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Collective CPO: Ad Tech Is High School, And You Need To Float Between Cliques

eoin townsend collective v2Why would former MediaMath Chief Strategy Officer Eoin Townsend join Collective, a company that built its reputation as an old-school ad network?

On the surface, the move seems counterintuitive: a guy working for a provider of self-serve ad technology jumping to a company that made its rep performing media-buying services. Since mid-September, Townsend has operated as Collective’s chief product officer.

But some old ad nets have changed. While they haven’t abandoned their services-oriented models, they’ve focused increasingly on creating tech offerings. Count Collective among them.

“I’ve come out to build the self-serve technology platform, to integrate the content, services and technologies – what we call the assisted self-service model,” Townsend told AdExchanger.

Collective has 350 employees worldwide and, according to Townsend, works with 1,500 advertisers, with 77 of the top 100 brands running current campaigns through Collective’s systems.

It’s also made the obligatory dip into programmatic, though Townsend is quick to point out this extends well beyond the confines of RTB (half of Collective’s buying comes from direct or premium relationships, the other half in an exchange environment).

Collective, he said, manages private exchange-type environments and also automates elements of the direct sales process.

But Townsend is also aware that Collective, because of its roots, is usually placed in the same ad network box as companies like Rocket Fuel, Specific Media and CPXi.

“Thanks to Terry Kawaja, we are all in boxes,” he said. “Once you get labeled with something, it sticks, even though we’ve been talking about how, on any given month, over 50% of our business is done through the programmatic channel.”

So where does Collective want to be?

“The full multiscreen partner,” Townsend said. “And it’s something we’re all building to. We’re all trying to look at automating all aspects of the buying process.”

Townsend spoke with AdExchanger.
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It's Go Time For Facebook's Mobile Ad Network

FAN-facebook-audience-networkIt's been six months since Facebook unveiled a new mobile-centric ad network offering at its F8 developer conference.

The message then and over the summer was clear: We'll take our time ramping up the new Facebook Audience Network, from both a supply and demand standpoint. But as of Tuesday, Facebook said it's ready to demonstrate the firepower of its fully armed and operational ad network. (Official blog post)

Recently rolled out to all advertisers and developers, FAN represents a compelling new data layer in the mobile ecosystem, where much of the supply is still thought of as "dumb impressions."

And it's not only data Facebook is bringing. The company aims to offer a range of compelling creative formats as well.

In its early form, FAN was restricted to Facebook's well-known app install ads, but the company has gradually expanded the formats and now offers a range of ad types, including banners, interstitials and native ads. It also offers so-called "link ads," where a user taps to open a mobile browser as opposed to an app-based ad.

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Rocket Fuel Explains Its MO, Plans To Release Anti-Fraud Product

Rocket Fuel TorranceRocket Fuel intends to release a free anti-fraud product in June called Bot Or Not – available to advertisers regardless of whether they’re clients. (Update 5/27: The company has settled on the name Botfinder.)

CTO Mark Torrance announced the product’s existence at the Rocket Fuel Summit in New York City on Tuesday and shined a little light into Rocket Fuel’s black box to provide some high-level insight into how its technology works.

Evil Bots

Fraud is increasingly in the limelight and tech companies are doing more than talking. Consider Google’s purchase of spider.io and Integral Ad Science’s purchase of Simplytics.

While Rocket Fuel works with fraud-detection partners, Bot Or Not is being developed in-house. “It almost works now,” Torrance said. “This is a very hard problem to solve. We need to ensure the quality of inventory we deliver to a marketer’s campaign is as clean as possible.”

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Rocket Fuel Q1: Customers Double, Media Margins Top 60%

George John, CEO, RocketfuelRocket Fuel, one of a growing pack of public ad tech companies, reported 95% growth in revenues and 107% margin acceleration during the first quarter. But it wasn't enough for Wall Street, which punished the company's stock after hours  perhaps in light of decelerating top-line revenues.

