Unsurprisingly, shares in TubeMogul (NASDAQ:TUBE) came off a halt up 82% premarket following the news that Adobe (NASDAQ:ADBE) will buy the video ad platform for $540M -- about $14/share, an 82.5% premium to yesterday's close.
Other ad-tech firms on the move premarket: TTD +4.6%; FUEL +2.2%. Adobe is up 0.8% premarket.
"Whether it's episodic TV, indie films or Hollywood blockbusters, video consumption is exploding across every device and brands are following those eyeballs," said Brad Rencher, Adobe's GM of digital marketing.
Rocket Fuel (NASDAQ:FUEL) recorded $62.6M in revenue, versus issued forecasts of $63M-$66M, attributed to political and EMEA business weakness.
Q4 outlook – Revenue $56M-$62M, adjusted EBITDA $1M-$6M
CEO Randy Wootton: "While we are disappointed with our top-line performance, we are pleased to see steady growth in our platform solutions business, with revenue increasing 141% year-over-year. Our ongoing focus to drive further operational improvements was evident, as we delivered adjusted EBITDA at the high-end of our guidance range, representing strong improvement both sequentially and year-over-year. Additionally, we had a good quarter from a free cash flow perspective, and made progress towards our stated goal of being free cash flow positive for 2016. We remain committed to our plans to return the company to growth and build a successful platform solutions business."
Following a test with advertisers, Facebook (FB -1.9%) has pulled the plug on a demand-side ad-buying platform (i.e. a DSP) for its Atlas ad-server/measurement solution.
Ad tech chief David Jakubowski states low ad quality drove Facebook's decision. "[W]e plugged into a number of the usual exchanges and bought across several formats ... We were able to deliver ads to real people with unprecedented accuracy, but came up against many bad ads and fraud (like bots). While we were fortunately able to root out the bad actors and only buy quality ads, we were amazed by the volume of valueless inventory."
Notably, he adds the only ad formats that "delivered significant value" during the test were native ads (Facebook and Instagram feed ads are native ad types) and video ads (another area Facebook is well-exposed to). Not surprisingly, mobile ads in general delivered much of the "true business value" found in the test. Facebook VP Brian Boland claims native/video ads delivered "7x better results than banner ads."
As part of its efforts to double down on ad types it considers effective, Facebook is rolling out new tools for Atlas: A tool for measuring the impact of online ads on offline sales, a service that gives advertisers insights on how users see ads across devices before making a purchase, and a video-ad-serving/measurement service. Jakubowski: "[M]any marketers still choose to deliver and measure their ad campaigns using desktop-first tools that are not built for a cross-device world — and they’ve got the wasted spend to show for it."
Facebook has tried to differentiate Atlas in part by using anonymous Facebook profile data (rather than cookies) to measure ad performance across devices. Atlas competes against Google's (GOOG, GOOGL) DoubleClick unit, which (among other things) is a major player in the DSP space through its Bid Manager platform. Independent DSP providers Rocket Fuel (FUEL +5.1%) and Sizmek (SZMK +3.9%) are higher today.
Clients will use their own data and demand-side platforms of choice and compare against NBCU inventory to build their media plans, including ads on "regular" (non-digital) shows broadcasting on NBC, or USA Network or Syfy.
It's not quite real-time bidding a la digital ads, though. It will still be sold in upfronts (as NBCUx is added to NBCU's upfront sales) or up to a week ahead of time, rather than via auctions. NBCU says this fall advertisers will be able to buy on a daily basis.
Banner ad prices plunged when automated bidding hit the market, but NBCU's Krishan Bhatia says the lack of real-time bidding will give the company a bit more control over pricing.
Beaten-down Rocket Fuel (NASDAQ:FUEL) is up 23% after hours to $3.85 after soundly beating Q4 estimates (especially on EPS). The programmatic online ad platform owner is guiding for Q1 non-GAAP revenue of $53M-$56M; the GAAP revenue consensus, which doesn't back out traffic acquisition payments, is at $99M. Adjusted EBITDA guidance is at -$11M to -$14M.
Along with the numbers, Rocket Fuel has announced the hiring of Rex Jackson, formerly the CFO of chip design hardware/software firm Synopsys and optical component vendor JDS Uniphase, as its CFO. The move comes four months after Rocket Fuel announced (along with the hiring of Randy Wootton as CEO) CFO David Sankaran is leaving; Cal Hoagland, a partner at CFO services firm FLG Partners, has been serving as interim CFO.
Boosting Q4 EPS: Non-GAAP operating expenses fell 11% Y/Y to $65.8M. On a GAAP basis, sales/marketing spend totaled $39.8M, R&D $10.8M, and G&A $13.7M.
Mobile, social, and video channels produced Q4 GAAP revenue of $46.9M (37% of total revenue). Rocket Fuel ended 2015 with $78.6M in cash (compares with a $166M after hours market cap).