Ad tech players Rubicon Project and Telaria to merge in bid to seize on connected TV ad growth

Publicly traded ad tech players Rubicon Project and Telaria announced plans to merge on Thursday in a bid to gain a stronger foothold in connected TV, while taking on Google and Facebook. The merger, which marks a significant consolidation in the ad tech space, will form what the companies described as the world’s largest independent sell-side advertising platform.

Los Angeles-based Rubicon provides technology allowing for automated ad-buying and selling that it says reaches 1 billion consumers globally. New York-based Telaria offers software aimed at optimizing ad yield for publishers across desktop, mobile and connected TV. Clients include Hulu, SlingTV, PlutoTV and TubiTV. 

In a statement, the companies said the merger would “enable thousands of publishers to connect with hundreds of buyers and brands, creating a global, independent alternative to closed players in the ecosystem”—a reference to the so-called walled gardens of Facebook and Google.

Michael Barrett, President and CEO of Rubicon Project, will become CEO of the combined company while Telaria CEO Mark Zagorski will assume the role of president and chief operating officer. The merged company will have more than 600 employees and offices in 11 countries.

“Our businesses are highly complementary, and when combined, are a powerful, strategic alternative to the walled gardens, which have been frustrating both buyers and sellers due to their lack of transparency, innovation bottlenecks, and conflicted business models,” Zagorski stated in the press release.

The merger is positioned to seize on the growing connected TV industry, with the firms predicting that “CTV [connected TV]  advertising is poised to be almost entirely programmatically transacted in the near future.”

Stated Barrett: “This transformative combination builds on our commitment to trust and transparency and accelerates our strategy to provide buyers and sellers with a single path to every format and channel including CTV.”

Finding sell-side economies-of-scale

Advertising on connected TV remains a small share of traditional TV ad spending, but it is growing. Forrester projects that connected TV ad spending in 2019 will reach $5.6 billion in 2019 with a growth rate of 46 percent. “Advertiser energy is high around connected TV, which makes sense,” says Joanna O’Connell, a principal analyst at Forrester.

She notes that buy-side players such as the Trade Desk have poured more energy into connected TV “because they know there is growth there.” The Rubicon-Telaria deal brings economies-of-scale to the sell-side. “Taking two otherwise separate independents and putting them together to create a larger, more complete offering is not at all surprising. It makes sense to me,” O’Connell says.

Shawn Riegsecker, CEO of Centro, which runs a digital ad-buying platform, says Rubicon and Telaria offer complementary capabilities.  “Rubicon generally has strong supply chops across the board in digital channels, but it isn’t as specialized in video and CTV as Telaria. Among Telaria’s unique relationships in CTV is with Hulu and Disney,” he said in an emailed statement.

He says that there are “too many [ad] exchanges” so “some consolidation is good, especially if it results in strong alternatives to Google.” But he adds that the deal is “not a slam dunk” because “combining exchanges is an enormous task. I expect them both to continue operating as separate platforms well after the merger closes.”

~ ~ ~
CORRECTION: A previous version of this story incorrectly reported the figure for projected connected TV ad spend.