TMCnews Featured Article

Any company trying to drive revenue through Google’s ad exchange would be hard pressed to survive if they found themselves on the wrong side of the Internet giant. That appears to be the situation AppNexus is in, according to a TechCrunch report.

Google (News - Alert) has reportedly cut off AppNexus from its ad exchange. As a result of this move, AppNexus had to direct its clients to purchase ad inventory directly from Google. This is a hard move for a startup that just finished raising $50 million in funding, including a contribution from Microsoft.

The timing is also a problem for the startup as the huge surge in shopping ensured the company lost out on significant opportunities. AppNexus is a real-time platform that offers purchasing and ad inventory from ad exchanges. The largest of AppNexus’ clients is Google.

One industry expert featured in the TechCrunch report noted that Google’s exchange could possible account for as much as 50 percent – or more – of AppNexus’ inventory. This move by Google makes a deep cut if these estimates are correct.

Google told TechCrunch that AppNexus has likely violated its policies. Of course, it wasn’t so specific in its wording, favoring to instead highlight that its wide-published policies are in place to protect users and publishers.

Technologies are in place to detect violations and any violation that places a user or publisher in violation can drive action that can include suspension from the ad exchange.

AppNexus is not much more informed on the issue and is for now directing clients directly to Google. The startup can still make money off of these transactions through fees, the problem is it can take weeks for clients to establish a relationship directly with Google.

The other problem is that Google offers its own competing platform through the acquisition of Invite Media (News - Alert) earlier this year. It is quite possible that if clients work directly with Google, they could easily switch to this platform and leave AppNexus behind.

The startup is communicating with clients, assuring them they are looking into the issue for resolution and will continue to service their accounts. This is dangerous ground to be treading in this point of the startup’s short life and if not quickly resolved, may demand a new direction. Will Google issue some sort of option before it is too late? It may all depend on what AppNexus did wrong in the first place.