Monday Note

Last week, Akamai quietly rerouted loads of its client’s traffic to deflect Wikileaks related attacks. The company, based in Cambridge (Massachusetts), had a surfeit of busy days fighting massive DDoS (Distributed Denial of Service) attacks. These raids were directed at companies seen as too complacent with the US government (the so-called “Wikichickens”, as coined by the financial site Breaking Views). Akamai’s countermeasures involved quickly moving data from one server to another or, when the origin of a DDoS was detected, rerouting the flood of aggressive requests to decoy URLs.

Akamai Technologies Inc. is specialized in providing distributed computing platforms called CDN (Content Distribution Networks). Its business is mainly to reduce internet latency and to offload its customers’ servers. As its president David Kenny told me last week, Akamai runs on three main business drivers: Cloud Computing, e-commerce, and video delivery (with the associated advertising).
The first driver is very straightforward: as applications move away from the desktop, users need to feel they get about the same response time from the cloud as they do from their hard drive. The same is true for infrastructure-as-a service. All is built around the idea of elasticity: servers, storage capacity and networks dynamically adjusting to demand.
The second component of Akamai’s business stems from the need for e-commerce sites’ availability. On Thanksgiving, Akamai said it saved about $50m in sales for its e-commerce clients who came under a series of cyber attacks. On a routine basis, the technology company stores thousands of videos and other bandwidth intensive items on its servers.
The third pillar is the biggest, and the more challenging, not just for Akamai but for the commercial internet as a whole: the growth of video, and of its monetization, will become more bandwidth hungry as advertising migrates from contextual to behavioral.

A couple of weeks ago, David Kenny was in Paris at a gathering hosted by Weborama, the European specialist of behavioral targeting (described on a previous Monday Note How the Web talks to us). He presented stunning projections for the growth of internet video.
Here are the key numbers :
- Global IP traffic will quadruple between 2009 to 2014 as the number of internet users will grow from 1.7 billion today to 4 billion in 2020.
-  In 2014, the Internet will be four times larger than it was in 2009. By year-end 2014, the equivalent of 12 billion DVDs will cross the Internet each month.
- It would take over two years to watch the amount of video that will cross global IP networks every second in 2014.

Traffic evolution goes like this :

Let’s pause for a moment and look at the technical side. Akamai relies on a distributed infrastructure as opposed to a centralized one. It operates 77,000 servers, which is comparatively small to Google’s infrastructure (between 1m and 1.5m servers on 30 data centers). The difference is that Akamai’s strategy is to get as close as possible to the user thanks to agreements with local Internet Service Providers. There are 12,000 ISPs in the world, and Akamai says it has deals with the top 1,000. This results in multiple storage and caching capabilities in more the 700 biggest cities in the world.

This works for a page of the New York Times or for a popular iPhone application (Apple, like Facebook are big Akamai clients). In Paris, Cairo or Manilla, the first customer who requests an item gets it from the company — whether it is from NY Times or Apple’s servers — and also causes the page or the app to be “cached” by the ISP. This ISP could rely on storage leased from a university or a third party hosting facility. From there, the next user gets its content in a blink without triggering a much slower transcontinental request. That’s how distributed infrastructure works. Of course, companies such as Akamai have developed powerful algorithms to determine which pages, services, applications or video streams are the most likely to be much in demand at a given moment, and to adjust storage and network capacities accordingly.

Now, let’s look at the money side. What does advertising have to do with bandwidth issues? The answer is: behavioral vs. contextualization. Ads will shift from a delivery based on context (I’m watching a home improvement video, I’m getting Ikea ads), to targeted ads (regardless of what I’m watching, I’ve been spotted as a potential motorcycle buyer and I’m getting Harley Davidson ads). Such ads could be in the usual pre-roll format (15 sec before the start of the video) or inserted into the video or the stream, like in this example provided by Akamai.

As online advertising spending doubles over the next ten years, video is likely to capture a large chunk of it. It will require a increasing amount of technology, both to refine the behavioral / targeting component, and to deliver it in real-time to each individually targeted customer. This is quite a challenge for news media company. On one hand, they are well-placed to produce high value contents, on the other, they will have to learn how to pick up the right partner to address the new monetization complexities.

—frederic.filloux@mondaynote.com

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