Dissecting The Sizmek-Rocket Fuel Deal

Last week’s blockbuster news in the ad-tech world was Sizmek’s acquisition of the ailing predictive marketing platform Rocket Fuel.

Rocket Fuel’s fall from its IPO highs of a $2 billion valuation in 2013, to its present $145 million valuation, points to the difficulties established ad-tech firms face keeping their technology current and sustaining client relationships.

The CEOs of both Sizmek and Rocket Fuel responded to wide-ranging questions about the deal and what it means for the industry as a whole.

From Rocket Fuel’s perspective, acquisition was the best option at this time. With investments in Rocket Fuel hemorrhaging from 2013 to the present, “the board thought that this was the best alternative for current shareholders,” Randy Wootton, CEO of Rocket Fuel, told RTBlog.

“There will be more opportunities for our employees, more capabilities for our customers, and we will have a lot more sales and service people to cover a broader market landscape,” added Wootton.

Joining Sizmek also gives Rocket Fuel the chance to focus on its competitive advantages, especially predictive marketing and AI capabilities.

Combining Creative and Media Optimization with Identity Management

Wootton explained that “the secret sauce in this merger is Rocket Fuel’s moment-scoring technology. I have always talked about how our AI was too big for just DR [direct response] media optimization. This is why we have made significant investments in building out our brand-building capabilities."

Being bought by Sizmek, "we can now point our AI -- and the many brilliant engineers behind the tech -- at the creative optimization challenge that still faces our industry.”

From Sizmek’s viewpoint, clients “want a platform that allows them to manage their data as well as all of the activities with data across the media plan,” explained Mark Grether, the company's executive chairman.“We feel that the combination of Sizmek and Rocket Fuel does exactly that, with a fully transparent SaaS [software as a service] platform that allows marketers and agencies alike to optimize campaigns to truly drive marketing ROI.”

“This combination brings what has been three different ‘types’ of ad tech -- creative optimization, media optimization and identity management -- together,” continued Wootton.

To that end, “there is no longer a divide between media agencies on one hand and creative agencies on the other hand,” added Grether. “What we are seeing is media and creative agencies coming together to form integrated teams to work on clients’ needs, and we are basically now the platform ... powering these integrated teams.”

Market Consolidation, But Proof in the Delivery

As was noted last week, consolidation in the ad-tech market is unlikely to slow down.

“With all media going digital and the ongoing proliferation of data, the problem facing the industry is how to comprehend the sheer volume and velocity of data out there,” said Wootton.

Consolidation seems the best answer for firms that just don’t have the resources alone to do that, especially in light of the  omnipresent Facebook/Google ad-tech duopoly.

The pieces of the puzzle need to be correctly placed, and consolidation itself is just the start, according to Wooton. “The proof is in the delivery,” he said. “We will be spending the next six to eight weeks working through detailed integration plans to see where we can start to make the vision of a fully integrated platform real. So expect to hear more about our story and combined company when the deal closes in Q3.”

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