Frank Addante is CEO of Rubicon Project, an online advertising technology company specializing in sell-side, yield optimization.
As part of its "State of..." series of articles with industry executives, AdExchanger.com sat down with Addante to discuss his company, his views on the space, and the state of Rubicon Project today.
Click below or scroll down for more:
- Google And Rubicon Project
- Company Vision
- Fox Audience Network (FAN) Integration
- The Benefits of FAN
- Classifying Rubicon Project Today
- The Future
FA: OK, I was going to say that I think they have a great search engine, but that's probably not what you're looking for.
We've been saying this from the beginning that we think that Google is going to be a pretty major player in the market, obviously. But we never felt like Google would have all the market.
So from that standpoint, I don't think anything's changed. Google has executed as expected, if you will. And the way we look at the market is that there's Google, and there's everybody else. Even that’s changing a bit, where I think there's going to be Google, and there might be a consortium of the Microsoft, Yahoo!, AOLs of the world. And then… you've got the rest of the top 500 publishers.
So as we look at this [ecosystem], there's potentially three giants in this space: one is Google, two is that potential consortium, and three is the collection of the other top 500 publishers.
Our vision has always been to provide the platform to tie together those other top 500 publishers and make their inventory more accessible and efficient to buy, by creating the same economies of scale that Google has by supplying them with similar technology. We always thought that was a pretty big market opportunity and something that was necessary for those other top 500. So from that standpoint, nothing's changed. Google is just doing what we thought they were going to do.
Google has the vision of putting together an end-to-end marketing stack, if you will. Do you think of it that way for Rubicon Project’s solution?
I don't know what Google's exact vision is, but from day one we've said that our mission was to automate the buying and selling of online advertising. And that includes both sides, the selling and the buying. We started with the selling because we thought that's where the biggest need was and the biggest pull was. And the way we look at the market is that our customer is the publisher, but our customer's customer is the advertiser, and they have multiple ways to reach that advertiser. They have their own direct sales team, they have ad networks, they have DSPs, they have ad exchanges, they have other potential channels like self‑serve technologies. Our job is to help the publisher service their advertisers, and provide them with the technology to make it efficient and effective.
So in that sense, we've always been creating a full end‑to‑end stack, but through the need of the publisher.
We, of course, have grander visions and plan extend to mobile and video, etc. But right now I think there's such a big opportunity just in display and we're very much focused there. The moves that we've made have not been small moves. We acquired three companies, raised a bunch of money. Every time we get the company to a good place, we get it to profitability, then we go acquire a big company like FAN and go through a big, massive integration. We do that because we're trying to further that stack and accelerate the development of that stack.
The general concept of the vision has been exactly the same. I think what's changed in the market has helped that vision and accelerated it. And again, vision was always to automate the buying and selling. Real-time bidding (RTB) comes to the market and that’s accelerating the whole thing. But, it’s just one of the methods. We don't think it's the only method for automation. So, I think in that sense, the need for automation has increased. I couldn't have said when we started the company that, hey, we're going to go do RTB, because RTB didn't exist.
But we talked about things like APIs and building connection points to be the buy‑side technologies. And I think RTB just put a standard around that.
Let's talk about Rubicon Project’s "Let's Fix It" campaign. What have you learned there about solutions?
First, what we really wanted to do is just start with the conversation. Because the real big battle that we all need to be fighting now is how we get more of the [ad spend] from offline to online? How do we get that money to follow the eyeballs?
Now, there are a lot of things that could be made better, but there are a lot of things that are going well. A lot of money has moved - billions of dollars, which is great. But I think the “fixing” part to me is that as an industry we're too myopically focused on everyone fighting with each other.
It's not about ripping inventory away from one solution to another. It shouldn't be about stealing this one advertiser if you're an ad network from a DSP or visa versa.
I think we should all be banded together to say, how do we connect each of our solutions? How do we focus on what the advertisers want to buy, and how do we just make those easier? Just serve it up on a silver platter.
What Google is doing for the industry is helpful. If they can participate in creating more solutions and more efficiency for advertisers, and pitch these advertisers, the more the money comes online - that's good for everybody. And, that’s because not every dollar's going to go to Google. Similarly, Facebook has been good for all social networking sites since it’s helping advertisers become more comfortable in spending money on social -and not all social dollars are going to go to Facebook.
