Home Mobile The Fiksu Acquisition In Four Words: ‘It’s Tough Out There’

The Fiksu Acquisition In Four Words: ‘It’s Tough Out There’


With additional reporting by Sarah Sluis.

FiksuacquisitionMobile app marketing platform Fiksu was quietly acquired last Wednesday by an obscure holding company for an undisclosed sum. But it’s a fate that could have been avoided.

Fiksu’s cautionary tale has multiple chapters.

It’s the story of what happens when a company pegs its future to the dynamics of a particular marketplace – and then that marketplace changes. It’s also the story of what happens when a company takes money it can’t pay back and fails to strike when it – and the market – is hot.

Around five years ago, Fiksu and its incentivized install technology was the app marketplace’s darling. Big clients like Groupon and Gilt were submitting enormous IOs and large potential acquirers were coming around to kick the tires.

But in the end, Fiksu’s acquirer was a largely unknown player called ClickDealer, the performance marketing arm of Noosphere, a Menlo Park, Calif.-based holding company that bills itself as an “international asset management firm” with a grab bag portfolio of digital ad companies.

So, what happened?

In a fix

Aside from a DSP and a self-serve data management platform, Fiksu operates a direct-to-consumer offering called FreeMyApps that rewards users with gift cards in exchange for playing games and trying new apps. Basically, it’s an incentivized traffic engine.

When incentivized app discovery was all the rage, Fiksu was much sought after. But then Apple started to publicly crack down on the practice in 2014.

That didn’t mean the buying and selling of incented installs wasn’t – and isn’t – still happening, though. While a lot of the new money coming into the mobile market is more branding-focused and less install-obsessed, game publishers in particular still engage in the practice.


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Incentivized installs simply became the user acquisition (UA) method that dare not speak its name.

“It was totally common for UA managers to straight-up lie about using it,” said Christian Calderon, CRO of game studio Ketchapp and a vet of game publishers Dots and KIXEYE. “I even heard of one UA manager that got a note from Fiksu’s accounting team asking them to confirm that they were a client and the manager ignored the message because they didn’t want a paper trail.”

Although Calderon said he wouldn’t even think about buying incentivized traffic today, there was a time when he spent a lot of money with Fiksu on user acquisition.

“But it was always tricky for Fiksu because … the quality of that kind of traffic is not good,” Calderon said. “It was a critical part of Fiksu’s growth, but it ended up being a bad business to be in because Apple looks down on it.”

According to Fiksu CEO Micah Adler, FreeMyApps, despite being spun off into a separate business, is still a key component of Fiksu’s offering and one that was important to ClickDealer, too.

“While incentivized marketing may not be publicly as popular as it once was, it still plays an important part in many mainstream app marketing campaigns, including some of the biggest names in the app stores,” Adler said.

But the space is clearly challenged, which makes it ripe for either consolidation or pivots. Incentivized mobile ad networks like NativeX and Tapjoy are good recent examples. NativeX got acquired by Chinese mobile ad platform Mobvista in February, while Tapjoy is getting by with a change in direction, focusing now on monetization services and rewarded video.

“The industry changes so fast, and companies have to pivot or make a move,” Calderon said. “If not, they get left behind.”

But that can be easier said than done and competition is fierce. (Ahem: Facebook.)

“Like many startups, Fiksu has not been immune to competitive pressures – this is a highly competitive market,” Adler said, pointing to Morgan Stanley’s observation that 85 cents of every new dollar spent in online advertising went to either Facebook or Google in Q1 2016.

What’s the deal?

Fiksu entered the scene in 2008 – the same year the Apple App Store launched. In the intervening years, the mobile LUMAscape has started to resemble a pointillist painting.

FiksuLUMA“Fiksu was arguably one of the first mobile DSPs, if not the first, and when they got into that space, what it meant to be a DSP was very different from what it means today,” said Charles Manning, CEO of mobile attribution company Kochava. “But it’s virtually impossible to be a differentiated DSP today. It’s tough out there.”

Fiksu did have other options, though. According to one source, Fiksu was in discussions with multiple parties over the years about possibly being acquired.

Although that’s par for the course when a small or medium-sized company is doing well – in a sense, startups are always for sale – a source with knowledge of the matter told AdExchanger that Twitter had approached Fiksu around the time it was showing interest in MoPub, the sell-side mobile exchange Twitter ultimately ended up buying for $350 million in 2013. The following year, Twitter spent around $100 million to buy up mobile ad retargeting company TapCommerce.

If Fiksu had entered the Twitter fold – Twitter bought MoPub a few months before going public – might the company have achieved a more lucrative, less ignominious exit? Impossible to say. But it decided to keep riding the app-install frenzy because business was good and big apps needed tons of downloads.

That kind of success is a double-edged sword. The IOs were coming in, but Fiksu also had to lay out a lot of cash to buy inventory before it got paid by clients. So it started to borrow.

Fiksu raised $16.7 million in investment capital since it was founded in 2008, the most recent being a $10 million Series B in 2012. In 2013, Fiksu took a $5 million line of credit from Bridge Bank and $10 million in debt financing from Silicon Valley Bank the following year to fuel more growth. But it was money that came with strings.

In early 2015, Fiksu claimed a $100 million run rate for 2014, was reportedly planning to go public and said it was gearing up to nearly double its headcount to 500. But by March 2015 those plans had fizzled. The company scrapped its IPO dreams and announced that it would be laying off 10% of its existing 260-person workforce. (Headcount today stands at 119.)

The borrowed cash seems to have created a problem. As business slowed, the money went toward keeping the company afloat rather than sustaining growth.

In the end, Bridge Bank essentially owned Fiksu’s assets at the time of the sale to Noosphere, which bought Fiksu directly from Bridge Bank. Essentially, the bank had called in its loan and the result was what one source called an “ugly bank takeover.”

Fiksu declined to comment on specifics other than to say that it disputes this version of events.

FreeMyAppsFiksu’s acquisition is “a symptom of companies in the space that have raised a lot of money and there is an investor community pressuring them for an exit or next steps,” said Kochava’s Manning.

It’s also a symptom of the trend toward focusing on metrics that go beyond the install – because user acquisition, incentivized or otherwise, doesn’t stop at the download.

It’s a shift Fiksu seemed to acknowledge in early May when the company announced it would be retiring its monthly cost-per-install index, noting at the time that “as acquiring the right app users becomes more important than amassing a high volume of app installs, measuring the cost of user engagement changes.”

While CPI is still a handy metric for marketers to base their ad buying on, user quality measures like lifetime value and downstream conversion metrics are starting to take center stage, said Mike Ng, CEO of Manage, a mobile DSP and a Fiksu competitor.

“It’s not enough to just drive an install,” Ng said. “Now marketers want to drive installs from users that have higher propensity to spend and who will stay engaged with an app longer to spend more. This is the challenge that all DSPs are having to address.”

That means taking better advantage of targeting data. But it also means scale. One rationale behind the deal was Fiksu’s SDK footprint, said Dmitry Atamanyuk, CEO of ClickDealer. Fiksu has more than 10,000 SDKs integrated and touches around 3.4 billion users.

Developers aren’t fond of integrating new SDKs, so acquiring a company that already has its hooks directly into devices is an attractive prospect. That was part of what made Flurry so appealing to Yahoo, for example.

“This is a common trend we’re going to see more of as networks start to consolidate in order to try and build products to compete with Facebook, because Facebook is light years ahead in terms of audience data,” Calderon said. “They know so much about their users.”

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