CEO Mouzykantskii Says IPONWEB Expanding Media Trading Tech Business Globally

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Boris Mouzykantskii is Founder, Chief Executive Officer & Chief Scientist of IPONWEB, a media trading technology company.

AdExchanger.com: Please share a bit of background on IPONWEB. What does the name mean?

BM: IPONWEB was originally founded with my wife in 2001 when I was still a lecturer and researcher in Theoretical Physics in the UK. The name comes from the original intended business activity, which was the development of software for law firms to manage their client’s patent portfolios. We’ve changed our business completely now, and are no longer involved in the legal space, but the name stays with us.

How was IPONWEB part of the development of Right Media Exchange? Is it still involved?

IPONWEB was contracted to provide engineering services by RightMedia from 2004 to 2009. During that time we rebuilt multiple parts of the platform several times and formulated RMX-specific solutions for dealing with the challenges around probability modeling, scale and designing complex advertising systems.

It was an exciting time and great to be involved in the pioneering years of automated media trading. After RMX was sold to Yahoo in 2007, we slowly scaled down our involvement and now we are no longer involved in the RMX project.

The work the IPONWEB team is now doing is at a whole new level of sophistication and capability to what we did back then. We no longer build just a single trading solution, we are now building many dozens of distinct variations of trading solutions simultaneously.

What problem is IPONWEB solving?

Our key value proposition is the ability to build a sophisticated automated media trading solution very quickly, tailored specifically to a customers` business model and integrated with their legacy systems.

To successfully deliver this, there are some tough problems to solve in high volume media trading for applications like RTB, such as scale (handling billions of complex decision events per day), big data processing & presentation, and machine learning.

With u-Platform, we’ve packaged these tough problems into component technologies presented as a cloud based open architecture, so that executing the build of a solution like a DSP or SSP is more a question of design & integration, than R&D.

We rapidly tailor the way the u-Platform components hang together, delivering a customer specific codebase for their proprietary decisioning algorithms, to have our clients trading in market very quickly. The ability to scale and execute significant complexity is baked in from the outset.

Most importantly though, post the initial feature-set build, we are able to continually rapidly iterate and release new features on top of this base at a pace aligned to our customers real world needs & product requirements.

To give an example, we recently had a client reach the milestone of their 100th deployment release, 7 months after going live on their initial base feature set. That's a release every 2 working days on average.

So in summary – we offer our clients a very economic approach to building a trading solution with low engineering risk, rapid time to market and very fast / responsive iterations for new feature sets. The focus is on helping our clients to quickly evolve the solution they need in order to uniquely operate their business, which is the reality of success in this space.

Why has IPONWEB remained relatively quiet to-date and why the change to put a more public-face on the company?

In general we prefer to focus on deeds not words, so our marketing has taken a back seat to date. We are in the fortunate situation where our reputation for delivering great results to our clients really drives our new deal flow, and we haven’t needed to spend effort in attracting new business to meet our growth objectives. Because we are independent, profitable and organically funded we have also not had to attract funding or VC attention.

We are growing rapidly as a business though and in 2012 we are looking to build out country teams in the US, Europe and Asia. In this ultra-competitive environment for talent, attracting good people requires a higher profile, proposition and market awareness, so we needed to polish up our public face.

Hence, we’ve hired a marketer, we have a new look, and we are actually doing a few media interviews here and there.

What does competitive set look like for the products and services that IPONWEB provides? How do you differentiate?

Currently there are three approaches to establishing a media trading solution for a business in this space.

The first is to build and operate it in-house with all the risks, investment and learning that that requires; the second is to structure your business to fit a 3rd party vendor’s shared, multi-tenancy technology platform; while the third is to customize something specifically around your business needs using a rapid development environment like IPONWEB’s u-Platform.

Each approach has its own distinct pros & cons, however in respect to our offering we don’t really see direct competitors as such, we offer something quite unique.

All our clients’ solutions operate in single tenancy mode on parallel isolated clusters, they don`t share their server footprint and "first party data" with anyone else. In this way, we deliver features that are specific to a client`s needs, with the ability to rapidly roll-out new features within days from when the client asks for them.

It's a personalized, tailored approach that delivers incredible value to our customers.

Can you talk about the current geographic set-up of the company and plans here? And, why has Moscow and Russia been a good location to source programmers, for example?

Operationally we are a global organization and enjoy a highly flexible, virtual office environment. We currently have staff permanently located in London, Tokyo, Sydney, Moscow and several other locations in Russia, plus many staff spend a lot of time on planes.

From an engineering perspective we are primarily based in Moscow. Culturally, Russians are very proud of their strengths in mathematics, statistics and programming, and in Moscow we have been able to source incredibly smart people, who are attracted to the computational challenges we offer them.

We also believe that service & technical delivery need to operate very closely together so have kept this part of the business centralized in Moscow.

In the coming months and through 2012, we are focused on building out our sales and client service teams in London, New York, Los Angeles / San Francisco, and in Germany. We are actively hiring Business Development, Sales and Solution Architects in these locations. And of course, we are always recruiting engineering talent in our Moscow office.

Can you talk a bit about your joint venture with D.A. Consortium (DAC) and how it will evolve?

