Story updated at 1:40 p.m.
Rubicon Project has acquired nToggle, a startup that builds infrastructure to streamline bid requests, for $38.5 million, the companies revealed Monday.
NToggle's technology uses machine learning to weed out impressions a DSP is better off not bidding on through a process known as "traffic shaping."
This capability is increasingly important as header bidding drives up the total number of impressions a DSP is exposed to, placing strain on its bidding infrastructure and raising costs.
“Integrating nToggle’s technology into Rubicon Project’s platform enables 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,” Michael Barrett, newly minted president and CEO of Rubicon Project, said in a statement.
NToggle's technology, when integrated with Rubicon's platform, is expected to generate higher fill rates to drive incremental revenue in 2018, the company said.
RUBI's move to acquire nToggle comes almost one year after former CEO and founder Frank Addante told investors the public ad tech company was "slow" to grasp the importance of header bidding to its publisher customers.
That led to a downward spiral, as revenue fell 34% in the first quarter, to $46 million.
The company, which always commanded a position atop a publisher's waterfall, saw that positional advantage deteriorate as publishers implemented header bidding or sought out partners offering contracts with lower take rates and fees.
Barrett, formerly of Google/AdMeld and Millennial Media, has been prioritizing RUBI's strengths – like its guaranteed audience product and server-to-server connections. And nToggle may represent his next strategic offense.
Rubicon bought nToggle to address its growing infrastructure challenges and to modernize its existing tech.
“When you’re sending bid requests for impressions [buyers would] never want to bid on in a million years, those infrastructure costs impact your ability to build for the future and do things like invest in mobile,” Tom Kershaw, CTO of Rubicon Project, told AdExchanger.
“By buying nToggle, we’re reducing our costs and the cost for our buyers and freeing up those resources to go work on other things.”
NToggle could make it less difficult for Rubicon’s buyers to find quality impressions and audiences as the volume of digital transactions increases.
“This business used to be about exclusive access to proprietary inventory,” he said. “As the industry moves forward, it’s become about who’s faster and better and easier at mapping buyers and sellers together.”
Rubicon also hopes the acquisition will give buyers using its exchange more leverage over their bids.
“We want to make sure whenever buyers want to access Rubicon inventory that they have all the benefits of control, self-service, intelligent filtering and machine learning,” Kershaw said. “So the idea is to make it super easy to buy on our exchange and, if that gives us an advantage, then I think that’s a good thing.”
But could nToggle’s ability to more effectively optimize fill rates against Rubicon’s own inventory compromise bids into non-Rubicon exchanges?
Rubicon hopes to maintain all existing nToggle services, Kershaw said, while remaining “committed to neutrality” in terms of traffic shaping and subsequent intelligence buyers derive from the tool.