So, all innovation is good. Let's not expend too much energy trying to destroy that.
I think I said it would take about a year - and I think our original plan was 15 to 18 months, so we're ahead of that plan, which is good. The first six to eight months were interesting times. At the beginning, I basically told the team, "Look. Be prepared because we're going to go do some remodeling. And, it's going to be like living in the house while we're doing the remodeling." But we did it because we were investing.
Now, going through it, doesn't feel great. And it does become a bit of a distraction. But then you start having “wins” along the way. And, the team was a big piece of it. We doubled the size of the company overnight. Every one of our managers had to double in their skill sets, their capability, their capacity. And, our management team stepped up, which is great.
Another part of the integration was merging two plans. FAN had a plan. We had a plan. Even though they were an ad network, what was interesting to us about FAN was that they were really a service provider for News Corp properties such as Myspace. And so, how do we make that inventory more valuable? Similarly, if you look at the roots of our first product launch, it was how do we take the remnant “stuff” and make it valuable?
FAN developed a lot of technologies to make MySpace inventory valuable such as targeting technologies like MyAds. They were one of the inventors of RTB. They built up big, massive data centers because they had to have scale to deal with the MySpace inventory.
So we had to merge those two plans. They had technology plans. We had technology plans. We have merged those things and I'd say we're probably about 90% of the way through it right now. That remaining 10% is really about what bets do we need to go place on the market? So, the plan piece feels pretty good.
The third part of the integration is certainly the technologies. We had a plan to go integrate our data centers, but what we didn't plan on was the rate that our business continued to grow. We, of course, planned to grow, but we didn't think that we would grow at the same leaps that we were growing before.
Well, in fact, we grew more and quadrupled revenue from last year to this year, which we feel good about. We took some bumps along the way and stuff, but we did it. That wasn't in the plan.
So today we're doing about four billion, 4.3 billion ad impressions a day. And then on top of that, we’re taking all the data to be analyzed – whether the data is for bid pricing, feeding the algorithms, doing audience analytics, etc. The technology integration finished as of three weeks ago.
Number one is team. For us to go hire 85 to 100 people in product and technology could take years, especially in this market. Team certainly is number one.
Two was infrastructure. This is the team that has built one of the biggest infrastructures to support MySpace at the time. That was a big piece of it.
Three was discipline for us. FAN brought very mature thinking to us, which we certainly needed if we're going to double the size of the company.
Fourth, it’s the great collection of technologies. MyAds, the self-serve piece of it - there's enormous potential there.
If you look at RTB, today RTB is certainly a big piece of the automation. MyAds is loosely integrated today while we’re working on the full integration. MyAds straddles our second or third largest source of demand along with RTB.
I think the big driver for what made Google successful is AdWords. It just made it easier for people to buy. [Self-service] is a big driver for what made Facebook successful. We think providing that capability for the top 500 publishers will hopefully move a lot of money that way.
Will MyAds access Rubicon's inventory?
By the way, the legacy FAN business is gone. Part of the integration is we had to shut that down. We don't do any of the News Corp stuff.
FAN operated an ad network. They would buy and sell inventory. We never buy inventory. That business is all gone. It's sometimes easier to create a business than it is to shut a business down. Especially when these are the same customers that you're trying to sell things to.
So, does Rubicon Project have a self-serve strategy for the demand side strategy that may be born of MyAds?
When you look at the automating of buying and selling, RTB is certainly a big piece of that. There's two things that we need to provide. One is APIs and the other is User interfaces. RTB is, to me, an API. It's a real-time API. There's also a static bid API, which we launched with Donovan as one of the pilots.
We'll have two user interfaces. At some point, those might become one, but it's really two end user groups, so we have REVV for Demand, which is a self serve interface that's been primarily for the ad networks, the trading desks, the ad exchanges to come in and use.
