Ad Network Rocket Fuel Lands $10 Million Funding

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Rocket Fuel, an ad network founded by a trio of Yahoo veterans in 2008, has closed $10 million in a second-round funding led by Nokia Growth Partners and including prior investors Mohr Davidow Ventures and Labrador Ventures. The latest round brings the company's total venture investment to $20 million.

The startup's boast has been to bring "rocket science" to display advertising by combining a variety of targeting methods including behavioral, contextual, geographic and demographic to optimize campaigns on the fly for better results. Redwood Shores, Calif.-based Rocket Fuel says its ad network reaches 150 million people each month across 20,000 sites.

The company plans to use the new capital raised to build up its sales force nationwide, expand services for brand advertisers and push into mobile advertising and other emerging media. Rocket Fuel CEO George John said the company plans to hire another 20 salespeople this year and add offices in Detroit, Atlanta and Seattle. The company already employs more than 50 people in San Francisco, Los Angeles, New York, Dallas and Chicago.

The company also plans to upgrade its Real-Time Brand Optimization service launched earlier this year with expanded analytics data. Powered by Dynamic Logic, this offering delivers display ad targeting optimization based on brand perception and audience characteristics in real-time as ads are served up. John said Rocket Fuel is working with six of the 10 largest consumer packaged goods advertisers, who have demonstrated growing interest in the brand optimization platform.

The company has also partnered this year with data auction marketplace BlueKai to deliver lower cost-per-action (CPA) campaigns for marketers, and with the Nielsen Company for offline purchase data to help target online ads.

Beyond traditional display advertising on the desktop Web, the company has begun testing ad campaigns on mobile devices with the aim of extending its ad network to the handheld realm. "I think the iPad woke up a lot of marketers to the opportunities there," said John, who noted that trials by Rocket Fuel have indicated an ad response rate on the Apple tablet three times greater than on the iPhone. (The iPod touch has shown a rate twice that of the iPhone.)

But he added that Nokia Growth Partners investment was not specifically predicated on Rocket Fuel's expansion into mobile advertising. John pointed out that Nokia's investment arm, based in Silicon Valley, has also invested in non-mobile startups including online guide Zevents. Other portfolio companies include Swype, messaging company Cloudmark and mobile video platform Kyte.

As part of the funding, Nokia Growth Partners' Marc Theeuwes will take a seat on Rocket Fuel's board.

Rocket Fuel also has social media and online video in its sights as newer ad categories ripe for monetization via its ad solutions. "The Internet itself used be the emerging medium, but now the emerging areas are mobile, video and social, so we're doing development in all those areas too," said John. At present, he said the company is on target to hit $20 million in revenue this year from participating advertisers including Infiniti and Lord & Taylor.

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