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November 18, 2013, Article

Article

Ad Tech's Master Builder Iponweb Expands to Agencies, Marketers, Publishers

Read on AdAge

When Boris Mouzykantskii walked into Advertising Age's offices in Midtown Manhattan recently, he was a bit bewildered.

"I still don't know what I'm supposed and not supposed to say," he said. The confusion was understandable considering it was only his second media interview during his 12 years as CEO of Iponweb — the most influential ad-technology company you've never heard of. A changing marketplace, however, is forcing Iponweb to raise its profile.

Iponweb's Moscow office

Iponweb has accomplished much since its founding in 2001, but it's had good reason to keep quiet. The outsourced development shop played a significant role in building dozens of ad-tech companies — Right Media and LiveIntent, to name a few — and its clients usually don't want to advertise that chunks of their technology come from somewhere else.

Until now, the company has depended on word-of-mouth recommendations, creating something of a mythical reputation. It employs 130 workers — 105 engineers in Moscow and 25 client-facing employees in cities such as New York, Tokyo and London. Without any venture backing, Iponweb, perhaps unlike some companies it helped build, is profitable by necessity.

"We do like the mystique," said Iponweb Chief Marketing Officer Scott Neville. "In a very noisy world, being quiet has worked very effectively for us."

After mostly building websites for its first few years, Iponweb jumped into ad tech in 2004, when Brian O'Kelley — now CEO of AppNexus but then just starting to build ad exchange Right Media — approached Mr. Mouzykantskii, who had been a lecturer on theoretical physics and a researcher at Cambridge University and the University of Warwick for over 10 years, for help. Mr Mouzykantskii described meeting Mr. O'Kelley as "accidental."

Iponweb ended up working extensively with Right Media until 2009, two years after the latter was acquired by Yahoo for $680 million. When Mr. Mouzykantskii learned his company would be cut loose by Right Media, he decided to stick with developing ad-tech companies. "We had a team of people who knew a lot about online advertising, specifically a lot about exchanges, and we thought, why don't we try to do the same for other clients?"

For years, companies rich with venture funding swarmed Iponweb. But ad tech isn't generating startups at the pace it once was. Only 13 new companies have been funded since 2012, compared with 33 in 2010, according to Neu Venture Capital. That means Iponweb's sweet spot — building for ad-tech companies that had an idea and venture funding, but trouble hiring enough engineers — is shrinking.

Today, while claiming confidence in its legacy business, Iponweb is gearing up to build custom ad technology for new types of customers: advertisers, agencies and publishers. The idea of such companies building their own systems instead of buying and selling ads through third-party companies may have sounded crazy a few years ago. But it's becoming less farfetched as ad-tech end users start harnessing their own data.

"The whole proposition of real-time decisioning and audience targeting is being able to leverage the data to really reach your audience and talk to your customer in a very interesting way," said Mr. Neville. "So customizing the buying algorithms, how that data is utilized and how they can leverage their own assets makes a lot of sense."

If enough end users moved in that direction, ad-tech companies could lose a significant chunk of revenue. But Joe Zawadzki, CEO of demand-side platform MediaMath, didn't seem concerned about the threat. "They have a hard road ahead," he said of Iponweb. "It's going to be a challenge for people to build this stuff. Most brands and agencies want finished working products."

While a platform with tailored algorithms may sound good in theory, running it is outside the core competencies of most brands, agencies and publishers, making it likely they'll stay away, the logic goes.

But Iponweb is removing perhaps the biggest hurdle for end users: the need for each platform to connect with disparate sources of inventory. The company earlier this year launched a product in beta called Bidswitch, which more easily connects the many platforms used by bidders and sellers of ad inventory. That should cut down on integration time and get systems running much more quickly.

For Iponweb, building niche ad-tech platforms means shorter sales cycles and potentially a much larger market. So while not forsaking its traditional business, it's moving into a new line. But Iponweb also won't be able to grow by staying silent. "It worked for us well to be humble and quiet about what we're doing," Mr. Mouzykantskii said. "It doesn't seem to be an option anymore."

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