How the Rubicon Project plans to become the supermarket of programmatic advertising
Being sued by The Guardian along with concerns about adtech’s transparency and brand safety helped focus the Rubicon Project becoming ‘the supermarket for programmatic advertising’, says CEO Michael Barrett.
“It’s never a high water mark to be sued by client. no-one says that’s a goal in life. So there’s no question that it was unwelcome,” Barrett said of the lawsuit when interviewed by Mumbrella yesterday.
Michael Barrett, CEO of The Rubicon Project
The Guardian’s lawsuit alleging the Rubicon Project didn’t disclose the service’s commissions when buying the newspaper’s inventory is still winding its way through the London courts but Barrett believes the legal saga has focused the business on the need for transparency in the adtech industry.
“We still firmly believe the business practices were warranted by the contract we had but, that said, it really was a kick in the rear for the company as obviously there is some ambiguity here,” You wouldn’t be going through this process,” he said.
Ten year old NYSE listed Rubicon Project has a natural advantage over other programmatic exchanges, believes Barrett: “Since our inception we’ve run a really well lit, curated premium marketplace.
“We are certainly not bulletproof, but the likelihood of ads being juxtaposed against hate content, pornography, extremist (material) is very low and we apply the same scrutiny for our publishers as our buyers. There are buyers who are very long tail that we could bring onto the platform but we’re not really sure of the ad quality they would be bringing in – you have malware, you have all sort of things.
“It’s always been a point of pride and differentiation for Rubicon and we’ve been the net beneficiary of it but, that said, it’s not good for the industry when someone like Google with all the resources they have and all the good intentions they have – they are not evil people – but the programmatic world things are flying around a trillion times a second that type of stuff happens and it puts a dampener on the whole industry.
Missing the industry’s shift to header bidding did hurt Rubicon, Barrett concedes, but he still takes an optimistic view on the company’s position in the adtech marketplace.
“I think generally speaking people root for the Rubicon Project, across our ten year history we’ve been seen as the white hat guys who really care about ad quality and really care about doing it right which doesn’t mean we’re always first to market in some respects but we take a much more mature view in some respects.
“Header bidding is a real game changer for publishers trying to monetise their inventory. Rubicon, for a handful of reasons didn’t think it was that important and that was an incorrect assessment and so what you hear from customers ‘we told you guys and you made us go find other partners and now it’s great you’ve joined the party but it’s not your party any more.’
“Essentially it used to be that when an impression was fired off and the first person was the sales team then it was Google and then we’d have a crack at it. Now publishers have said ‘forget that waterfall, everyone gets a shot at that first impression and everyone is in competition.’
“On one hand that’s a huge positive for Rubicon because we never got to see a lot of the inventory, on the other hand it’s a challenge because you’re in parity with a lot of folks who used to be below us on the waterfall. It presents a cool opportunity for us to figure out.
“Transparency is about the only way,” Barrett continued. “If you want to run a arbitrage game and you told everyone that’s what you’re doing – I’m taking inventory risk, I’m doing this and that and I’m pooling data and I’m adding value and it’s worth thirty percent cut – then that’s great.
“I think what happened was the clients weren’t aware of what the business model was and so now I think what we’re seeing now is complete disclosure and a retrenchment from the arbitrage model. We now have a SaaS model, “here’s our services, here’s the fee. It’s not variable, it’s more in line with what we’ve charged you for media in the past” and it’s net negative for agencies in general.
“We’ve decided to play a very big role in being transparent, exposing all costs with the platform and driving costs down which we’ve done over the past several quarters and highlighting mundane things like auction mechanics which is taxonomy in itself.
“The goal has become in this world where we have more volume than you’ve ever seen in terms of inventory coming through the system, your model has to evolve too with high volume and low margin. A lot of adtech companies have been operating on a modest volume, high margin business.”
“We’re no different to any other adtech company but lets take a leadership role and make sure that as we exit this year there is zero question about what our revenue model is, we can defend it, we feel justified in doing so and so if there’s been any benefit from The Guardian’s legal action is a really emboldened charge internally to make sure we’re completely transparent because it’s where the market is heading and we can get there ahead of the market.”
Barrett sees the out of home industry and audio platforms such as Spotify, Pandora and Soundcloud as being the next frontiers for the adtech sector: “now we’re seeing step changes in the value of inventory.”
“Some of our clients are on eleven different platforms and it’s almost impossible for them to monetise it so we’re building systems for them to monetise and we’ve talking billions of dollars of opportunities. As desktop dies these new media formats come on board and it’s a very exciting time for publishers.”
“If it can be bought and sold programmatically you’re going to find it on the Rubicon platform,” Barrett concluded, “we will be the supermarket of programatic inventory”
