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The Rubicon Project releases positive Q4 report for web publishers and ad networks
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Clearly the United States is in an economic recession. With stock prices continuing to decline and unemployment rates reaching an all-time high everyone is feeling a financial pinch. Well, maybe not everyone. the Rubicon Project, a Los Angeles, CA based advertising technology company focused on global ad network optimization, released some very positive market data and industry trends in its fourth quarter 2008 Online Advertising Market Report. the Rubicon Project's positive report comes in contrast to comScore’s more negative 2008 Digital Year in Review where they outlined a decline in United States based online display ad inventory when compared to the previous year.
Obviously there is truth to comScore's report with companies such as Yahoo! and The New York Times announcing decreases in both overall display ad inventory and associated revenue. Depending on which details you focus on you may be of the opinion that the online advertising industry is going through a rough patch or you may be more optimistic, believing that opportunities are enormous if you are innovative and ahead of the curve. In all reality, like most things in business and life in general the truth of the situation is somewhere in the middle and is closer to one side or the other based on your own personal situation.
The online advertising industry is an 800 pound multi-faceted and extremely dynamic gorilla and the Rubicon Project's report did an excellent job sharing useful and insightful information. Being that the Rubicon Project's entire publisher base (specifically in the media and entertainment categories) experienced a 30% revenue growth in Q4 2008 its no wonder they have reason to feel positive. This is an impressive accomplishment and competitors, web publishers and advertisers should take notice as to what the Rubicon Project has to offer and say as a company. Some key findings and information from their report are shared below:
A changing industry
- Despite the overall job slowdown in the advertising industry, the online sector was the one bright spot. At Internet media companies and web-search portals, December employment reached its highest level since 2002
- $134 million was invested in ad network-related deals in Q4, up nearly 18 percent from the previous quarter
- Broader economic turmoil didn’t drag down ad rates for publishers in the Rubicon Project’s marketplace: CPMs remained flat Q4 vs. Q3, and revenue climbed 30% across the board
Internet dominates
- For the first time ever, the Internet overtook traditional channels for holiday shopping and as a news source as hungry readers turned to the Web for political info one of the most notable elections in American history – to the benefit of news sites who were able to turn traffic influxes into real revenue (example within report).
- Traffic to all sites in the Rubicon Project’s News & Reference channel jumped 50- 75% percent on and after Election day
News & Reference
- Average CPMs in the News & Reference vertical up nearly 17 percent from Q3
- Publishers equipped to deal with the traffic saw better performance, as evidenced by one premium news publisher working with the Rubicon Project able to capitalize on a sudden influx of traffic. The site optimized a 587 percent spike in ad impressions without any drop in fill rate or CPMs (graph 1)
The emerging metric to gauge growth: CPM + Total Revenue
- Traffic to the Rubicon Project’s Entertainment channel grew by 75% during the quarter
- While average CPMs trended downward in Entertainment due to a flood of inventory, publishers didn’t suffer -- overall revenue shot upward. These sites generated 1.9 times the revenue they did vs. Q3, for 70% revenue growth -- and that’s considering they had 2.4x, or 78% more, available inventory (graph 2.)
Thoughts for the Future
- Valuable ad networks will continue to flourish; Arbitragers will fail
- Ad quality will Continue to be the industry’s greatest risk
- Publishers need to “get smart” about channel management.
To access the Rubicon Project's full Q4 Online Advertising Market Report, as well as past published reports for free, visit: http://www.rubiconproject.com/product/market-report.
About the Rubicon Project
About the Rubicon Project Based in Los Angeles, the Rubicon Project launched in 2007 on a mission to automate the $65 billion global online advertising industry. Responding to one of the largest problems plaguing website publishers today – monetizing ad space that goes unsold (as much as 70 - 80 percent) across a fast-growing number of global ad networks – the Rubicon Project pioneered the category of Ad Network Optimization (ANO). Backed by $22 million in funding from Clearstone Venture Partners, Mayfield Fund, and IDG Ventures, the Rubicon Project developed its patent-pending Smart Matching™ technology, which uses billions of pieces of proprietary market data to match each publisher ad impression to the best money-making opportunities from ad networks.
The company serves 1350 premium customers (publishers like Gannett, Salon, Washington Post/Newsweek Interactive and American Greetings) by optimizing more than 25 billion ads each month across more than 380 top ad networks. Reaching more than 320 million unique Internet users, the Rubicon Project is one of the largest sources of ad inventory and reach on the Internet and the preferred source of targeted, audience-segmented inventory for ad networks around the world. The unique combination of ad network optimization and Smart Matching™ technology drives revenue lift ranging from 30-300% for the Rubicon Project’s customers.
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