Sizmek acquires RocketFuel to boost AI-capabilities – industry opinions

Sizmek, the digital advertising company, has announced the acquisition of RocketFuel, which provides predictive marketing solutions. The company agreed to acquire RocketFuel for $2.60 a share. The deal is being valued at $145 million, which also includes RocketFuel’s debt.

Mark Grether, Executive Chairman of Sizmek, said in a statement:

“We’re reinforcing our commitment to you by bringing together the best of both worlds – omni-channel creativity coupled with AI-enabled decisioning. With the integration, you’ll gain access to a leading DSP and DMP and the most robust dynamic creative optimisation and ad serving capabilities all under one roof.”

RocketFuel has been on a rocky path. Going public in 2013, the company initially hit share prices around $62. However, investors quickly noticed that the business wasn’t as scalable as pure ad tech companies.

In addition, the firm has had to deal with allegations of ad fraud and layoffs only to be facing growing competition from advertising behemoths Google and Facebook. Stocks closed at $2.69 on Tuesday.

Stefan Benndorf, COO at AppLift, says:

“As Ad tech consolidation continues, its proof that size does matter. The industry is still very fragmented and will see further consolidation as time goes on. Scale on a global level is an important factor to deliver attractive ROI to advertisers and to build sustainably profitable companies.”

Indeed, the ad tech sector is no stranger to mergers and acquisitions.

Matthew Fanelli, SVP of Digital, MNI Targeted Media, a subsidiary of Time Inc. adds that ad tech consolidations are going to continue.

“The landscape is constantly shifting and changing with multiple players looking to gain new market share while reducing complexity. It is becoming clearly evident that it makes more financial sense to acquire an existing tech stack vs. creating one from scratch. It also increases speed to market, which is of the utmost importance. It is the key to survival.”

According to research by OpenX, consolidations are likely to continue until 2018 with the net number of companies already in decline.

Meanwhile, Sizmek stands to “benefit by absorbing and combining existing Sizmek and Rocket Fuel technology and data from the DMP”, according to Erik Requidan, VP of Programmatic Strategy, Intermarkets.

“Rocket Fuel has strong hooks into enormous premium supply and demand. Ad tech is consolidating and you are seeing the biggest players strengthen positions to prove quality across their demand, tech and supply. In the days ahead, we will see more acquisitions and mergers like this one.”

RocketFuel will have a 30-day period to solicit other buyers.