After acquiring ad-tech company Rocket Fuel for $145 million in July, Sizmek is folding Rocket Fuel’s brand and said it will start disclosing the fees included in media buying to instill more trust and transparency for advertisers about how they purchase digital ads.
With the Rocket Fuel acquisition, Sizmek hopes to beef up its services to compete against behemoths like Facebook and Google that control the majority of digital ad spend. However, Rocket Fuel’s controversial history may make marketers uneasy about forking over bigger budgets.
Rocket Fuel, one of the earliest successful ad-tech companies, went public in 2013. Shortly after, a Financial Times report accused Rocket Fuel of placing a significant amount of ads on fraudulent websites for Mercedes-Benz, claiming that more bots saw the ads than humans. Rocket Fuel never completely publicly recovered from the allegation and last year stopped serving ads to controversial news site Breitbart after it was discovered that the company’s ad-tech software served ads to the site, among dozens of other ad-tech companies. At the time of Sizmek’s acquisition earlier this year, Rocket Fuel’s shares closed at $2.69 per share, down from the peak of $66.43 in October 2013.
“It became pretty clear when we were having conversations with a number of our customers that there were some things that they liked about Rocket Fuel and some things they didn’t,” said Mike Caprio, chief growth officer at Sizmek.
In a survey commissioned by Sizmek that asked ad-tech and agency execs about trustworthiness, only 11 percent of execs rated Rocket Fuel as a trustworthy partner.
Specifically, Caprio said that agencies “had some foundational issues around what was happening behind the scenes and the take rate in terms of the managed service and a wide variety of other things that Rocket Fuel wasn’t willing to share.” Take rates are the percentages of money that ad-tech companies keep after a publisher is paid for a media buy.
As for what marketers did like about Rocket Fuel, the company “has been known historically for really great performance and that’s what’s really carried their business,” Caprio said.
Now, Sizmek is sunsetting the Rocket Fuel brand and rolling it up into Sizmek to create one brand with the goal of showing advertisers “radical transparency.” The transparency model will break down fees from suppliers, provide more insights into performance and retool how artificial intelligence is used in media buying.
“What we want to do is make it really clear to our agency and our brand partners that when they do business with us, we’re disclosing how we are making money,” explained Caprio.
Sizmek provides a technology stack that manages creative, programmatic and data for advertisers. With the transparency tools, Sizmek believes that it can function more like a consultancy model and provide advertisers with data about audiences that can inform what media they buy as well as the creative process.
Artificial intelligence is another big part of the new transparency model and a major reason behind why Sizmek bought Rocket Fuel. In recent years, Rocket Fuel has pitched its artificial intelligence capabilities that uses AI to make decisions on where and when ads are placed on pages.
However, that AI model is “antithetical to how an agency works,” since agencies focus on how humans guide the media-buying process, Caprio said. “The Rocket Fuel guys I think were unable to articulate how artificial intelligence adds value to the performance of media.”
That’s why Sizmek is refocusing its efforts from using an AI-decision engine to a recommendation and optimization engine that allows for more input from agencies. Caprio explained that AI can analyze hundreds of pieces of data in real time that a human cannot to determine which bids are best for an advertiser to serve an ad. For example, someone who likes red tones more than blue can be served ads in blue tones to increase their engagement with them.
Additionally, AI can be used to wipe out fraud and analyze ad impressions on sites that look invalid.
“We will be much more transparent going forward [about] how the machine learning algorithms work that make up the artificial intelligence and why do we weight certain things over another,” Caprio said. “It’s a bit of a nuance: how do we move from being a fully automated, artificial intelligent-driven bidding process to a recommendation an optimization engine that helps inform our buyers to make better decisions and let the machine do a lot of the heavy lifting that frankly humans aren’t able to do in real time.”
Overall, Sizmek hopes that cleaning up transparency issues will help give it an advantage over platforms like Facebook and Google that continue to struggle with trust and cross-platform measurement issues.
“Brands are looking for an alternative to Google and some of the other walled gardens,” Caprio said. “In some ways I think that we can be a really empowering force for the open web with independent publishers all around the world and then making that available to agencies and brands.”