Company profile: AdJug

AdJug is Europe’s first online advertising marketplace, bringing together buyers and sellers directly through an auction process.  Unlike traditional ad networks, where advertisers often ‘buy blind’ with little or no control over where their ads appear, AdJug is designed to give both the publisher and advertiser more control and transparency.

The company came about through a meeting of minds and expertise from different online disciplines. Michael brought his knowledge of online marketplaces as former managing director of Gumtree and marketing director of eBay in Germany, while Satish contributed his experience working with ad networks as head of European strategy at Espotting (now known as Miva) and founder of contextual ad firm Nixxie.

“With AdJug, we married two different ideas with each other,” said Michael. “I was with eBay for 7 years and during that time I looked at the principles of an online marketplace: bringing buyers and sellers together, helping them find the right price and increasing the overall efficiency of the transaction.  Meanwhile, Satish had worked in the online media and brought his knowledge of the ad network industry.”

“I met Michael through Seb Bishop at Miva. We both shared the view that many publishers felt hard done by with their ad networks,” Satish said. “When publishers sell their unused inventory to a network, everyone is paid the same price, regardless of the quality of your website. Michael felt he could apply the sophisticated analytics of eBay’s auction process to buying media.”

“At eBay I was spending millions with ad networks, but there was no transparency,” Michael continued. “We couldn’t see which ads on which sites lead to conversions. I thought ‘why can’t we find the same transparent process that we have at eBay, where it’s an open auction and you know the value of the goods. While ad exchanges like Right Media existed in the US, we couldn’t find the right model for the European marketplace- we knew we needed to invent it ourselves. That’s how AdJug came about.

After a trial launch early last year, the company secured a funding boost from Bebo investor Balderton Capital in July 2007, alongside a number of high-profile backers including Espotting founder Seb Bishop and TradeDoubler Vice President, Rene Rechtmann.

In contrast to the way online adverts are bought and sold through Google or Yahoo!, AdJug’s advertisers can choose the location that adverts are displayed on a web page and determine the exact price they will pay for traffic. Publishers can also define how much an advertiser pays ‘per click’- optimising the method of deriving value from their online ad space.

With Adjug, publishers are able to know exactly how much money they can make by selling ads depending on what traffic they have plus decide which advertiser they sell to.  Advertisers can buy on certain sites and truly appreciate which sites are delivering customers and which are not, it also allows them to have control over which sites they are placing ads on so as to avoid controversial website content.

The formula has worked so far, and AdJug’s UK site currently garners more than half a billion ad impressions per month.

Satish said the site was built with usability in mind, replicating the online shopping experience. Publishers are given an online ‘storefront’ to display their stats to advertisers, while advertisers can drill down by categories such as audience demographics and ad location, formats and sizes. They then add their chosen sites into a virtual shopping basket, upload creative and go to the ‘checkout’.

“The big advantage is that on day two you can record how you’re doing on a placement by placement basis, remove those that aren’t working and increase send on those that are,” Satish added.

Satish insisted that AdJug is a ‘no-lose’ service, as it is free to register and use. “If publishers haven’t sold at auction, what happens to the impressions? In Adjug’s case, we host the publishers ad network free of charge, so it goes through their existing ad network- you don’t lose money with that ad impression.” Satish explained.

AdJug makes its money on a commission basis. The publisher sets their own asking price for an ad placement, and AdJug gets a 30% share of the agreed selling price. The total price, including the commission, is shown on the marketplace. “We’re very open with our revenue model and feedback so far has shown that publishers are happy with how we work,” Satish added.

So how have traditional ad revenues viewed AdJug’s ‘cut out the middle-man’ approach? “Online advertising is an industry that has traditionally been driven by an intermediary,” said Michael. “We have had some ad networks approach us with a deal to persuade us not to approach their publishers directly, but it all depends on whether this adds any value for the publisher. There are some excellent ad networks out there-that are very good technology providers, but sometimes it’s just a case of passing one contact to another and we have refrained from doing that. We want to make things better not to let others maintain the status quo- we are slightly disruptive, and not everyone likes that.”

The site’s analytics offers advertisers an education process too. “For some advertisers, it’s as much a revenue opportunity as it is a learning opportunity. For the first time advertisers can see what is happening with their ad. We can help give them tips on how to optimize their campaign. We see the data across hundreds and hundreds of sites and the advertisers can see in detail what works and the publisher can see what works. For example are MPUs working better than banners? What works at the bottom of the site? What works at the top?  We have the sophistication on how to monetize inventory best.”

So does this level of transparency negate the need for IASH? IASH is a regulatory body put together by ad networks themselves to establish standards and offer a guarantee that ads won’t appear on inappropriate sites such as adult content. “IASH is a fantastic initiative, there was no policing of ad networks for so long,” said Satish. “But on AdJug  we vet the site – there’s no adult and lots of banned categories. I don’t think we need to be IASH compliant as we are completely visible to clients, you’re not buying blind at all here - it’s an open exchange.”

Having built traction in the marketplace, Adjug started to raise a second round of funding. Being a German native, Michael felt Germany was the best place to start a second operation. AdJug generated $6.5m (approx. £3.3m) in this second round, through German digital sales and content firm Tomorrow Focus AG and existing investor Balderton Capital, the leading venture capital firm behind Bebo, Codemasters and Setanta.

As part of this expansion, Tomorrow Focus AG will provide access to a portion of its advertising inventory (initially 100 million ad impressions) via AdJug and help to build the online advertising marketplace in Germany.  Tomorrow Focus AG’s Chief Marketing Officer Christoph Schuh will be joining AdJug’s board along with existing board members.

So beyond the German expansion, what does the future hold for AdJug? Michael was optimistic but felt the company should stick to what is does best in the market, and what the founders are most familiar with. “We need to take it one step at a time,” he said. “Expanding into too many markets in parallel can be risky. But we are finding that AdJug is essentially a model that can work on any scale and in any market.”

www.adjug.com

by

Robin Langford

News Editor, Netimperative