The recent history of digital advertising is full of ad networks that have pivoted, or are trying to pivot, away from the withering RFP trade. Some have become demand-side platforms or analytics tools geared to advertisers and agencies. Fewer have positioned around the publisher.
Family run Casale Media is in that smaller group. Founded in 2001 by an electrical engineer from Toronto named Joe Casale with help from his then 15-year-old son Andrew, the company operated an early ad server and ad network business that did well from 2001 to 2010. Towards the end of that run, seeing the programmatic writing on the wall, it bootstrapped itself into a sell-side platform.
The company recently renamed itself after that publisher platform, Index Exchange, which today represents 100% of revenue. As part of that transition, 28-year-old Andrew Casale has taken the reins of the company he started with his father while the elder Casale has transitioned to chairman.
How did all this come about?
Starting in 1996, when he was 10, Andrew ran a bunch of fan sites geared to topics like reality TV, which he monetized using banner ads – mostly 468x60s. He enjoyed an insanely high click-through rate of 1%. "I would get checks from ValueClick," he recalled.
In those years, Casale observed that the ad network model was limited to a small number of very large companies, and the service was horrible or non-existent. "As a publisher, when you logged in you didn't have a lot of control. There was an opportunity to blow the doors off this category for publishers."
Andrew talked to his father about it, and together they set about seizing that opportunity.
Joe Casale is 65 years old and still chairman of the company he founded. According to Andrew, he still comes into the company's main office in Toronto's fashion district every single day. In the 1990s, before starting Casale Media with his son, Joe ran a consulting business geared to major ecommerce companies in need of guidance on building out their infrastructure. "Early on he loved the idea of digital advertising, and the two paths (engineering and advertising) kind of converged naturally," according to Andrew.
In addition to investing in an ad server and selling it to website owners, Casale Media also built a self-serve interface making it easy for advertisers to access inventory across its network. But those advertisers didn't come knocking. "We realized we had to learn what media sales is. You don't pick up the phone and call Kellogg's," he said. "At the time we overinvested in tech and underinvested in sales. Our sales force was always a small fraction of the size of any of our competitors."
But over the years, the company got its foot in the door with big media agencies. And it was those close agency ties that helped it prepare for what came next.
Around 2010, agency clients who had worked with Casale for years started warning of looming changes in the traditional, RFP-driven media business.
According to Casale, these agencies said, "You've been on media plans forever. You've got good publishers, but we also know you've got good technology." The message was, you need to be ready sooner than you think. Programmatic has arrived.
Two agency holding company reps – including one from Omnicom Group agency PHD -- proposed that Casale Media provide them with its ad serving technology, which they would then use to plug directly into supply sources.
Casale's management thought about this proposal, but ultimately decided against it. "It would've meant shuttering the publisher business and disintermediating our relationship with the publisher," Casale said. "The publishers gave us the opportunity to be what we were. I didn't want to give up the relationship."
Rather, the company decided to leverage its ad server technology and its publisher reach to create an SSP/ad exchange that would compete with the likes of Rubicon Project, PubMatic, and OpenX.
It was a pretty big bet, considering that the company had little technology other than its ad server. No bidding technology, no programmatic plumbing to speak of.
"We took the entire technology group off the road map we had plotted and put it on this," Casale said. "It took us a year to build it."
Then came the moment of truth. Casale Media's first demand-side platform integration went live in June 2011, and the first bid came in from Nissan through the Havas-incubated Adnetik trading desk. Casale was surprised by the Nissan bid, since it was a brand his company had never successfully managed to win an RFP from. It struck him as a validation that this programmatic thing was indeed going to be big.
"From that point, we recognized we had a long road to go down to plug in to demand sources. Turn, MediaMath, Google, AOL, Yahoo, and so on," he said. "First you have to sell it in." The company built a name on transparency and inventory hygiene. It told buyers, "We'll be the exchange you don't have to worry about. We'll be the exchange that if you have a very conservative client, you can trust its budget to."
This focus on transparency and ethics seemed like a niche proposition at the time. No longer. "To our good fortune, that's become a very important factor in the industry," Casale said. The early bogeymen of porn and piracy-related content gave way to fraud and viewability in the last three years. Index Exchange greatly benefitted.
Over the three-year period from 2011 to 2014, the company exited its ad network business, and today every dollar the company touches comes from a DSP or other plugged in buyer. "There is no media sales," he said.
And despite heated competition from larger exchange players, business is good. Index Exchange projects $200 million in gross revenue for the current fiscal year, which ends in March. It does not disclose net revenues, but says it is profitable. It counts among its publisher customers Expedia, Hearst Magazines, Ziff Davis, and Kayak.
The company's headcount is 130, of which 10 are based in the company's growing New York offices. It will employ about 30 in New York by the end of 2015, and will hire 60 engineers across the company working on areas such as native and programmatic direct.
At a time when many of its competitors on the sell-side are running demand-side businesses as well -- AppNexus and Rubicon Project come immediately to mind, Casale says Index Exchange remains committed to a pure focus on publishers.
"We spent 10 years in media sales. Our tour of duty is over," he said. "The demand partners that a few years ago took a risk and integrated with us, the vast majority of them are committed to a pure play model in their own right. We make a very complimentary match on the supply side. I'm a big believer in focus."