The biggest cloud tech companies, including and especially Amazon Web Services, Snowflake, Databricks and, of course, the Google Cloud Platform, are investing heavily in their own ad tech and marketing verticals.
But, funnily enough, ad tech vendors themselves tend to avoid the big public clouds, instead relying on their own servers and network hardware. In cloud terminology, this would be referred to as “on-prem,” which usually doesn’t actually mean “on premises.” It’s referring to servers and other network hardware that’s co-located in database centers (or “co-los,” rhymes with “polos”). What a fun new world of jargon.
However, the ad tech instinct to own one’s networking hardware is a notable deviation from other business categories, where the de facto path is to license one or multiple of AWS, GCP and Microsoft Azure. An enterprise client might lean further still on tech like Snowflake, say.
The reason why ad tech is an “on-prem” comes down to the perception of what a real-time interaction is on the internet, said Srini Srinivasan, founder and CTO of Aerospike. His company, a database vendor that helps businesses set up their own networks or integrate with other cloud providers, gave a presentation on cloud infrastructure tech Wednesday at an event hosted by FreeWheel in New York City.
The real real-time bid
While the term “real time” is bandied about everywhere, what companies and customers really need in the moment has some bandwidth built in, Srinivasan said. If a payment provider like PayPal, relied on databases in NYC, Chicago and San Francisco, it might be essentially unaffected if it temporarily lost service from one of those three AZs (“Availability Zones,” the network tech jargon for surrounding areas served closely by a database center).
If the time it takes to process a payment goes from a quarter of a second to three-quarters of a second, that’s fine. If it’s taking five seconds, that’s a serious problem, he added, because people ditch the payment, and the company is more vulnerable to fraud.
In ad tech, though, the real-time window is about as close as one can get to actually “real time,” as opposed to just a figure of speech.
Aerospike, which was founded in Mountain View, California, working mainly in fraud and cybersecurity, opened a New York City office in 2010 to meet the sudden demand from ad tech companies with overrun network systems, according to Srinivasan. AppNexus was testing IT and cloud tech options to reduce the number of timed-out bids it was missing due to bottlenecks or fluctuations in network bandwidth, he said. At the time, it was missing 2% of bids.
Another early Aerospike client was Beeswax – and thus Aerospike’s role with FreeWheel, which acquired Beeswax. Although FreeWheel does build ad tech products on AWS as well.
What Aerospike brings is great parallel capacity, said Xiaoli Liu, FreeWheel’s executive director of software engineering, at the same event. “So whenever there’s a hard drive or hardware failure, it’s not going to put us down or take the cluster down.”
Even brief issues with a database center could mean the Comcast-owned FreeWheel misses hundreds of thousands if not millions of opportunities to serve an ad and take in accurate data on that impression. Liu added that these hotspots in bandwidth also often occur for Comcast or FreeWheel’s other broadcast partners during the most inopportune moments. The Olympics, for instance, are broadcast by FreeWheel’s sister company, NBCUniversal, but FreeWheel is also the vendor right now for March Madness broadcasts by Paramount and Warner Bros. Discovery.
Srinivasan added that media companies can open up new revenue streams, too, if they can reliably process transactions before a game. The Indian Premier League, which is a cricket league, had its opening day this week, he said. The broadcaster is also doing fantasy league sign-ups, and the big flood of those happens just before the game starts. But once the season starts, it’s done. There’s a huge value in being able to take as many of those last-minute submissions.
Liu said that one problem, and a reason why FreeWheel works with Aerospike and AWS, is that the demands on bandwidth and the nodes that the company operates are increasing almost exponentially and have been for years. Viewers are moving from cable to internet streaming content. More TV ads are transacted via real-time bids. FreeWheel’s overall bandwidth demands are a constant up-and-to-the-right pull, but its processing speed per ad transaction must remain a nearly flat line.
The competitive angle
In the world of CTOs, there’s less competitive tension with the likes of AWS and GCP, even for CTOs at ad tech companies that compete primarily with Amazon’s and Google’s ad tech units. Which, by the way, are the main rivals to the FreeWheel SSP.
FreeWheel’s decision to own its network hardware, solid-state drives and use its own co-located database centers (companies that own their own servers and network hardware rather than default to the big public clouds still almost always use shared data centers) comes down to cost, efficiency and control, per Liu.
Control even goes to the network level, he said. Aerospike collaborates closely with Intel, and so, as an Aerospike customer, it made sense to consolidate to Intel chips, for example. But what that means is that FreeWheel has more control over how a specific stream or traffic is processed and sent, accommodating for bandwidth needs. Defaulting entirely to AWS would mean all streams are essentially treated the same.
Srinivasan compared the idea to a highway that might have different lanes for express drivers, certain local exits or carpoolers. All the lanes move faster because people aren’t switching between them, and specific moments when traffic bottlenecks occur are more easily managed.
However, regardless of whether any CTO would say they’d happily use AWS or GCP if they could pay less for the same efficiency and risk levels, Aerospike itself is keenly aware it’s selling to ad tech companies.
After all, “it’s not like Aerospike is the only one doing this,” Srinivasan said. “All the big companies have their own thing that they built.”
Except that Aerospike “is not interested in competing with any of our customers,” he added. Aerospike customers are, for the most part, tech companies trying their best to compete with Google and win.
“That’s the advantage to solve this by anybody else,” he said.
