There has been much debate about the imminent ad tech crash. Some say there is too much VC money, flooding the ecosystem. Others say there are too many point solutions struggling to scratch a living with unsustainable businesses. So how do we as an industry innovate without blowing up financially? Perhaps the most interesting development in 2012, for the point solution, has been the app strategy. Simply put, this approach means ad tech companies can reach scale and customers through a big platform.

AppNexus has been a big champion of it, but it's safe to say that other players will be focusing on this area in 2012. Why wouldn't PubMatic and Rubicon, with their publisher reach, open their APIs and let innovative businesses build on top of their solution. Why wouldn't MediaOcean, with its hooks into every part of the agency business, execute a similar strategy for its burgeoning platform play? And let's not forget the DSPs. Surely it would make sense for their sophisticated trader partners to get access to third-party apps on the DSP offering. I would add Google into the mix here, but it invariably builds its own flavour of these innovative third-party solutions and bundles them into DFA/DFP.

With VC money starting to dry up for series A and follow-on rounds, this might be a good route for small point solutions. No longer do you need to raise tens of millions of pounds/euros/dollars to scale and hire expensive sales staff in New York, London, Tokyo and Singapore -- just some key evangelists to push the product through the partner platforms. ExchangeWire is profiling a number of businesses in this growing part of ad tech. First up this week is FlxOne, a spin off from a Dutch agency, that is building new revenue models for its parent company by developing ad tech solutions for traders globally.

What are the apps? How do they work?

Since the start of FlxOne early this year, we have launched 3 apps so far: FlxPxl, FlxAds and FlxViz. FlxPxl is a pixel management solution that enables our clients to efficiently and intelligently collect first-party data. FlxAds is a dynamic creative solution, with a focus on high-quality creatives. By using our Flash plugin, designers can apply our dynamic creative technology to their own design. FlxViz is a customised data warehouse that translates raw data into information, providing intuitive insights that go far beyond traditional reporting.

Who would be a typical user?

Every player in the programmatic buying space can benefit from our apps. From publishers, to ad nets, trading desks, agencies and even direct advertisers.

What does the product solve?

Our products are developed with the specific purpose of extending the features of a DSP, in our case AppNexus. By "extending" we mean improving a platform’s core capabilities, or filling a gap that isn’t covered by a platform’s core capabilities.

What are the opportunities available around scale and distribution by leveraging a platform like AppNexus/Google/Turn/MediaMath?

From a business perspective, the apps ecosystem is a very interesting opportunity to leverage. We have been able to immediately enter markets outside of The Netherlands, with a strong focus on the UK and the US. The potential to scale is huge, looking at the AppNexus client base and global presence.

AppNexus seem to have embraced the app model. Do you think the app strategy will be adapted by other platform vendors -- like some of the DSPs or maybe the likes of MediaOcean?

We feel AppNexus have a strong competitive advantage over other DSPs and SSPs by embracing the app model. To catch up, the only choice for other platforms is to adopt an app-like model, or to acquire and integrate third-party technology to extend their core capabilities.

Will this actually make it easier to build ad tech companies? With no need to raise ridiculous sums of money to build out the infrastructure and resource to distribute the product -- when the pipes have already been built by a number of large infrastructure players?

Building an ad tech company will always remain a difficult business, as you need the technological vision and resources to develop high-quality products. From a distribution perspective, however, the apps ecosystem removes a lot of barriers. See it as a kick-start for smaller companies with really cool ideas to be successful without the need to raise ridiculous sums of money.

Often point solutions in ad tech find it very difficult to build sustainable models in the space. If a product is successful, it will be aped by a stack offering, thus reducing its competitiveness in the market. Does an App strategy give ad tech companies the focus to not only innovate, but also build a sustainable business?

Companies with a stack offering will always be able to copy good ideas. If you fear that, you shouldn’t enter this business. It’s the execution that matters. Even though the concepts of our products may sound easy, our technological architecture is highly sophisticated. We’re confident our clients can benefit from our products, even in the presence of competing products.

To what platforms are you currently connected? Is there risk involved in being reliant on one platform?

At the moment, our focus is exclusively on AppNexus. It is the only platform we’ve seen so far that truly opened up its infrastructure, allowing third parties to innovate on top of it. Sure, there is a risk involved in being reliant on one platform, but such exclusivity also provides a lot of benefits. By working so closely with the AppNexus team, we know the platform inside and out. This enables us to create highly innovative technology that adds significant value to our clients.

Can you give any results/indication of the benefit this is delivering?

In just a short period of time, FlxOne has been able to scale in terms of number of clients, markets, products, revenue and people. From a product perspective, we’re gaining success in terms of performance. FlxAds, for instance, has turned out to deliver over 30% lower CPAs for our clients, compared to established retargeting companies.

Is the app model allowing agencies, like yourselves, to diversify revenue streams?

Definitely, the role of technology is becoming increasingly important.

How does this change the skill sets required to work in agencies? Presumably you are hiring candidates from different backgrounds than those usually found in agencies?

Absolutely, we’re looking for geeks instead of marketers. We’re located close to the Eindhoven University of Technology, where we’re picking the brightest data scientists, machine learning experts and engineers.

What is the future of the app ecosystem, what's coming up over the next 12 months?

Adding quality to a platform through apps has proven to be successful for Apple, Google and Facebook, in different contexts. We’re confident the apps model is the way to go for ad tech as well. The next 12 months will be about app adoption, as the phenomenon is relatively new and companies still have to get acquainted with it.