Rubicon Project carves out profitable niche in digital ads

More than 1,500 publishers and tens of thousands of advertisers rely on Rubicon to figure out which marketing messages are best suited to the different audiences that gravitate toward certain websites and apps. The company says it processes 7 trillion requests per month using about 60,000 different algorithms.

Last year, Rubicon managed more than $1 billion in ad spending. That’s a paltry amount compared to market leaders Google and Facebook, which last year sold a combined $87 billion in advertising. But its exchange for mobile ads ranks as the third largest behind those of Google and Twitter.

The 8-year-old company recently posted its first full-year profit, helping to lift its stock back above its April 2014 initial public offering price of $15. The shares ended recently were trading between $17 and $18.

Gregory Raifman, Rubicon’s president, recently discussed the state of the digital ad market with The Associated Press. The interview has been edited for clarity and length.

Q: Rubicon Project’s revenue nearly doubled last year to $248.5 million. What is driving that?

A: We provide a comprehensive solution for buyers and sellers. Google and Facebook operate in their own walled gardens. We are the only one that operates in an open Web environment. We are now reaching well over 1 billion users. So if you are an advertiser that wants to reach an audience at scale across mobile, desktop and video, then you have to be working with Rubicon Project.

Q: How are you able to figure out which ads are most likely to appeal to specific audiences?

A: The biggest brands in the world have data about what their consumers want. Publishers have other data on why users come to their site. Our job is to match the data of the buyer with the data of the seller in a way that creates the best environment at the best price.

Q: We are seeing more ways to block digital ads from appearing on screens. How does that affect Rubicon?

A: From our perspective, ad blocking is an opportunity. Good advertising follows good content. If you are working with really good content providers, you are typically going to find better and better advertising. Consumers will typically react well to quality advertising. They will react poorly to low-end advertising.

Q: Any thoughts on where the industry is heading?

A: There are not that many that can say their industry is growing as quickly as ours. We feel like Rubicon Project is playing a central role. I often joke that this industry changes so rapidly that in three years you could build a whole new company out of your existing company.