Rubicon

Online advertising technology provider Rubicon has released their latest 2008 Online Advertising Market Report for the second quarter. Similar to the PubMatic AdPrice Index, Rubicon's report takes a look at the online advertising industry through analyzing the stats and impressions served on the Rubicon system. Rubicon notes that the report came from analyzing 15 billion impressions across their publisher network.

The key takeaways from the report are:

• Ad Networks Grew During the Economic Storm in Q2 - the report notes that (outside of Google AdSense) eCPMs were up 7% in Q2. I'd rather see a breakdown of large sites vs. small and medium. Large sites are more likely to see a jump just based on volume alone.
• Publishers & Networks: A Dysfunctional Relationship - a discussion of how the relationship works between publishers and ad networks. They discuss the issue of a quickly expanding traffic event (i.e. a Digg/Slashdot/etc.) and the inability for ad networks to meet the expanded traffic rapidly. Also this section discusses remnant inventory
• Big Publishers are Transforming the Ad Network Space - the report notes, "While smaller publishers can entice advertisers with the prospect of reaching the ideal audience for their brand, even the most precisely targeted niche publisher, on their own, is no match for the combination of scale and segmentation that larger publishers provide."
• International Traffic: A Growing Opportunity - discusses AOL's consolidation in Europe into Platform-A and Glam Media's expansion

Check out my interview with Rubicon CEO Frank Addante and all of our Rubicon coverage.

Earlier today I had the chance to sit down with Rubicon Project co-founder and CEO Frank Addante. Frank is here with his team during Internet Week and will be part of the Mashable Expo on Friday evening. Frank is a serial entrepreneur, having started 5 companies. Two of the companies were acquired and one went the IPO route. Rubicon is very well funded, probably because of Frank's past successes.

I am very into the online advertising and analytics space so I was very much looking forward to the conversation with Frank. The conversation didn't disappoint. Sadly the online advertising market as a whole is still stuck in the late 90's. I rarely see any innovation - and please don't tell me that Facebook ads show innovation.

Frank explained that Rubicon is focused on "advertising technology innovation." The idea is simple -- for publishers, the system offers you a way to make more money with less effort. Instead of managing multiple ad networks and trying to decide which order to route them in, when to show what, and having to deal with all of the paperwork, Rubicon takes care of all of that. The system can give you back many hours of frustration a week to instead use to grow your business. During their beta period they signed up 625 publishers and now have passed 1,000 publishers. He didn't share actual active publisher numbers. Some of their largest clients include Slide, JibJab and eHarmony.

The Rubicon system is processing 250 million ads/day with 150 million unique users/month passing through their engine.

We discussed their "default killer" technology which is similar to PubMatic's default optimization service. Frank says they have submitted patents on this techology. The idea is that the system knows when a "default" ad is displayed and can re-route accordingly. If it works, the idea is great as it would remove the need for "chaining" of ad networks.

Rubicon charges publishers 10% of any income generated from the ad networks served through Rubicon. In speaking with a few people today who have used the system, overall the feeling was that the system hasn't increased their revenue enough to make them want to continue. And Clicky CEO Sean Hammons reported that the system was just a fairy tale back in February.

The truth is that if they are able to sign the largest publishers/applications to use their service, then frankly it won't matter if small publishers see no value in using Rubicon. Frank wants his service to be beneficial for publishers of all sizes and he noted that Rubicon focuses on the publisher first. This is something we normally don't see - most focus on the advertiser's needs and could care less about the publisher.

Other companies in this space include PubMatic and YieldBuild.

The Rubicon Project team is located in Los Angeles and made up of about 50 people, up from 10 when they launched the beta in October 2007. We may test the Rubicon Project this summer and will report back on our findings. If you plan to test any of these new publisher ad maximization services, I'd suggest giving it at least three months before drawing any conclusions. So many factors affect ad revenue and using at least a quarter's worth of data will provide some level of comfort in whether the selected system will work over the long-term. And to be honest, I'd test all of the services before selecting one and then pick the best one for your particular site or app.

