POV: Sizmek Acquires Rocket Fuel
Ad tech company Sizmek has announced that it is acquiring predictive marketing platform (and DSP) Rocket Fuel for $2.60 per share, valuing the company at $145m. On the day of its IPO in 2013, Rocket Fuel traded at $62.50 per share; it closed on the day of its acquisition announcement at $2.69
Details and Implications:
According to the press release: ‘the proposed combination with Sizmek brings Rocket Fuel's media optimization and industry leading AI-enabled decisioning to Sizmek's omni-channel creative optimization and data activation platform, marking the next logical step in marketing automation. Combined, the two companies connect more than 20,000 advertisers and 3,600 agencies to audiences in over 70 countries around the globe, and service a client base comprised of an overwhelming majority of the world's most recognized brands and agencies.’
In the short term it will be business as usual for both companies with Q3 being the earliest that the deal will close, so we won’t likely see any significant change in offering until 2018.
The acquisition is a sign of ongoing consolidation within the ad tech ecosystem as clients look for more ‘full stack’ offerings that cut down the number of suppliers they need to work with, and manage and offer more transparency. Sizmek already offers a mobile DSP (StrikeAd) and ad verification, brand safety and pre-bid technology (Peer39), so the addition of a DSP (Rocket Fuel) is a natural addition to the mix. The additional features, especially the AI/Machine Learning investments that Rocket Fuel has made, will allow Sizmek to offer competition with the likes of Google and Adobe.
Despite building out a full stack offering, we would expect Sizmek to remain committed to the openness of its platform and so continue to work with and integrate with other DSPs and technologies. The company was already attempting to go through a transformation from a managed service to a platform funded by software fees. In reality the acquisition by Sizmek was a way (if not the only way) for them to fast track the transformation.
The acquisition also helps Rocket Fuel to transition from a desktop based model, where ad blocking is ever prevalent, to mobile where we see the growth. Rocket Fuel as a platform was deeply ingrained in the old model, which was potentially masking some good technology and analytics that can no be brought to bear.
More transparency and the need for a full-stack approach have driven this acquisition. Mindshare FAST has been built on this approach, leveraging mPlatform and the best in class from the ecosystem has allowed us to be ahead of the curve and this acquisition shows the market is evolving towards a similar model.