Once reliant on mass appeal to win over consumers, advertising has become a more personal experience in the internet age. And the real-time ad platforms like those provided by New York-based AppNexus will turn advertising into an increasingly intimate business. CEO Brian O’Kelley explains why this future shouldn’t be feared.

BrianAppNexus

AppNexus founder Brian O’Kelley.

AppNexus has deep roots in the realm of online advertising: founder O’Kelley got his technological start at the real-time personalization company LogicSpan, and then as the mastermind behind a similar company, Right Media, which Yahoo! bought for $850 million in 2007. While most people would have taken their winnings and ridden off into the sunset, O’Kelley couldn’t resist the lure of the ever-evolving online ad world.

“I was 29-years-old with plenty of money, and it was very tempting to retire. And I tried,” laughed O’Kelley.  “But after a few months of traveling, and constant phone calls from people with business questions, I realized I couldn’t resist.”

Ready to jump back into the proverbial rat race, O’Kelley reached out to Mike Nolet, Right Media’s former director of analytics, and the two began to plot out their AppNexus venture.

Despite their connections and cash, the path to success wasn’t immediately paved with gold. “Founding was easy in some respects, because of our personal money, but we also pitched to investors, and so many people weren’t into it,” O’Kelley explained from his office in New York.

“It took some time, but it made me learn something important for start-ups: really look for investors who are willing to see your vision and the people behind the project.”

Finally, O’Kelley and Nolet convinced a bevy of investors from Kodiak Venture Partners, Venrock and First Round Capital, as well as individuals, to help them out. Then the real work began: marketing.

Rather than trying to canvas as many businesses as possible, O’Kelley, Nolet and their nascent team took a more targeted approach.

“Because we’re an enterprise technology company, we contacted the about 500 companies in the world that are our targets,” said O’Kelley. “We marketed specifically for those companies, telling them how we could solve their specific problems.”

Their technique worked, and it wasn’t long before AppNexus had established itself in the growing real-time ad business, taking on clients such as eBay and Microsoft.

Last year, a mere three years after the company’s inception, AppNexus secured an additional $50 million from Microsoft and their other investors, bringing total investment to $65.5 million, and now auctions more than 4 billion ads a day on its real-time bidding platform.

With a foot firmly planted in New York and about 90 employees, AppNexus is working its way into the European and Middle Eastern market, thanks in part to a data center they’ve just opened in Amsterdam, and O’Kelley predicts the real-time bidding business will grow 20% between now and 2012.

But what is a real-time ad platform?

Basically, services and technology like those AppNexus provides gather information about internet users, allowing companies to target specific customers with specific messages in order to guarantee that their ad dollars are spent in the most efficient way possible.

While some other companies claim to offer such a service, O’Kelley insists he’s not worried about the competition, primarily because AppNexus doesn’t simply claim to be based on a platform, it is a platform, one built on a cloud service that allows them to offer what O’Kelley calls “the most scalable ad technology platform in the business.”

This means, according to O’Kelley, that AppNexus promises the most reliable and accurate personalized advertising on the web.

To many, the idea of personalized advertising can bring about visions of a dystopian future in which corporations control your every decision. O’Kelley understands these fears; he has them, too.

“This is the most effective advertising, yes: we help people get specific goods they would actually like” he says, before continuing, “But if we make it too personal, it gets creepy. There’s a line I don’t want to cross.”

Advertising should be enticing, not worrisome, he says, and AppNexus does everything in its power to balance people’s private lives with their product desires: “We have a strong delineation between identifiable information and non-identifiable information, and only use information from sites you’ve visited. There’s nothing scarier than receiving information from advertisers with which you don’t have a relationship.”

And AppNexus is all about relationships, particularly when it comes to hiring, which O’Kelley describes as the most important element of any start-up.

“Hiring is critical to us. We look for people who are smart and, more importantly, passionate — that’s almost more important than experience,” says O’Kelley. “You have to have what we call the ‘customer service gene,’ because only the customer can tell us what they want and need. That feedback helps us thrive.”

Asked for the best advice O’Kelley’s received on his journey, the young CEO cites tech entrepreneur Ben Horowitz: “There are only two emotions a CEO can feel: terror and euphoria.” Those two emotions, of course, often come as a package.

Startup Tools

Startups need tools to organize themselves. Here’s what AppNexus uses behind the scenes.

  • Customer Relationship Management: A combination of Salesforce.com and AppNexus’ proprietary system.
  • Accounting: Currently evaluating.
  • Project Management: Atlassian Confluence Wiki as a way to collaborate on projects and share documents.
  • Cloud Computer: AppNexus maintains their own cloud through three databases around the world, and use two Netezza machines for as a data warehouse solution.
  • Internal Email: Hosted Exchange 2007 service.
  • Marketing: None.
  • Site Analytics: Google Analytics and Jobvite for hiring.