Rocket Fuel's active customers more than doubled year over year to 1,251, and the company now wants to grow its share of budget with some of its largest advertisers. It has seen some modest success in this area, according to CEO George John.

One advertiser spent $150,000 in March, $250,000 in April, and is on track to spend $350,000 in May. The total investment for the year for this client will clear $1 million in 2014, but John said he is not yet satisfied. "We have a few advertisers above $5 million but none at  the $10 million to $20 million we'd like to see," he said on the company's earnings call Thursday.

Analysts on the call seemed concerned about whether Rocket Fuel will suffer disintermediation as brands and agencies gain prowess with programmatic buying methods. Or, as one put it on the call, is the company seeing increased competitiveness from agency trading desks like Xaxis (WPP Group), Vivaki AOD (Publicis Groupe), Accuen (Omnicom Group), Affiperf (Havas), Amnet (Dentsu) and Magna Global (Interpublic Group)?

The answer, apparently: Ask again later.

"We've seen significant growth in one of the holding companies by coming up with a more win-win approach with their trading desk. We'll see how it unfolds," John said, somewhat  mysteriously.

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Being Public Counts In Ad Tech, Criteo Shows

criteoq1Since going public in Q4 2013, Criteo has had an easier time signing new advertisers – especially in Europe, where the business environment is more cautious overall and advertisers carefully examine credentials when making vendor selections.

In the first quarter of this year, the French ad tech company's business wins in the EMEA region included IKEA, Visa and Walbusch.

"New doors are opening (for us) as a public company," CEO and co-founder Jean-Baptiste Rudelle told investors on the company's Q1 earnings call Tuesday morning. "There are strong winds in Germany and the UK with new clients that were closed to us and now they're opening the door. Europe tends to be more conservative and working with an established company is more important than in other regions."

In the United States, Criteo has seen significant, if smaller-caliber, business wins such as Crocs, Rent.com and Talbots. And in the APAC region it nabbed NTT Docomo Travel. In all it now serves more than 5,500 advertisers.

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Rocket Fuel Stock Hits All-Time Low In Wake Of Insider Trades

rocketfuel-stockslumpRocket Fuel's stock closed at $31.04 Friday, near its lowest point since the ad tech company went public six months ago. The sell-off comes after a group of more than seven investors and senior executives cashed out to the tune of more than $150 million, as reported by InsiderTradingWire. Those transactions, which earned more than $14 million each for the company's top two executives, CEO George John and President Richard Frankel, took place between February 3 and February 7.

Rocket Fuel's market cap is now just north of $1 billion, about half of the $2 billion where it made its NASDAQ debut last September.

Here are the largest of the insider stock sales from early February, according to InsiderTradingWire:

  • George John, CEO, sold $17,935,375
  • Abhinav Gupta, VP Engineering, sold $10,293,038
  • Richard Frankel, President, sold $14,627,030
  • J. Bardwick Peter, CFO, sold $1,000,738
  • John Gardner, investor at Nokia Growth Partners, sold $23,750,156
  • William Ericson, investor at MDV Ninth Partners, sold $101,063,336

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Matomy Pulls IPO, Citing 'Technicality'

ofer-druker-matomyIsrael-based performance network Matomy has scrapped plans to raise about $100 million in a London Stock Exchange public offering that would have valued the company at around $400 million.

The withdrawal was motivated in part by a "technicality" of London IPOs that requires at least a quarter of shares to be claimed by investors in the European Economic Area, a zone that includes 30 states in the European Union and  European Free Trade Association.

Additionally, Matomy's decision was influenced by what it called "volatility" in ad tech share value, as evidenced by post-IPO performance of Tremor Media, Blinkx, Rocket Fuel and others.

Here's a statement from the company:

"Despite a well-received bookbuild, in which Matomy obtained sufficient demand from high quality investors to cover the deal size, the Board has decided not to proceed with the IPO at this time.

