August 21, 2014
The acquisition of [X+1] by Rocketfuel signals the beginning of the end for “programmatic” ad networks. Since the industry’s shift to programmatic, countless ad networks have changed how they market themselves, adjusting their sales language to mimic legitimate programmatic platforms. The “programmatic” ad network insertion order-based and flat-rate business model has prolonged the black box opacity that spurred the need for demand side platforms and exchange based media buying. It’s only fitting that one of the industry’s most successful “programmatic” ad networks — Rocketfuel — is addressing client demand by making a move that launches them into the digital marketing SaaS market.
There is a lot to be said about the success that Rocketfuel has had in the industry; they have done great things for marketers looking to automate audience prospecting and retargeting. They certainly have done an amazing job marketing their programmatic chops, with the success of their AI product and their success with agencies running performance based campaigns. Their recent revenue growth and the fact that Rocketfuel had the capital to acquire a DSP/DMP in [X+1], are testaments to the success that they have had in the industry.
Despite their success, prolonging opacity for marketers in this market is a short-term strategy, and Rocketfuel is positioning itself for long-term success.
Coming from the agency trading desk world, I did not partner with Rocketfuel for several reasons:
- Rocketfuel works with marketers and agencies on a flat-rate business model, which is aligned with traditional ad network buying.
- Rocketfuel has proven successful for some marketer and agency performance based campaigns; however, DSPs have always been able to provide deeper transparency into a marketer’s success or failure.
- Transparency in this case being inventory level pricing and delivery, which would expose the arbitrage of inventory that allows “programmatic” ad networks to record margins of 60% to 70%.
- Being opaque also has broader ramifications as success cannot be duplicated or failure avoided across other aspects of a marketer’s media strategy. For example, the ability to identify inventory that performs and doesn’t perform so that it can be opted in/out of or bid on/priced differently.
While this acquisition calls into question what type of systems Rocketfuel was using to drive targeting and analytics if they needed to acquire a DMP, it does make them a viable option for marketers, agencies, and agency trading desks looking for SaaS programmatic platforms.
There may still be a market for programmatic managed service in the future, but providing more control and transparency in programmatic inventory, pricing, and data is the sustainable long term strategy. Considering the success of Rocketfuel as a “programmatic” ad network, their shift towards this long term strategy means trouble for those companies that continue to prolong opacity in the programmatic market place.
What do you think? Will this acquisition change the programmatic landscape?
- B2C marketing
- data management platforms (DMPs)
- demand-side platforms (DSPs)
- media buying