Rubicon Project is shutting down the division associated with its $122 million Chango acquisition

Ad tech company Rubicon Project is closing down the division it created following its $122 million acquisition of Toronto-based "intent marketing" company Chango after its performance did not meet expectations.

In an SEC filing on Wednesday, Rubicon Project said it was was shutting its intent marketing business and had instead entered into a partnership with digital marketing platform IgnitionOne.

(Rubicon Project also provided Business Insider a statement, which you can read in full below.)

IgnitionOne will take on any Rubicon Project intent marketing sales staff that want to make the switch. It will also accrue Rubicon Project's intent marketing clients. Rubicon Project is likely to retain some revenue share as part of the deal, although the percentage was not disclosed in the SEC filing or the company's official statement.

The changes have also led to Rubicon Project opting to close its Toronto office, according to the SEC filing. A small number of staff will leave the company as a result.

Chango was once seen as an entry into a "$35 billion" revenue opportunity

When Rubicon Project acquired Chango just under two years ago, the company's CEO Frank Addante told Business Insider he hoped the purchase would open up a "$35 billion" revenue opportunity. The company specialized in mixing information from search queries with behavioral, contextual (the kind of content a web user is browsing), and advertiser data to allow brands to better target their ads.

Rubicon Project integrated Chango into the company as its intent marketing division, but it was kept as a separate entity from its recently-consolidated global sales team. Previously, Rubicon Project had two sales teams - buyer cloud and seller cloud - but it rolled them into one in the second quarter of 2016.

The intent marketing business was a standalone beast, but it wasn't a successful one. The SEC filing said it generated just around $41 million in GAAP (generally accepted accounting principles) revenue in 2016. Rubicon Project generated $65.8 million in Q3 alone.

Addante said of Chango in Rubicon Project's Q3 earnings call: "Hindsight is 20/20 ... Chango didn't work out exactly how we expected. Yet, we are better for doing it than not. Our order business generated a lot from that. But we probably wouldn't have invested in that asset in the way that we did."

In that same earnings report, Rubicon Project announced it was laying off 125 people - around 19% of its total headcount - as it looked to build a "leaner, and meaner, and stronger Rubicon Project." In addition to merging its sales organization, it also slimmed its product and engineering divisions into one team.

The plan now is to focus its business on four areas of growth: Mobile, video, orders, and header bidding - a new type of ad technology that has significantly boosted digital ad revenue for publishers, but one that Rubicon Project admitted it was initially slow to adopt. Rubicon Project has since said it is quickly increasing market share in this area, through its FastLane product.

The closure of Rubicon Project's intent marketing business will see the company incur non-cash pre-tax charges of $8 million to $11 million, related to the amount of clients lost. Rubicon Project said it will also incur approximately $500,000 in cash expenditures associated with employee severance.

Rubicon's product launched after its 2014 acquisition of ShinyAds is also closing

Separately, Business Insider has also confirmed Rubicon Project has shut down a product associated with another, far smaller acquisition. In 2014, Rubicon Project acquired ShinyAds in a deal reported to be worth $5 million. ShinyAds specialized in automating ad deals direct between a media buyer and a publisher, also known as programmatic direct.

That acquisition - which also happened at the same time Rubicon Project bought a larger programmatic direct player, iSocket - resulted in the launch of the company's self-serve programmatic direct business.

In December, customers for that product were informed it will be shutting down effective January 31. Customers are instead being migrated to its "guaranteed orders" solution.

However, Todd Garland, CEO of BuySellAds - a programmatic direct ad tech company that stands to benefit from the ShinyAds shutdown - thinks some Rubicon Project customers may not like the compromise.

He told Business Insider: "[Rubicon Project] made the decision, instead of building a direct connection with the publisher's ad server, they'd push orders through [Rubicon Project's] existing RTB (real-time bidding) ecosystem and the protocols that are already in place."

Garland thinks that's a "critical" mistake: "Publishers have been abused by RTB and the RTB ecosystem for the last eight to 10 years. What publishers really need is not to be trapped in protocol that they don't have any way to get out of without losing significant revenue."

News of the shuttering of Chango and ShinyAds-related products comes after Rubicon Project's stock soared on Friday following a Wall Street Journal report suggesting it was working with investment bank Morgan Stanley to explore its strategic options, including a sale. The company declined to comment on the report.

Here's the statement from Rubicon Project on the closure of its intent marketing business and the partnership with Ignition One:

"In 2016 Rubicon Project announced a comprehensive realignment of our business to strategically shift resources to the areas of Mobile, Video, Orders, Header Bidding and our newly launched consumer solution that we believe will accelerate longer-term growth.

"As part of our growth efforts, we took a number of important steps, including combining our buyer and seller sales organization into one revenue team, integrating our product and engineering teams under our Chief Product and Engineering Officer and we completed a global workforce reduction and realignment effort.

"We also introduced an expanded partnership approach for the buy-side of the business with multiple announcements including partnerships with Strata, AdDazzle and a strategic partnership with Mediaocean, which, after months of integration, went live in January of 2017, providing the largest industry-wide solution for automating the $60 billion direct buy market.

"As part of our efforts to further focus our buy-side investments in the fastest growth areas of the business, this week we announced an agreement with IgnitionOne to refer existing Rubicon Project intent marketing customers to IgnitionOne for ongoing intent marketing services. Following this agreement we will be sun-setting our intent marketing business and referring future intent marketing customers to IgnitionOne as part of a new two-year revenue sharing agreement.

"As a result of our focus and execution, we achieved our goal of having a majority of our business come from the growth areas of Mobile, Video, Orders and Header Bidding a full quarter ahead of schedule in Q3 of 2016, moving the majority of our ad spend to the fastest growth areas of the industry today and serving as a further proof that our commitment to delivering the highest quality advertising marketplace, to investing in new innovation and to committing ourselves to literally changing advertising for good has positioned the company for strong growth opportunities in 2017 and beyond."