Rubicon Project has purchased nToggle in a deal valued at $38.5m, with the adtech outfit claiming the purchase will help buyers on its platform deal with bid requests in a more efficient way post the rise of header bidding technology.
The transaction was completed today (July 14) with the acquisition forecast to generate a modest increase in Rubicon’s expenses in 2017, a tumultuous year for the adtech outfit that has seen it lay off up to 19% of its headcount, undergo legal action with former inventory partner the Guardian, as well as see a change in leadership.
The nToggle technology, integrated with the Rubicon Project platform, is expected to generate higher fill rates that drive incremental revenue for 2018, and is expected to have a positive effect on its EBITDA, with the LA-based outfit claiming that its newly acquired technology can reduce costs for media buying outfits.
Since the introduction of header bidding, which Rubicon Project’s former leadership admitted it was slow to pick up on, the number of bid requests received by demand side platforms (DSPs) has increased by as much as five times. And although access to inventory has increased, the infrastructure costs associated with that growth have put a huge burden on DSPs, resulting in many of them never seeing large swaths of that available inventory.
Rubicon claims this means that DSPs have witnessed a sharp up-tick in operational costs and that nToggle’s technology can significantly reduce their infrastructure costs by compressing inbound queries per second (QPS) by as much as 80%.
Michael Barrett, Rubicon Project, chief executive, said the newly acquired technology can help “buyers to find the ‘signal in the noise’ so they can bid more confidently, win more auctions, and spend more with our publisher and app clients.”
Adam Soroca, nToggle, chief executive, added: "Traffic shaping – or 'toggling' as we like to call it – is a real force in programmatic advertising, and a mission-critical ingredient for its important players.”
A press release announcing the deal also contained a quote from Bill Simmons, technology chief at DSP DataXu, which read: “We've worked with nToggle for the last two years, and look forward to the new scale at which this tech will be deployed through Rubicon Project’s larger engineering resources.”
Speaking recently with The Drum, Barrett hinted at potential purchases, and mentioned how he hoped to channel the industry’s shift from using client-side header bidding technology to server-to-server side header bidding from a potential head-wind to a tail-wind.
“Bid duplication and the move to server-side header bidding is crushing them [DSPs] from a cost perspective. Having access to more supply (where they could see the same person in a different environment for a cheaper price,) was previously a USP for them. But value proposition is going to diminish over time, as you’ll be able to plug into a handful and still see everyone,” he said.
“Generally speaking, I think that’s getting to parity, and that’s where we can use the legacy of Rubicon to move into a leadership role. And there are things we’re going to have to develop such as tools and services that are more appropriate for this server-to-server world. So with our balance sheet and the technology chops that we have, I think that’s where we can start to develop differentiation.”
Rubicon is poised to announce its next quarterly results on August 1.