Increased Focus On Real-Time Bids, Asia Prompts Rubicon Reorg

Frank Addante, CEO, The Rubicon Group

The Rubicon Project is doing a mix of hiring and firing as it brings in more automated services to meet clients’ demand for real-time bidding services, the company told paidContent. The company is letting go three staffers in the U.S. as well as two others in Hong Kong, as Rubicon decides to pursue partnerships in the region, as opposed to building its business there from scratch. Financially, the two-year-old company is doing well, says Frank Addante, the company’s founder and CEO. This is the first year that Rubicon will hit $100 million in revenue and it expects it will reach profitability within the next two quarters, Addante added.

The company is preparing a new product launch in Q3, though Addante wouldn’t go into details. But while it is losing five staffers out of 154, it is also actively looking to recruit 10- to 12 new hires: 6- to 7 for product & engineering (U.S.) and 4- to 5 sales (U.S. and UK).

Aside from the dismissals, Rubicon is also experiencing another personnel change. JT Batson, EVP for Revenue and Global Development at Rubicon, will be leaving the company to run what Addante described only as a “multi-million dollar traditional media company.” Batson also had gotten married and had been working from New York, away from Rubicon’s Los Angeles headquarters. He will remain as an advisor to Rubicon following his departure.

Addante describes that company right now as “hyper-focused around three goals for our platform by Q3 and Q4″. One is to maintain its position as the top provider for yield optimization, which involves increasing the value of publishers’ online ad inventory; the second part of the plan involves being in the top five in terms of audience reach — according to Quantcast, Rubicon reaches 550 million users worldwide, behind only Google (NSDQ: GOOG). The other goal is to be the second most used platform for real-time bids for online inventory.

In order to get set for the upcoming product launch this fall, the company is restructuring its demand team. Rubicon had four people in the U.S. and one person internationally who were charged with reaching out to ad networks and exchanges. In its two years of operation, Rubicon currently has almost all the ad nets and exchanges — about 550 altogether, as well as 20 RTB services — plugged into its system.

With the outreach to these technology companies all set, the team is being replaced by technology since those systems are largely automated.

“As we completed this plan, we also completed our performance reviews, and like in any business, some people are successful and some are not,” Addante said. As for the Hong Kong personnel, those staffers were employed to essentially scout out the region for Rubicon. The company has decided that the best way to pursue its business there is to partner with another company.

When asked if Rubicon is planning any acquisitions there, Addante said no decisions have been made as to whether to force an alliance with an independent ad firm there or to purchase one. “We’re not sure yet, we’ve been having conversations with a number of companies about working together in an otherwise independent relationship” he said. “We could also work with a potential investor. It’s a complicated market. If you look at MySpace (NSDQ: NWS), Facebook, they’ve all entered that region with partners. Google tried to do it on their own and that didn’t work out so well. We just want to be smart about it.”

The changes come a few weeks after Rubicon sought to expand its offerings to publishers by acquiring malware monitor SiteScout for an undisclosed sum. A few months before, the company raised $9 million in a third round led by NBC Universal’s Peacock Fund — a large chunk of which remains in the bank, Addante noted.

Rubicon’s “yield optimization” and RTB services have always positioned it outside the familiar confines of ad networks and exchanges. Technically, it primarily acts as a “supply-side platform,” which falls on the other side of demand-side platforms. As DSPs are tools for advertisers and agencies to use ad exchanges, SSPs provide ways for publishers to protect the price of their inventory when submitting their ad space for bids.

“Our focus is on the publishers and the market has now evolved where they need to yield optimize across a variety of channels,” Addante said. “They have to optimize across their own direct sales teams, across third party sales channels like ad networks and exchanges and now they have to optimize across real-time bidding partners and DSPs. We have argued in our manifesto that the ad server is dead. The ad server was built 10 years ago, when all online advertising was sold direct. Today, 80 percent of online advertising sold through indirect sales channels. So that 80 percent needs to be yield optimized. Ad servers don’t do that. So that’s where we fit in.”

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