We have some fantastic clients globally, and DAC is one of a few we can actually talk publicly about.

DAC is quite a unique company and possibly the leading Online Media Company in Japan. Majority owned by Hakuhodo, DAC work with more than 500 agencies to plan and buy their online spend. Additionally they represent media for more than 1,000 publishers and operate the largest, by volume,  adserver (called IPSX) in the Japanese market. Over the last 15 years they have consistently introduced the latest technologies into Japan.

Together with DAC, we established IPONWEB Japan as a Joint Venture, focused on accelerating the adoption of RTB in the Japanese market.

One of the first clients for IPONWEB Japan is DAC itself, where we are delivering their SSP (called YieldOne), their DSP (called MarketOne), as well as a dynamic creative optimizing 3rd party ad-server for Advertisers & Agencies (called i-Effect).

The JV started this year in April 2011, and in June the YieldOne SSP and MarketOne DSP`s were launched. At the time, these solutions were some of the first RTB offerings in Japan, and have quickly grown to lead the market, launching the RTB space rapidly in parallel. We are now working to enable other players in Japan with their own RTB enabled solutions.

Things are moving very quickly in Japan, probably faster in terms of the adoption curve than we have seen in other markets. It has been fascinating to watch an entire RTB eco-system develop before our eyes and to be able to play a key part in that.

So, if I wanted an ad exchange or sell-side platform - how much is that going to cost me? Please share a bit about pricing and time-to-market with your products?  Beyond your DAC relationship, do you take equity interest in client companies?

For clarity, the equity interest in our DAC partnership is in IPONWEB’s own customer facing business for the Japanese market, IPONWEB Japan. We are not an equity holder in DAC’s SSP or DSP businesses or an equity holder in DAC.

As a general rule, we don't take equity in our clients that are operating a media trading business. We feel that to take equity compromises our position as an agnostic provider of technology and services to any and all media trading businesses.

There are a few exceptions where we deviate from this rule, where a business model is particularly unique and there is little risk of compromising our position with our other customers. But it’s very rare for us to take equity; unique business models don't pop up that often.

Our pricing has 3 distinct parts.

  • The first part is an establishment fee, to customize and launch the core solution with base functionality, typically something we can achieve in under 3 months.
  • The second part is a SaaS based monthly fee for the operation and management of the underlying u-Platform itself. It is usage based and scales up with the number of bids and impressions. For most clients it amounts to a small percentage of trading spend moving through the system.
  • The third part represents the ongoing development fees for continuous improvement and new feature releases to the system.

The total development cost for a mature system (i.e. sum of the first part and the third part) can be from a few hundred thousand to a few million USD, it all depends on the complexity of the solution.

Operationally, we do expect clients to deliver a minimal threshold of activity, and so our entry level pricing starts from 500 million ad requests or bids per month. On the larger scale side, we have several clients executing 6 to 8 billion ad selection decisions a day.

IPONWEB has supplied technology to startups that have reaped huge monetary rewards once acquired.  Why not just build products for yourself?

We are always delighted that many of our clients are the leader in their respective markets. We see it as a great reflection of the value proposition that we aim to provide.

Our core competency is in engineering; the build and operation of the technology behind these media trading solutions, and we are great at that. We are not experts in media buying or ad operations, nor do we have the deep relationships required on the buy and sell side to be successful there, this is very much our clients’ field of expertise and what they uniquely blend and customize around our technology.

We also sincerely believe that we need to be independent of the media buying process itself, in order to deliver a real value proposition and independence for our customers.

Have you taken any funding? Any future plans to do so?

External funding has not been necessary to date. We are privately owned and profitable and we are growing the company according to plan.

In the future, we see a couple of scenarios where bringing external funding into the business might be beneficial, however it`s currently not a priority and to be honest any fund raising process can be very distracting.

Additionally, we see our financial independence & stability as being critical to many of our clients.

Looking ahead strategically, and in general terms, what industry shifts are you seeing as opportunities for IPONWEB?

Ultimately we see RTB becoming the lingua franca of media trading. In 2011 almost all of our new projects are RTB related and while different markets are in different phases of adoption, the breadth of opportunities in the space is quickly expanding, particularly in mobile and video.

Longer term the true power of RTB lies at the enterprise level where an organization is able to assess a given advertising opportunity seamlessly in the context of an enterprise’s own “first party” data; whether that be their CRM, Product Inventory, eCommerce, Finance, Customer Database, Business Intelligence or Content Management IT systems.

Enterprise advertising solutions require highly customized, deep integration approaches, far more complex and demanding than a pixel hand-off between disparate isolated systems. We have built u-Platform with these kind of applications in mind and see ourselves playing a key role here.

As companies integrate real-time actionable capabilities with their existing enterprise systems, a whole new ecosystem is evolving. An enterprise client needs a team of highly skilled “advertising traders” to operate their sophisticated media buying system, and to deliver the deep integrations.

We see more and more of our “traditional” media clients -- like Ad Networks or DSPs -- recognizing the opportunity and becoming a supplier of custom advertising services on top of deeply integrated solutions for large enterprise clients, essentially commissioning a separate advertising solution for each such client. It is still early in the game and the potential is huge.

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