Rubicon Project founder Frank Addante has stepped down as CEO.
Former AdMeld and Millennial Media chief Michael Barrett is Rubicon's new CEO, effective immediately. Addante will switch to a strategic and advisory role as chairman of Rubicon's board.
Barrett has a history of turning companies around and getting them sold. As CEO of Millennial Media, he took a company that struggled post-IPO and sold it to AOL at the end of 2015. And he has experience running a supply-side platform: Barrett led AdMeld, a former Rubicon competitor that Google bought in 2008.
"Michael and I are aligned on vision and he's a perfect cultural fit," Addante said to investors on Rubicon’s Q4 earnings call Tuesday. "I've known him for 10 years. He's a proven ad exec with a strong brand with customers."
And Rubicon needs the help. Its revenue decreased 23% in the fourth quarter to $72.7 million. Both desktop and mobile web revenues declined due to the influence of header bidding.
Addante told investors that header bidding’s impact took time to hit fully, and it will take time to move past the strategy’s disruptive impact on the business.
Thus far, 300 of Rubicon’s 1,300 publisher connections use its FastLane header bidding solution. Header bidding contributed $120 million in revenue in 2016. And ad requests grew 50% year over year, which shows that Rubicon is looking at more header bidding impressions.
Barrett joins a company that cleared out much of its C-level staff in recent months. Rubicon Project President Greg Raifman left at the end of February, along with six other unnamed execs.
“Greg ran a buy-side business, and as we were going after the buy-side opportunities with Chango, his skill sets were of particular value there,” Addante told AdExchanger after the earnings call. But the opportunity going forward lies with “re-gearing the company to focus on its core ad exchange business,” he said.
Barrett won’t have to clean the house of staff. Besides Raifman, top staff trickled out last year, including CTO Neal Richter, marketplace development SVP Jay Sears, global tech partnerships SVP Adam Chandler, international head Jay Stevens and seller cloud head Kaylie Smith.
Rubicon made just one other top hire during that period. Former Google director Tom Kershaw joined as chief product and engineering officer in October.
Barrett said that he will spend the next few months talking to customers and the team “to make sure we are delivering the best possible product and monetization capabilities going forward.”
Rubicon also laid out part of its new strategy: establishing more header bidding connections, as well as increasing market share in mobile app and video inventory.
To accommodate its new strategy, Rubicon will have to increase capital expenditures on infrastructure to scale up header bidding, and it will likely have to lower take rates.
“Making header bidding work and making it scale are two different things, “Addante said. “The latter is much more of a challenge.” He said DSPs are also struggling to handle the influx of impressions from header bidding, and that Rubicon plans to help lower that burden for them.
To meet the infrastructure challenge of header bidding, Rubicon spent $25 million just on hardware last year, and will be able to continue to invest in ways that smaller companies can’t. “To play in this market, you have to invest in infrastructure,” Addante said.
Rubicon said take rates will decline over time. Since header bidding creates a more unified auction, if a middleman like Rubicon takes a bigger cut, it stands to lose inventory that sees a lower bid reduction.
During the fourth quarter, take rates went down 1% as the company tested different pricing strategies. And Rubicon called out a shift toward its exchange API and header bidding products, which carry different fees, driving down take rates. It plans to run a more efficient business to minimize the impact of those declining take rates.
Another way to gain scale and reduce costs is through consolidation, but Addante swatted off the rumor that Rubicon would combine with another SSP.
“We don’t comment on specific strategic initiatives,” he said. “There are lots of reasons companies hire banks, including our IPO and the seven acquisitions that we’ve done.”