Rocket Fuel Gets $10 Million; CEO John Discusses Plans For Ad Network's Growth, Trends

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Rocket FuelRocket Fuel announced that it has raised another round of financing led by Nokia Growth Partners. Read the release.

Rocket Fuel Inc. CEO George John talked about the new funds and company plans.

AdExchanger.com: Having Nokia Growth Partners as a strategic partner and lead investor in this round would seems to indicate that Rocket Fuel may focus in the mobile space, correct?

GJ: We're very excited by the mobile opportunity and have some early offerings in market testing right now, and the response has been fantastic.   But Nokia Growth Partners (NGP) and Rocket Fuel fell in love more based on a shared excitement over the tremendous opportunity in effective advertising in general, not just mobile.  The whole advertising landscape is in play right now, and in the long term we like our chances at pretty much any ad that isn't being served right after a web search.

Overall, how did you find the funding environment for this round compared to previous? Is ad tech still "hot"?

Investors are categorically excited about advertising, yet concerned by the infamous Terence Kawaja / GCA Saavian chart.  I actually had one VC steal the projector cable from me during my presentation so he could project Terry's chart and ask me why there was room for Rocket Fuel to be successful in such a crowded field.  So investors were circumspect, but we pretty quickly got into a situation where a number of firms were very excited about us.  Generally those firms either had very technical VC's who met with our CTO and VP Engineering to understand our technology first-hand, or they had a number of related investments in web analytics and marketing optimization, and so had seen first-hand the kind of growth that is possible for Rocket Fuel. It definitely helped that we were signing up large brand advertisers and doing million dollar deals while the fundraising process was underway!

Ultimately we felt that Marc Theeuwes at Nokia Growth Partners was a guy we wanted on our board.  He had a number of really insightful observations about opportunities for us after his reference checks with our customers, and also fit in well with our "Nerdy & Loveable" corporate culture in the course of the diligence process.  He's also a Stanford Professor in their engineering school, so he is an example of the VC's who became excited after personally scrutinizing the technology.

And as a footnote, someday I am going to get even with Terry by producing a slide full of the logos of all of the M&A advisory firms, investment banks etc, and then becoming a keynote speaker at investment banking conferences, where I will talk about how the M&A advisory landscape is crowded and confusing.

Can you provide a bit more on insight on what you will use the additional funds for - beyond "rapidly expand its market presence to better address the demand for effective online display campaigns"?

I don't know, that seemed pretty clear to me when I wrote it :)  The translation is we are hiring salespeople like crazy.  We'd like to hire 20 by the end of the year.  Do you know any good sales reps?  Overall our strategy is to get to $100mm revenue run rate as fast as possible.

What key macro factors in advertising are contributing to Rocket Fuel's 10x growth year-over-year as indicated in the press release?

It's a good time to be in market with a solution that makes display campaigns effective for both brand and direct response advertisers.

Advertisers are shifting budgets online, and within their online budgets they're shifting spend to more accountable media.  I think the economic shockwaves from 2008 and 2009 caused a number of CEO's to turn to their CMO's and ask even more pointedly what the marketing spend is delivering for the company.  That increased need to show results is positive for Rocket Fuel because we measure effectiveness in terms the CEO would appreciate, not just clicks or reach.

And successful agencies have taken the opportunity of the focus on metrics to steer clients towards campaigns backed by more rigorous analytics than they have done in the past.  Generally when I'm visiting an agency, I find that the more analytical the agency, the tighter the office space, because they are growing fast.  During my last trip to New York, 100% of my agency meetings were conducted in hallways and borrowed offices, because the agencies' digital teams were bursting at the seams and had converted their conference rooms to offices.  That's an amazing sign for the industry and testament to the value of well-managed digital advertising.

Although these industry-wide phenomena are winds at our back, a lot of the growth has sort of snowballed from our early wins.  For example, a year ago we were just in the middle of our first automotive campaign with a great luxury brand.  The success of that campaign helped us talk credibly with a number of other auto brands, and now we've run 48 campaigns for 15 automotive brands, with many more in the works.  This story has been repeated across a number of verticals growing quickly for us -- consumer packaged goods, travel, technology, retail, education, finance, dining, and media.

By John Ebbert

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