I am glad we are seeing some innovation in the ad management area, now we need to innovate in the actual ad area. I still believe widget advertising will be huge once brands realize that for them, it doesn't matter where consumers interact with their brands, as long as they do.

The Rubicon Project has launched a new program named "certified ad space". Launched with 725 Web sites, the company notes that the program was created to satisfy ad network and advertiser needs for broader exposure and access to safe, high-quality website inventory, while ensuring that campaigns reach the intended audience and content.

Just like when you get an oil change for your automobile, the certified ad space program features a 21-point certification checklist. The certified ad space program also includes human screening of all participating Web sites or blogs.

The program has three main functions:

• Certified content and audience: assures brand safety
• Certified placement and targeting: delivers certainty that ads reach their intended audience
• Certified tracking and reporting: promises ad networks and their advertisers get what they pay for

The net of this program is that Rubicon is going to screen your Web site and then can create applications to a variety of networks and assure the networks that Rubicon has already screened the site. Check out one Rubicon member who claims the income increases are only a fairy tale.

We've written about the online advertising maximizing service Rubicon Project several times before including their new funding round last week. We applied for the service after receiving a beta key and were basically declined - what they noted is that "we would be a perfect candidate once the public launch happens".

While checking my Clicky analytics account today, founder Sean Hammons has a post about his experiences with Rubicon Project to-date. He obviously got into the beta. Here are some snippits from his post:

That optimization is a fairy tale unfortunately, and doesn't do jack diddly. Plus we've had two major problems with the service, including them not paying us for our first month even though we had earned WAY above the minimum threshold, and both times their customer service sucked big time. And the ads are extremely irritating anyways, and that's not at all what we want.

This company has a raised $18 million in funding which is just unbelievable. There's no way they're using any more bandwidth or resources than Clicky is (they're still in private beta), and we started on essentially zero dollars from our own pockets and have taken zero funding and have zero debt.

Clearly the issue with any of these maximizers is garbage in-garbage out. Have you used Rubicon Project or one of the other ad maximization services (e.g. YieldBuild/PubMatic)? If so, leave your thoughts in the comments.

Coming off their selection as a 2008 AlwaysOn OnMedia 100 winner, The Rubicon Project has picked up another $15 million in Series B venture capital funding led by Mayfield Fund with participation from IDG Ventures Asia; Stanford University; University of California Berkeley; Matt Coffin, founder and former CEO of LowerMyBills.com and Clearstone Venture Partners, the company's Series A investor.

A month ago the company claimed serving one billion ad impressions in the first six weeks of activity. The idea behind The Rubicon Project is easy -- it will take the ad networks you work with and show the best paying ad for you as the publisher.

Erick Schonfeld, notes "The fact that they think there is a business here speaks to the inefficiencies of the online advertising market." I agree with Erick that there are huge inefficiencies in the ad network though The Rubicon Project is trying to actually solve a different problem.

The Rubicon Project is fixing the issue of "chaining" -- that is where when an ad network can't serve an ad, you chain to the next ad network in your rotation. Some publishers I know have chains that go 5-8 deep. Instead of chaining, The Rubicon Project tries to show the best paying ad first - which is better than using a chain because the chain has no idea which ad pays the best in a particular situation. The best paying ad could be last in the chain and you would never actually see it if a higher ad network fills the ad.

Other companies in this space include YieldBuild and PubMatic.

The Rubicon Project is announcing this morning that they have hit one billion ad impressions since their beta launch six weeks ago. The Rubicon Project allows publishers to maximize the revenue earned on their ad slots by showing the ad with the highest paying campaign at any particular point in time. This is a hot market today with other players such as YieldBuild and PubMatic.

One difference between Yieldbuild/Pubmatic and Rubicon is that Rubicon doesn't require you to bring your own ad networks. This could be a big plus for smaller sites who can't manage to get an ad network to approve them.

Rubicon is also serving ads on Zoominfo.com, AOL/Userplane and Beliefnet.net -- this is where the billion served come from - not on small blogs. All of these services help you get the most out of your ad placements and I think it's great. The ad networks themselves have had zero innovation in ten years.

Editor's note: PubMatic is a CN sponsor