Do more in less time. It’s an eternal imperative of business, but it looks particularly challenging when your industry is already working in transactions that start and finish in 1/10 of a second.
The digital advertising industry is under constant and increasing pressure to save microscopic slices of time. What more ad tech companies are learning is that Equinix can help them do that. And at the same time, it can also provide new access to trading partners from around the world.
Equinix builds high speed data centers, where companies improve efficiency by directly connecting their data networks to their data partners within the same buildings.
Each center hosts different “ecosystems” — companies with shared commercial interests. Like real ecosystems, the ones with frogs and birds, Equinix’s aren’t static. In April, Equinix officially launched its Ad-IX ecosystem for ad tech companies. Already, it’s grown to host more than 85 participants .
Those companies include ad exchanges, ad networks, data aggregators and demand side platforms. Some are well known, some will be. All are working to optimize real time bidding and get the right ads in front of the right people as fast as possible. And all are potential collaborators in the market for near real time online ads, which is poised to take off.
According to eMarketer, digital display ad spending in the real time bidding market is projected to rise from $3.4 billion this year to $8.5 billion by 2017.
To ad tech companies on the cusp of this runaway growth, the business synergies within Ad-IX may prove as important as its speed.
But that’s not to downplay its speed.
In the real time bidding market, ad exchanges require bids on ad inventory to occur within 60 to 100 milliseconds. That means that literally moving in the blink of an eye (average duration: 100 to 400 milliseconds) is too slow.
Over a public data network, 80 to 90 percent of those milliseconds can be taken up with grunt work such as domain name lookup or establishing a connection while negotiating network congestion. That’s called latency, and leaves just a handful of milliseconds to analyze Internet user profiles and calculate a bid for the ad that’s about to appear on screen.
The Ad-IX ecosystem takes its companies’ data networks off public lines and links them – server to server – so that participants within the ecosystem are connected to each other. The distance between ad tech companies involved in real-time bidding shrinks to meters, not miles, of cable.
All this shows up on the clock. Latency within the Ad-IX ecosystem drops below 10 milliseconds, leaving exponentially more time for analysis of information in Internet user profiles and other third-party data. The extra time produces more bids, more informed bids and more successful bids.
Their success has prompted Equinix to work with advertising companies to build out the Ad-IX ecosystem in seven regional hubs (see map). The hubs stretch from Silicon Valley, through Amsterdam, to Hong Kong. And because every Equinix data facility, not just the hubs, can support the activities of ad tech trading partners, companies in the Ad-IX ecosystem can operate in 31 metro areas globally.
That kind of reach is bound to draw businesses, and Ad-IX’s early results show it has. But Ad-IX’s initial gains are also a signal that the momentum is likely to continue.
Another way to think of an ecosystem is as a neighborhood that doesn’t get more crowded when more companies move in, it gets more efficient through various business synergies. The efficiency makes it more desirable, which propels more growth, which makes it still more efficient, and so on.
Equinix knows how this works. Its financial services ecosystem is dominant, with its data centers housing more than 800 companies. As its advantages drew companies into the ecosystem, it eventually made no sense for their partners not to join them there.
Equinix expects a similar dynamic to play out in Ad-IX. It’s built an ecosystem where the key players in the ad tech business can congregate, and benefit from the proximity. It makes sense that more companies will soon be clamoring to get in.
Leading ad tech companies such as AdJuggler, BrightRoll, Casale Media, Rocket Fuel and MediaMath are already operating in Ad-IX. Their feedback indicates Ad-IX can build on its early gains.
Ben Lindquist, vice president of technology at the ad exchange AdJuggler, describes Ad-IX as a place that offers both speed and the right mix of industry players. He says that has promoted successful real time bidding for his company.
MediaMath, which invented the demand side platform, has a presence in Equinix data centers in four continents. Their Chief Information Officer, Tom Craig, says the company has discovered new partners and generally has more open lines of communication.
BrightRoll worked with Rocket Fuel in Ad-IX to test ad response rates for its real time bidding exchange for video ads, versus public networks. The companies found a 10 percent reduction in average bid response time and a 48 percent bid success rate improvement.
Being linked, and potentially allied, to a diverse mix of ad tech companies has value beyond what collaborations can be created, costs saved, or revenues enhanced. Direct connections in Ad-IX with some of the industry’s key players also bring stability.
Companies who have built industry ecosystems in the same facility can collectively react to the market more quickly. The ecosystem also provides a sort of business insurance, because when the ecosystem responds to rapid changes in the market or regulatory environment, individual members aren’t left behind.
Ad-IX’s momentum, then, isn’t just good news for Equinix. It means enhanced performance, opportunity and security for every member of the ecosystem. And for future members, as well.