The requirements of the UK Listing Rules for a Premium Listing are that 25 per cent of shares in issue must be held by investors within the European Economic Area. This requirement could not be met given the international profile of investor demand.

The negative share price performance and volatility in the ad tech sector over recent weeks was an additional factor.

The Board is considering appropriate options."

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The Next Ad Tech IPO: Questions For Matomy CEO Ofer Druker

ofer-druker-matomyIsrael-based performance network Matomy on Monday signaled its intent to go public in a letter filed with the London Stock Exchange.

As we noted earlier, the company aims to raise $100 million at a valuation of around $400 million. The filing also revealed Matomy has 388 employees, and more than 1,500 clients.

Matomy's business is a three-legged stool consisting of a publisher network, an affiliate channel and a programmatic sales channel supported by a global partnership with AppNexus. Within these buckets, it supports multiple formats including desktop display, mobile and email. It hopes to become the world's largest company focused on performance-based digital ads.

The company has made four acquisitions since 2011 (Adotomi, Mediawhiz, Adperio and MobAff), and has raised $17 million in venture funding from Viola Private Equity.

Druker spoke with AdExchanger.

Note: This conversation took place before Monday's filing. It has been edited for length and clarity.

AdExchanger: What is Matomy?

OFER DRUKER: The idea behind the company was to offer a risk-free way for advertisers to reach a digital audience wherever they are, and to work with publishers on a rev share – not to pay them for the impression. All the targets are aligned through the advertiser through us and through the publishers. All of us want to generate results, otherwise nobody gets paid.

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Must Ad Tech Margins Fall? One Analyst Says No

pivotal-brianThe conventional wisdom on ad tech margins is that lucrative markups naturally compress over time due to a variety of factors, including competition for media impressions, which drives up the cost of impressions.

But some companies, most notably Rocket Fuel, seem to have defied that logic.

The programmatic ad platform, which went public last fall, has enjoyed steady margin growth for at least the last five quarters. In Q3 2012 its revenue ex-media cost margins were 54%, and rose to 58% by Q4 2013.

By comparison, digital ad platform Criteo's margins were around 40% for the first half of 2013. That's down from around 42% for full-year 2012.

Does this foreshadow the younger Rocket Fuel’s future? In a Friday research note, Pivotal Research analyst Brian Wieser said he doesn’t believe margins inevitably fall.

"Interestingly, lighter competitor margins [e.g. Criteo] amplify concerns among investors that margins must inevitably fall at Rocket Fuel, which is not necessarily the case at all," Wieser wrote. "Any given ad network can find pockets of inventory that are under-appreciated by other networks, including those with more data (such as Google's GDN) for many different reasons."

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How Mobile Ad Net Orange Advertising Built A Programmatic Channel

orange-liquidmHundreds of mobile ad networks are working on a transition to programmatic trading.

One of them is Orange Advertising, a unit of European wireless carrier Orange. Last year, the company realized it needed an answer to the impression-buying trend, and began evaluating ad tech partners to support a nascent trading desk. It ultimately settled on an vendor-neutral approach that included buying through companies like LiquidM, AppNexus, StrikeAd, and AdMarvel.

"We wanted to be technology agnostic. We didn't want to build just one platform," said Giuliano Stiglitz, CEO of Orange Advertising Americas. The company is focused on developing a programmatic strategy focused on Latin America, and in Stiglitz words, is "building a state-of-the-art trading desk in Colombia using the best U.S. technologies."

According to Stiglitz, there are three areas where mobile buying and optimization platforms can set themselves apart. First is inventory. ("Most have overlap; that 10 to 20% that don't overlap can really make a difference.") Second is optimization functionality. Third is revenue model.

One of Orange Advertising's partners, LiquidM, has sought to differentiate on the latter. The company charges a flat software licensing fee, starting at $12,000 a month and capped for most customers at $69,000, and takes no percentage on total media transacted. It offers a pilot program allowing would-be customers to test the platform before committing. Twelve customers are in pilot mode; six are full-fledged subscribers.

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