The Rubicon Project was born as a solution to one of the largest problems publishers face today: monetizing ad space. Approximately 80% of this space goes unsold across a fast-growing number of global ad networks. The company’s mission is to automate the $65 billion global online advertising industry with the goal of making advertising an effortless source of income for publishers.
The company was founded by CEO Frank Addante, a 32-year-old serial entrepreneur. In the past few years he has started six companies, half of which resulted in acquisitions and an IPO. In 1999, he created one of the first ad servers (adMonitor) for 3,000 websites, reaching 65% of the worldwide Internet population. After a successful IPO in 2000, adMonitor/L90 was acquired by DoubleClick.
Other founders are all part of the team which built adMonitor along with Frank. Craig Roah, co-founder and COO, also co-founded Verapas Marketing in 2002 and within three years, he grew Verapas from a self-funded startup to a multi-million dollar direct marketing company which was ultimately acquired by ValueClick. Duc Chau, founder and vice president, Research & Development, also founded Flukiest.com and led the US engineering team at StrongMail Systems. Julie Mattern, founder and chief technologist at the Rubicon Project, began her career in Internet advertising over 10 years ago at Yesmail.com, where she was responsible for product development, which lead to a $524 million sale to CMGI.
The company has raised a total of $22 million so far: a $4 million Series A from Clearstone Venture Partners in October 2007 and $2 million in venture debt from Square1 Bank at the same time; and a $16 million Series B from Mayfield Fund; IDG Asia; Clearstone; Jarl Mohn, former chairman of CNet; Matt Coffin, former CEO of LowerMyBills.com; Stanford University and University of California, Berkeley in January 2008.
Since Rubicon’s inception in 2007, the online advertising market has undergone massive movement and growth. With $27 billion changing hands in 2007 and the rapid spawning of ad networks, today’s online ad market looks very different than it did a few years ago. The industry is left with an ever-expanding market fragmented by ad spend that’s spread over more than 400 advertising networks worldwide. Publishers needed a technology solution to make more money from unsold ad inventory, save time by eliminating the hassles of ad network management and protect their brands when selling through these critical channels.
Recognizing this need, the Rubicon Project has evolved to make the process simpler, faster and more profitable for web publishers. The Rubicon Project developed its Ad Network Optimization product and Smart Matching™ technology, which uses billions of pieces of proprietary market data to match each ad impression to the best money-making opportunities from ad networks, driving up revenue from previously under-valued ad inventory. The Rubicon Project offers ad network management, with a consolidated reporting user interface, billing management and “one tag, one time” integration. The company avoids conflicts of interest by not being owned by a publisher or ad network.
According to research firm IDC, the global Internet ad market is expected to reach $106 billion in 2011. The Rubicon Project’s business model is performance-based revenue share with publishers, so there is a business-driven incentive to create efficiency for customers. In beta, the company delivered revenue lift ranging from 33 to 300%. Some of its closest competitors are PubMatic and HubPages.
In just over a year since inception, the company has more than 1,300 publishers such as the Washington Post, Newsweek, American Greetings, USA Today and Babycenter, and represents more than 11,000 websites. It optimizes over 16 billion ads each month across 300 of the top ad networks. According to Quantcast, the Rubicon Project’s reach far exceeds that of MySpace, YouTube, Microsoft and eBay. In the past year, Rubicon has established direct relationships with more than 320 top ad networks including international networks in Asia, Europe, Australia and Latin America, and has experienced 250% revenue growth from Q2 to Q3 of 2008.
In an article on in November, investment bank Petsky Prunier said that VCs and investors pumped $241 million into ad networks during Q3 last year, thereby refuting the expectation that the online ad industry is suffering as much as traditional media advertising. But another article on the Alley Insider said that ad net rates dropped 11% in Q3, although this may refer to miscellaneous ad networks on entertainment and social networks. A newer report is not yet available and the situation may be quite different now, given that there is still no improvement in the state of the economy. One thing is true, that dollars continue to shift from print/tv to online ads.
The Rubicon Project has a simple growth strategy: aggressive acquisition and retention of top publishers, international expansion, and key partnerships to grow their technology platform. As CEO Addante says, “We aren’t focused on exits – we’re all about entrances these days. Entering the space, entering the front lines on behalf of publishers and entering dollars into our customers’ bottom lines”.
This segment is a part in the series : Deal Radar 2009