40. Brian O’Kelley (part 2) – the Right Media experience

Paleo Ad Tech

Part 2 of an ongoing conversation with Brian O’Kelley, one of the most influential people in the last two decades of ad tech. He led the technology team at Right Media that launched the first real exchange for ad networks. After Right Media was sold to Yahoo in the eventful year of 2007, Brian co-founded AppNexus, a pioneer in programmatic advertising and real-time bidding. The company grew over 11 years to 1,000 employees and was sold to AT&T for $1.6 billion in 2018.

AppNexus was folded into Xandr and is now pending a sale to Microsoft, a long-time AppNexus partner.

Today, Brian is the founder and leader of Scope3, which helps companies monitor and reduce emissions in their supply chain.

In this entertaining episode, Brian focuses on his experience at Right Media, which extended from 2004 through its sale to Yahoo in 2007, the year he co-founded AppNexus. Brian heard about the start-up from a posting on the Princeton alumni network; Right Media co-founder Matt Phillips was a Princeton alum, although the two men didn’t know one another. Betraying a charming naivete, Brian showed up for his interview in a suit.

At the time, Right Media was incubating in the offices of Poindexter, an innovative digital media agency and tech shop started by Joe Zawadzki, an early supporter. He gave the founders office space and tried unsuccessfully to get his board to fund the start-up (which is a story deftly related in our action-fevered Zawadzki episode here).

Brian was vastly overqualified to build the Right Media website, so he was handed over to Joe, who employed him as a contracting engineer. Over the next year, Brian developed a relationship with Phillips and began to believe he could deliver a performance-based ad server that was un-gamable, as DoubleClick Media Networks’ had been so spectacularly in the deft hands of RM co-founder Mike Walrath. (Brian details how in the episode, and Bill Wise sketches a similar story in our special holiday episode.) In 2004, Brian joined the RM team as an engineer.

What followed was a flurry of innovation that left a lasting legacy on the industry. It included a predictive ad server that optimized based on effective CPM (eCPM), equivalent to CTR x CPA, requiring the clever use of a Bayesian algorithm to predict response rates to ads. (The story of this 18th century cleric and his theorem so beloved of modern data scientists is related here.) Brian also built an early SSP — perhaps the actual first, predating AdMeld — not as a product but rather to help direct traffic toward Right Media’s actual business, which was its ad network.

And then of course the ad exchange itself, which as Brian describes it began as a “stupid feature” in his multi-tenant SSP to allow ad networks in Europe to bid on overflow inventory from other networks and vice versa. So speculative was this bid-on-overflow feature that initially Mike Walrath wouldn’t plug Right Media into it, and Brian turned to partners.

Surprisingly to some, Brian’s RM career involved a heavy component of business development. This included Yahoo, whose Andy Atherton and Ryan Christensen (a future AppNexus leader) pivoted from skeptics to investors in Brian’s network exchange and in Right Media. Ultimately, of course, Yahoo would acquire Right Media and appoint Mike Walrath for a time as a leader in its programmatic ventures.

Brian didn’t join Yahoo — but did co-found the even more successful AppNexus, which he is scheduled to tell us about soon as his adventure continues ….