AppNexus Bulks Up On The Buy Side

appnexus-peopleThe steady growth of AppNexus’ advertiser-facing business in recent years has led to a jump in employees.

Out of AppNexus’s roughly 1,050 total headcount, about 318 now serve the buy side, developing and supporting the company’s demand-side platform product. Of those employees, about 97 are engineers, 19 are product managers, 74 are in sales and a whopping 114 hold service and support jobs.

AJ Kintner, the company’s most recent senior hire, just joined as VP of DSP sales in the Americas after holding sales roles at DoubleVerify and Invite Media, where he was the only salesperson prior to the DSP’s 2010 sale to Google.

Kintner will report to AppNexus’ demand-side CRO Marcus Startzel.

AppNexus is mostly known for its publisher suite, but it has a long history serving the buy side. For a long time, its buyers were mostly intermediaries – ad networks and trading desks – but the company has increasingly pitched its DSP directly to agencies and marketers.

From a product standpoint, AppNexus says its “bring-your-own-algorithm” approach sets its DSP apart, allowing marketers to customize their data-driven ad strategies.

Its two largest direct-to-advertiser clients are AT&T and Anheuser-Busch, according to a source with knowledge of the company. On the agency side, AppNexus probably gained inroads to GroupM agency buyers through its strategic investment from WPP Group in 2014. Whether that investment has helped or hindered its chances with non-WPP agencies is an open question.

AppNexus declined to comment on customers or to identify specific clients, either brand or agency.

A large question looming over AppNexus’s advertiser-facing business is whether it can hold the line on managed services. CEO Brian O’Kelley has historically been adamant about his company’s pure technology focus. Are his 114 service and training support staffers a momentary concession to marketers who need help onboarding the DSP, or a sign of more hires to come?

“We’re definitely not moving off of the vision to be a technology provider,” Startzel told AdExchanger. “As we take this technology closer to [marketers], we are going to have to help folks onboard. With any SaaS product, you’ve got training, you’ve got different types of service offerings, and we have a service offering.”

AppNexus is adding people as some of its DSP competitors subtract them. Downward price pressure on ad buying platforms has helped set in motion layoffs and other cost-cutting moves at a range of DSP companies, including Rocket Fuel, Turn, MediaMath, Centro and Videology.

The problem for these companies is, in a word, bodies. Agencies selecting DSP partners for “preferred” vendor arrangements have driven DSP fees from previous norms of 15% to 25% down below 10% and in some cases as low as 5%. Many ad tech companies have agreed to those thin margins, hoping to make up for the reduced revenue on the volume and scale agencies can provide. But to hedge their bets during this uncertain transition, they have also sought to reduce expenses, including payroll.

AppNexus may be well-positioned to weather this storm, since the company has long been accustomed to single-digit margins for its SaaS-based technology licensing business. Fewer hands on fewer keyboards means a lower margin… and that appears to be fine with the company.

“It’s certainly true that in the market you’re seeing downward pressure,” Startzel said. “With the scale of AppNexus and our cost base, it’s an advantage for us. We have the competitive advantage to compete and win and not be as effected by price drops because that plays to our strength.”

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