Home / Tech / Ad tech company Rocket Fuel sole for a fragment of its rise $2 billion valuation, and it marks the finish of an era

Ad tech company Rocket Fuel sole for a fragment of its rise $2 billion valuation, and it marks the finish of an era

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When a company that pulled in over $450 million in income in
2016 and over $95 million during the first entertain of this year
unexpected sells for just
$125.5 million, it raises eyebrows.

That’s what happened on Tuesday when the ad tech company Rocket
Fuel was acquired by rival Sizmek. The understanding appears to symbol the
finish of an epoch for the ad tech industry, which has been
characterized by a large flood of funding, a proliferation of
startups, several hilly IPOs, along with lots of layoffs, pivots
and consolidations over the past half dozen years or so.

Here are five reasons since Rocket Fuel (once valued at close
to $2 billion, according to The Wall Street Journal) and
companies of its ilk are crashing down to earth.

1) There wasn’t that much tech to start with

This is an mostly listened censure when it comes to firms like
Rocket Fuel: that their technology compulsory a lot of people
to help marketers use it. And at the finish of the day, they just
sole ads on other people’s websites.

“They were an ad network,” said David Yovanno, CEO at
opening selling record firm Impact Radius.
“The whole judgment of service and tech bundled together is
now obsolete. That
 business indication is

Even as Rocket Fuel done investments in better tech, “they
would not

 not let go
of the bequest model,” Yovanno added.

Randy Wootton, CEO of Rocket Fuel,
shielded the company’s ability to innovate and stay forward of
where the digital ad attention is headed over the past several

“We have also focused on developing
many new, industry-first capabilities with partners in the
ecosystem.” For example, progressing this year Rocket Fuel introduced
what it calls its 

Predictive Marketing Platform, which according
to Wootton “focuses on leveraging big information and artificial
intelligence to personalize patron practice in real
time to impact code opening and drive discerning insights,”
for marketers and CEOs

2) The ad business is moving to mobile, where cookies and
retargeting just don’t work as well.

“Apps are dying, desktops are dying, and the mobile web is
winning,” said Ryan Urban, CEO of the marketing
technology firm Bounce Exchange. “
That’s a big hole in the business. [Companies
like Rocket Fuel] are focused on o
ld ad sizes from the 1990s,
hose customary banner
Those formats don’t work for advertisers
and they haven’t
 adapted at all.”

3) Marketers are screaming for some-more digital ad

“Rocket Fuel positively has had a tough go of it in the post
‘black-box’ world,” pronounced Mac Delaney, conduct of programmatic at the
ad group Merkle. Indeed, over the last year, major marketers
have been fixation distant some-more inspection on where their ads are
using (following a
flurry of ads speckled in bad places on YouTube) and how they
are being billed. “For some time on the buy side [Rocket Fuel
was] synonymous with what was lacking in the programmed ad buying
space,”Delaney said. “[Namely] transparency
into strategy and margins.”

“The fist on clarity now creates these companies untenable”
added Marco Bertozzi, clamp boss Europe, conduct of
sales at Spotify and a longtime programmatic ad buyer.

“Transparency continues to be a big ask from our
clients,” pronounced Wootton. ” As they need to know what drives
the good opening they get from Rocket Fuel. If asked, we
were always means to produce this visibility, but indispensable our
researcher group to run the report. Providing marketers with the
stating that put their minds at palliate compulsory a significant
volume of time and engineering resources.”

asteroid meteor armageddon shutterstock

4) Giants like Apple, Google and others are pushing
for better ads.

As both companies devise to hurl out web browsers that block
certain forms of ads and making it easier to retard cookies, that
creates life a lot worse for the Rocket Fuels of the world, say
attention executives.

5) There’s a lot reduction toleration for high margin
businesses in this industry

Ad tech companies are famous for flitting on very high margins to
advertisers, in the area of 40% or more. That’s no longer

“It’s the finish of the businesses that got abounding by a massive
arbitrage and making clients consider tech was behind results when
really it was just throwing billions of inexpensive impressions at
every problem,” pronounced Bertozzi.

Added BounceX’s Urban: “In ad tech, unless your product is extremely
differentiated, you are just m
iddlemen charity middleware with fees, fees, fees. You have
o reason to exist.”
Especially when marketers can run ads on Google and Facebook
but such markups, he said.

Wootton pronounced the company has “seen the margins come down
over time since the attention is rarely competitive. We still
trust we produce differentiated value for business who use our
full service option.”  

There is hope.

Several attention experts contend that Rocket Fuel does exaggerate of some
plain record and modernized analytics tools. Merkle’s Delaney
remarkable that the company had done smart investments in machine
learning. That joined with Sizmek’s business could produce some
value, generally given the cost paid. The attention certainly wants

“Sizmek purchasing Rocket Fuel is assisting to finish a strategic
picture of operative to turn a some-more suggestive aspirant to
companies like Google,” pronounced Jessica Peltz-Zatulove, partner at
MDC Ventures. “Considering the sale cost was almost a 90%
bonus from Rocketfuel’s 2013 IPO, scooping them up is a smart,
fit pierce to raise their information and tech offering.”

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