As it continues its transition into the platform solutions business, Rocket Fuel reported clients' spend of its platform solutions grew 70% year-over-year, to $31 million for the first quarter of 2017, representing 32% of total customer spend. That’s up from 17% for total spend for the same period a year ago.
While Rocket Fuel reported that its total platform customer account has increased 30% year-over-year, overall growth was negatively impacted by the media services business. The company reported Q1 2017 GAAP revenue was $95.2 million, a 9% decline vs. the same period a year ago, when it earned $104.7 million. In addition, non-GAAP spend, or net revenue, was $99.1 million in Q1, down 7% year-over-year.
Randy Wootton, Rocket Fuel CEO, said that the platform solutions business model’s lower cost of sales and service and focus on larger customers compared to the media services business will, over the long-term, foster higher spend and profitability. “We’re still on a mission to become a single platform to address both direct response and brand objectives,” Wootton said, adding “marketers still want only one platform” and fewer ad tech vendors.
Rocket Fuel reported $99 million in gross client spend in Q1, down 7% year-over-year. While North American revenue declined, total spend from international markets was up approximately 5% year-over-year. Wootton said the company is focused on attracting large, enterprise customers as well as agency holding companies to platform solutions business to offset contraction in the media services business. He added that spending across the six agency holding companies is up 10 x year-over-year.
Revenue from the company’s top 50 customers represented 68% of total revenue in Q1 vs. 52% for the same quarter in 2016. In addition, revenue from the top 250 customers represented 93% of total revenue, compared to 83% in Q1 2016.
Wootton said the company is focused on three priorities: predictive marketing, which he believes represents the next era of digital marketing; growing the platform solutions business that caters to large customers and brand marketers; and the media services business. As he described it, predictive marketing hones in on the quality of the interactions between consumers and brands, increasing the value of each ad impression. Predictive marketing tactics employ big data architecture and artificial intelligence to understand consumers.
Separately, Wootton said the company teamed up with Nielsen on research that seeks to understand the connection between TV and digital advertising. “We can predict what shows people are watching by what consumers are doing online,” Wootton said of the research. The goal is to help advertisers understand the connections between digital behaviors and TV.