AppNexus also has accelerated plans around digital video advertising, which could assist an eventual IPO. Recent developments in the video landscape are seen internally as a boon to those plans, according to someone with knowledge of the company's thinking.
Banks kept asking O'Kelley and Rubenstein about AppNexus’ video strategy, and many investors preached that a full-stack video platform with proven commercial traction could unlock the "full value" in an IPO. AppNexus already had planned to increase its investment in video ad mediation for publishers, and in Q3 it began working on a video ad server/SSP product. This product was meant to directly compete with Facebook's LiveRail and Google's DoubleClick.
Now the company thinks Facebook's sudden move to sunset its video ad server (AdExchanger story) will help it achieve sales traction for the AppNexus video platform earlier than it could have hoped.
According to a source with knowledge of the company's plans, management believes that "even if you’re a current LiveRail client, it’s clear that Facebook is moving away from what was always an ancillary business, so building your business on their platform isn’t the best long-term play." To seize this opportunity the company has accelerated its rollout plans, and plans to deliver an aggressive pitch to LiveRail clients in Q2 2016.
Additionally, the insider added, AppNexus sees promise in recently reported allegations around invalid inventory on Yahoo's BrightRoll ad platform (though BrightRoll has sharply refuted those claims).
AppNexus hopes these improved prospects around video will improve the company's 2017 projections, which would in turn please bankers evaluating its IPO viability. According to the source, the thinking is, "They can’t control extrinsic elements like volatile markets, but if they capture this opportunity, they may be sitting in a more advantageous position when they make their decision."
Ready Or Not
Sources close to AppNexus say the plan was always to be fully IPO-ready moving into 2016, and the company has largely achieved that milestone, having prepared itself to meet federal requirements for quarterly disclosure and investor relations. Today, the private company "mimics and shadows" all of those public company functions, even though it's not yet required to.
Much of the company's preparedness is thanks to Jonathan Hsu, a seasoned ad tech exec who took 24/7 Real Media public and oversaw its eventual sale to WPP Group in 2007. Hsu joined AppNexus in April 2014, when public ad tech stocks still looked relatively attractive.
Since his hiring, most of those companies are trading dramatically lower. Criteo and Rubicon Project are both down 25%, Tremor Media is down 57% and Rocket Fuel is down 92%.
These declines reflect investor cynicism about advertising technology, and as long as that cynicism dominates it's unlikely AppNexus will be able to garner sufficient interest to underwrite a public offering. However, if the negative pressure on IPOs – exemplified by the poor performance of both publicly traded ad tech stocks and consumer-facing tech stocks like Twitter, GoPro, Etsy and Fitbit – improves, the company has every intention of going public.
AppNexus declined to be interviewed for this story.