Randy Wootton will speak about advertiser perceptions on April 14 at AdExchanger's PROGRAMMATIC.IO conference in San Francisco.
The past couple of years have been a tumultuous adolescence for ad tech, and perhaps no single company embodies the growing pains as neatly as Rocket Fuel, with its near-solo public spotlight, its dispute over margin transparency and the rough transition to SaaS-based revenue models.
But being such a keen reflection of ad tech woes has partially obscured the company’s actual position, said CEO Randy Wootton.
“We’ve struggled since we acquired x+1 [in August 2014] to communicate to the market who we are and what our distinct value prop is,” he said.
Wootton spoke with AdExchanger about Rocket Fuel’s recent changes and why he thinks the couple is well set to emerge from “the coming shake-out in ad tech.”
AdExchanger: What’s at the heart of Rocket Fuel’s transition, and others in the industry as well, from a “network” to a “platform”?
RANDY WOOTTON: At its most basic, being a platform means you can have a set of customers interact with you in a self-service way. Everything is in the interface and you only need Rocket Fuel if something breaks or there are issues on the back end.
When you have managed service, and this was part of Rocket Fuel’s criticism early on regarding margins and being a “black box,” it was hard for people to understand the value we brought to the chain. It was almost heretical in the media world talking about our network as services. If you’re Google or Microsoft, you throw in campaign analytics and services as part of the CPM charge. In the classic software world, you buy the tech and then pay for the services: managed service, support, training, whatever the added service is.
So this whole idea of having services to be monetized is different. We started with 40 products – direct marketing, three flavors of PMP, video, CPA (cost per action) campaigns, cross-device, mobile, different DMP features sold as products, programmatic TV, etc. – we were trying to sell to everybody, instead approaching each company with a holistic solution.
Where is the company in terms of having that split between platform tech and managed service?
We talk about this in our earnings report, and currently it’s about 10% self-serve platform and 90% managed service. As we’ve also noted to investors, we’re in talks with holding companies to work on being platform partners, and have signed some significant customers who are using our platform as an integrated DMP/DSP. So expect that 90/10 split to change significantly over time.
When you look at the rise of trading desks, agencies of the future look more like marketing services firms. When you look at the moves being made by companies like Accenture, PwC (PricewaterhouseCoopers), IBM, Salesforce and Deloitte, [and] if you look at what someone like Merkle has done or acquisitions by Adobe or Oracle in the past few years, it’s clear there’s a huge opportunity to be the activation and optimization engine that extends those platforms.
You’re not the only player on the buy side looking to make that transition to the SaaS model, and most have seemingly failed in the attempt, so what does it mean to you seeing others struggle with the same change?
VCs are fickle lovers. Companies like Turn that have extended themselves without the cash reserves to make the transition, ended up cutting deals with holding companies that were so low they couldn’t maintain their cost structure and weren’t getting enough dollars from direct deals to make up for it, so they struggled. VC sources dry up or they aren’t patient when you have trends that take 10 years, and those that aren’t public will struggle to get money and have responsible cost structures in place.
Marketers have never bought technology this way, on this enterprise software model. Historically, when you look at who controls tech spending, it’s probably the CFO, CTO or CIO. Now it’s the CMO’s purview, but they’ve never done it before and it’s moving along the chain. That’s why I think you suddenly see companies moving in – Deloitte, Accenture, Salesforce, IBM – where you’re beyond the digital ecosystem and traditional CMO responsibilities, and now they have these back doors and relationships they can leverage across different business sectors. Those are the companies you want to power, not compete with.