Then we look at MyAds as being a user interface that's tailored for direct marketers. A lot of SMBs are spending on search, of course. But, just to clarify, MyAds will have full access to inventory running through our platform. It will be another demand source that has access to inventory, so no different than the ad networks, the DSPs that run through our system. And it's a [demand source] that's controlled by a publisher. Just like not every publisher chooses to use RTB, not every publisher may choose to make all of their inventory available through self‑serve.
But from our conversations with the publishers, we think that they pretty much all will just like they do with RTB.
We've gone from a single product company to a multi‑product company. So you can label our products and say that we have ad network optimization products, we have RTB products, we have self‑serve products - so the collection of those things. We will define those as part of our go-to-market that we're working on right now, but it's along the lines of a more complete, holistic platform.
We do think that everything is going to be about machines, whether that's programmatic buying and selling, or machine trading. We think that's the purpose that we need to serve in the market. We need to define that rather than just RTB. It's greater than just a sell- side platform moniker.
Ad verification is very popular on the demand-side. Can you guys see a way of bridging to the ad verification world on the buy side? Is there an opportunity there?
With publisher permission, no one is in a better position to provide transparency betweeb the buy side and the sell side than Rubicon. We do not believe Google is going to allow any of that transparency to actually happen. Transparency is part of trust.
This is a lot of what was broken. If you look at the relationship between publishers and other parts of the industry, they hated each other. They were working against each other and everyone was talking about ad networks are going to die and go away.
Certainly those businesses have changed, but they've grown. Thank God for them, because that's where most of the innovation is coming. It was ad networks that created audience targeting tools. It was ad networks that created campaign authorization technology.
Now, DSPs and ad networks are adopting real‑time bidding. And some of these technologies have been popping in on top of it.
Can you talk a bit out how you’ve overcome the turnover that a lot of more mature startups experience?
It's part of the natural growth of the company. We went from four people to 250 people in four years and some people are just pure startup people. They want to work in small teams. They want to be the stars. As a company grows, you can't build a company just around heroes, it needs to be a part of a system of skills. Including myself. No one person can either influence the company in a very positive way or hurt the company in a very negative way. It's just part of building the right company and system structure, and some people just don't fit into that, so you have natural turnover that comes from that.
I believe you need to have a good balance - a 50/50 balance between entrepreneurs and really great operators.
The overall turnover for us is we've hired more people than we've turned over. I actually expected that we would have had more turnover from the acquisition than we did.
High level - I do think that there's going to be three giants; Google, some consortium of something (Yahoo!, Microsoft, Aol, for instance), and the top 500 publishers. I'd like to see us be the platform that powers that top 500 publishers piece of it.
The milestones that we need to go through to get there is we need to move RTB from beta to full production, that's a big piece of it. It's doing really well in beta and we're really close to launching it in full production. So, that's one.
Two, is really developing a world-class infrastructure, because I think that is where we're finding that the machine needs are getting more complex. RTB was a great example of it. We can't just be a software company anymore, we also have to be a world class infrastructure company.
Three, is we need to connect all the technologies and take them to market. So, MyAds, REVV on Demand, our Donovan Data System relationship, the static bidding type API - get all those things together, and that's a big milestone for us as well.
Then the fourth piece is to build the team around the marketplace side of this business, and help publishers work better with their advertisers, agencies, and channels. We need to put the controls in place.
Those are probably the four big, more immediate, milestones. But it's hard for me to predict what a year and a half from now looks like.
Do you envision an IPO down the road?
Yes, we've been aiming down the IPO path. I've built five companies before and I've never built a single one of them saying, "Hey, we want to be acquired." If you want to be an important feature, great businesses are built that way, absolutely.
If you want to be an important feature, you build your business for that, that's not me. We wouldn't be building up a platform, we wouldn't be doing three acquisitions. We wouldn't be doing all these things.
We do look at [the company] and say, "Well, at some point, how do we really accelerate this company?" I think the IPO path is certainly one of those things.
In the interim, do you think you'll need some funding or are you good-to-go?
Yes, we are [good-to-go]. We're back to profitability. We're six months ahead of where we expected to be. The amount of cash that it took us to integrate FAN was far less than we expected. It was only four million over the course of the year to take in 100 people and all of these technologies. We already had a war chest of cash. Starting in Q4 the business has just printed money while we sleep -which is nice.
By John Ebbert