Ad tech companies flocked to Washington, DC, during the recent election cycle in pursuit of political ad budgets, but many were disappointed.
Rocket Fuel was the most aggressive newcomer, adding approximately 15 people to its DC office for political business development beginning last summer. But the company dismissed most of those hires in the week following the election. Rocket Fuel confirmed the downsizing to AdExchanger, attributing it to the natural fluctuation of electoral cycles.
In Rocket Fuel’s quarterly earnings call last month, CEO Randy Wootton said the company lowered guidance for the year “primarily due to political and international coming in lower than expected.” According to sources, the company also struggled to wring profitability out of DC’s byzantine network of consultants and middlemen.
“There is a 0% chance that many resources are dedicated to political again,” said one source with knowledge of the company’s political strategy who wasn’t authorized to speak publicly about internal discussions. “More likely you’ll see one or two people parachute in for the election.”
Rocket Fuel’s success landing political partnerships – and it did have success there – turned out to be both a blessing and a curse.
On the conservative side, it tied up with The Data Trust, a conservative voter targeting solution offered by the Republican National Committee, and National Media, one of the oldest and largest Republican media agencies.
But central Republican Party groups spent most of their digital budgets in direct deals with platforms like Facebook and Google and with digital video networks.
Rocket Fuel also worked with Cambridge Analytica as the DMP for the Trump campaign, but sources with knowledge of the agreement said Rocket Fuel was not involved in the relatively lucrative performance marketing aspects of digital campaigning (i.e., fundraising) and was just one of dozens of inventory sources.
On the left, it partnered with both the Democratic National Committee and TargetSmart. But liberal groups tend to spend more (of their non-Facebook and non-Google media) with an ecosystem of partisan vendors.
Beltway Blues
Rocket Fuel was just one among many ad tech companies to make a bet on politics.
The last year saw “a kind of gold rush to DC,” said Grace Briscoe, Centro’s VP of candidates and causes. “A lot of people clearly said, ‘Let’s assign somebody to political or hire somebody in market and get our piece of this spigot of money.’”
Centro opened a DC office in 2010 and has 20-plus people working on firewalled conservative or liberal teams – an unusually large and longstanding team. For most commercial ad tech, this election was the first foray into politics.
Quantcast made a deliberate move on political budgets along the lines of the “parachute-in” strategy, hiring two specialist sellers from the political world, one each to win business from Republican and Democratic sources, and shifting some brand support teams to political clients.
Now, the bulk of people in its DC office and those who were involved in campaign work will move back to brand business, while the company plans to retain its two direct political sellers during the offseason.
“In terms of being able to understand the power and impact of advertising in politics … the biggest takeaway this year is to be humble about what’s possible,” said Jag Duggal, Quantcast’s senior VP of product and strategy.
Political newcomers made the mistake of setting revenue projections against overly optimistic spending forecasts, said Jordan Lieberman, politics and public affairs lead at the targeting firm Audience Partners.
Borrell Associates originally projected digital political spending to be around $1.1 billion, but revised its final estimate to less than $1 billion.
“They didn’t anticipate how much of that money was already spoken for through existing relationships and players like Google and Facebook,” he said.
Lieberman anticipates more downsizing in early 2017, referencing a string of nonpartisan tech layoffs since the election – mostly from Rocket Fuel – as well as major downsizing at former Republican programmatic juggernaut Targeted Victory.
“I knew most commercial tech that made a run at political dollars would fail to hit their numbers,” he said, “but I didn’t think things would blow up this fast.”