I am amazed at the recent ascent of RocketFuel, which has grown faster than any ad network I have ever seen. Budgets in the display media business are guarded by large agency holding companies, and agencies typically discourage clients from scaling this fast with a specific vendor. It looks like Rocketfuel has found a way around the industry stalwarts.

The secret is that Rocketfuel has done a good job defining success on each campaign. This involves a direct conversation with marketers to lay out goals, and afterwards performance can be measured directly against any other vendor, including an agency trading desk. To the extent a client wants low-cost clicks, Rocketfuel delivers, and to the extent a client wants email sign-ups, Rocketfuel can deliver those too. There are murmurs about the methodology underpinning all of Rocketfuel’s success, but at this stage they are arguably the best performance vendor in the market.

The one knock on Rocketfuel, which is actually a knock on every adtech company, is that they are not achieving the big vision of advertisers using their platform directly to buy media. Like every other ad network, Rocketfuel is currently bought campaign-by-campaign using insertion orders. The public market expects them to transition to a software model that is used in-house by clients. Unfortunately I think this vision is still 5-10 years off.

One hard part about buying media is the optimization that occurs mid-campaign. Typically the first dollars on every performance campaign are used to locate the audience, and then incremental dollars perform better once the system hones in. There are algorithms that automate parts of this puzzle, but it is largely customized for each client. Think about this problem from the perspective of a financial trader – if every stock broker used the same platform with the same algorithms, a smart hedge fund would swoop in and take advantage of that information to make a profit.  The same thing would happen in the media business if advertisers tried to take these systems in house today without investing in teams of data scientists.

A more realistic near-term vision is that marketers will bring data science in house over the next five years.  And only after that occurs will they venture into buying media. The market for these new “data science systems” is still emerging – the category includes a hodge-podge of acronyms like DMP (Data Management Platform), MDS (Marketing Data System), and TMS (Tag Management System) – but eventually a standard vocabulary will emerge to encompass it all.

Greycroft is keeping close tabs on the race to build the ultimate client-side data platform.  We have a few bets here already, such as Performance Horizon, Resonate Insights, and Tagman, and will likely make more over the next year or two.  We believe that this market is big enough to support a number of billion dollar outcomes.  Most importantly, the winner of the data war might also win the bigger fight to control media spend, and if played right someone could run the table here.  Based on what I am seeing in the market, my bet is that the ultimate winner is not going to be Rocketfuel.