Thought Leadership

Welcome Chango to the Rubicon family!

March 31, 2015
By Frank Addante

Today, we announced a definitive agreement to acquire Chango, Canada’s fastest-growing technology company—as recognized by Deloitte’s Technology Fast 50 program. In today’s call, we will share with you why we believe this deal makes terrific financial sense, strategic sense and how it provides Rubicon Project with even greater scale.

In short, with the acquisition of Chango, we’re able to bring Intent Marketing budgets to premium display, mobile and video advertising. Intent Marketing represents $35 billion of advertising spend based on keyword, contextual targeting and retargeting. Intent Marketing was one of the largest contributors to the success of search advertising. And now, for the first time, we’re able to bring Intent Marketing to an independent, open marketplace that serves premium Buyers and Sellers at scale.

Rubicon Project is bringing to display, mobile and video advertising for the world’s most premium Buyers and Sellers what companies like Google and Overture brought to search and small websites in the tail of the market. Further, this acquisition accelerates our Buyer Cloud roadmap, hiring and customer acquisition plans by more than one year. And the scale that this acquisition brings will further fuel the marketplace network effects that help drive our growth.

As I shared on our Q4 earnings call last month, it is an exciting time to be in the advertising market. The advertising market is increasingly embracing automation, and which in turn is fueling rapid industry growth. And while automation is growing fast, Rubicon Project is growing even faster than the market!

Advertising is a $250 billion dollar, and growing market. In just a few short years, 10% of this $250 billion market has moved toward automation. If you flip that on its head that means there is another $225 billion to go! Our focus is on accelerating market growth for all of our customers. As the market grows, so do we.

Our impressive growth has been driven by Rubicon Project’s strategic role as the core infrastructure that powers the automation of advertising. We provide infrastructure to both Buyers and Sellers, enabling them to transact through indirect 3rd party channels such as DSPs and ad networks and also directly with each other.

Our mission from Day 1 has been to automate the buying and selling of advertising. And from Day 1, all of our technologies have served both Buyers and Sellers.

Our goal is to connect all Buyers and all Sellers and enable them to transact with each other through any channel, any buying method, any media type and in any way that they choose to transact with each other, directly or indirectly.

Early on, we automated the buying and selling of advertising through indirect channels, by providing infrastructure to connect Sellers and Ad Networks. Then, we pioneered RTB and enabled the creation of DSPs – which then connected Sellers and DSPs through real time bidding.

And more recently, we pioneered direct order automation to directly connect Sellers with their customers – ad agencies and advertisers. These efforts were accelerated last fall when we acquired iSocket and Shiny Ads.

Now, let’s talk about how Chango accelerates our vision. Chango is Canada’s fastest-growing technology company and a leader in Intent Marketing technology. Chango’s unique technology delivers automated advertising campaigns that leverage proprietary intent based data and unique live-profile technology. Chango’s real-time advertising automation technology has proven to be highly successful at enabling the world’s premium advertisers to acquire new customers and boost conversions by bringing intent-based marketing into display, mobile and video advertising.

I would like to take a moment to talk about Intent Marketing. To be specific – Intent Marketing is a combination of keyword, contextual targeting and retargeting.

For example, you might enter a search query for “best bicycles” on a search engine, and then land on an article about top rated bicycles.

Standard search technology can infer from this process that you are likely intending to buy a bike. Chango’s technology however is able to go deeper. It is able to take that data and deliver ads to you based on both the initial search result and the contextual information from the article the consumer is reading on the website they clicked through to.

Chango’s technology already processes 1 trillion page views per month and billions of search events from popular search engines such as Google, Yahoo! and Bing.

By integrating this into our infrastructure, we’re able to bring this data processing technology to market on a massive scale.

The reason this is particularly powerful on our platform is because of our large install base of Sellers and massive reach of consumers. While you might use a search engine like Google to search for something, you’re likely to land on a Rubicon Project customer’s website or application. Given that more than 50% of the Top 100 websites have now integrated our infrastructure – and that our platform connects more than 650 million consumers globally — this presents an incredible opportunity for Rubicon Project to bring this technology to market at scale. In short, the combination of Chango and Rubicon Project will enable us to bring these capabilities outside of the search market to the premium content publishers and application developers.

We believe that by integrating this intent-based technology into our infrastructure, and making it available to the massive channel of Sellers, Buyers and 650 million consumers in our marketplace, we can accelerate the overall growth of advertising automation, and further the growth of our own revenue and marketshare.

While Intent Marketing has been available in search and the tail of the market (such as small blogs), Rubicon Project is now bringing Intent Marketing technology to the premium Sellers and Buyers on our infrastructure. This is the first time Intent Marketing technology is being brought into an independent, open marketplace that serves premium Buyers and Sellers at scale.

If you were a premium advertiser, would you rather reach your consumer on a small blog, or would you rather reach them on a site like the Wall Street Journal?

From an operational and product perspective, Chango significantly accelerates our Buyer Cloud business:

  • Chango’s technology will accelerate our Buyer technology roadmap by more than 1 year.
  • With the addition of Chango’s team of approximately 150 people, it also accelerates our Buyer team hiring plan by more than a year
  • And Chango brings a large number of new advertiser and agency customers to our platform, including more than 60 of the Fortune 500 advertisers. Chango will also accelerate the adoption and growth of our Direct Order Automation technology. Direct Orders addresses the largest part of the advertising market, where the least amount of automation has occurred to date. We estimate direct orders to be a $60 billion market opportunity.

As the infrastructure that powers advertising automation we are increasingly facilitating direct transactions between Buyers and Sellers through our Orders business. Further development of our Buyer Cloud technology and team to support this massive growth opportunity in Orders is increasingly important.

Now, let me address -head on- one question that may be on your mind after today’s announcement.

We are not in any way trying to displace DSPs. As I mentioned, DSPs are important customers in our marketplace. We are very motivated to see them continue to grow and prosper. As they grow, so do we.

Through Chango’s technology we will can enable all buyers, including DSPs to execute Intent Marketing campaigns on premium content sites and applications – empowering DSPs to grow, which in turn results in further growth for Rubicon Project.

With that said, there is $225 billion of advertising that has yet to be automated. Much of the remaining market opportunity is transacted directly between the buyer and seller. Chango and our Orders product are focused on enabling those transactions directly between the Buyer and Seller. So today’s announcement is focused on accelerating the automation of the rest of the market, not taking business away from existing customers of our marketplace.

The team at Chango has done an outstanding job engineering and deploying their Intent Marketing technology. They have built a terrific product and a stellar team.

I was happy to see that they have also invested in developing a strong culture. At Rubicon Project, culture is our top priority – and the cultural fit between the Chango team and Rubicon Project’s team is strong. I’m excited to see them come together to advance our mission.

In summary, we are acquiring Chango for the following 3 reasons:

  • First, Chango will bring access to $35 billion of Intent Marketing spend to the Rubicon Project marketplace
  • Second, Chango accelerates our Buyer Cloud roadmap, hiring and customer acquisition plans by more than a year
  • And third, Chango will accelerate the adoption of Direct Order automation, the largest segment of the $225 billion advertising market that has yet to be automated

We are excited to bring Chango’s technology on to the Rubicon Project platform. We believe it will help us to accelerate the growth of advertising automation for all of the Buyers and Sellers in our marketplace.