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Surprise Winner in Portal Alliance: Right Media

RMX's Yahoo inventory trumps AppNexus's technology, say insiders
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When Yahoo, Microsoft and AOL announced in November that they would begin formally sharing nonpremium inventory, many in the industry speculated whether Yahoo’s Right Media Exchange (RMX) or Microsoft-backed AppNexus would emerge the partnership’s go-to ad exchange. We may have a winner, and it's not the platform most insiders expected.

While Yahoo and Microsoft have stood behind their respective exchanges since the announcement, AOL waited until earlier this month to say it will make its non-reserved display inventory available on RMX. That decision has served as a tiebreaker of sorts. Industry experts said that even though RMX’s technology is subpar, its hoard of Yahoo nonpremium inventory ends up trumping AppNexus’s real-time bidding technology.

One trading desk executive who initially considered the partnership a victory for AppNexus said that Yahoo was likely able to use its inventory—which is larger than MSN’s or AOL’s—as leverage to anchor the partnership, at least in part, around RMX.

But the problem facing RMX is that its value is so closely tied with the Yahoo inventory. “The question that Yahoo will face is, 'Are they able to take that platform in Right Media and extend that beyond the Yahoo inventory...and then take that to additional publishers to bring them to their platform?'” said Rajeev Goel, CEO of supply-side platform PubMatic.

Another challenge? AOL is not necessarily all in. Frank Addante, founder and CEO of supply-side platform The Rubicon Project, said the fact that AOL’s inventory is not exclusive to RMX undercuts the strategic value of the two companies’ agreement.

Addante also questioned the value of the partnership between the three portals , and he’s not alone in saying that the partnership announcement only formalized an existing relationship -- a relationship where Yahoo, AOL and Microsoft regularly purchased inventory from one another. Zach Coelius, CEO of demand-side platform Triggit, added that Google has been buying inventory from RMX “for the last couple of years” without a formal deal.

Sources familiar with the matter said that political rifts also likely played a role in AOL’s decision to make its inventory available on RMX. Two sources said that AOL doesn’t trust AppNexus when it comes to protecting pricing. But there's another reason AOL and Yahoo seem more cooperative.

There is longstanding friction between Yahoo and AppNexus related to AppNexus CEO Brian O’Kelley, per sources. O’Kelley had served as RMX’s chief technology officer until Yahoo acquired the company. O’Kelley of course went on to cofound AppNexus. However another source downplayed that theory, noting that a number of the Yahoo employees with negative feelings toward O’Kelley and AppNexus are no longer with the company.

Yahoo declined to comment, and AppNexus did not respond to an emailed request.