U of Digital Newsletter - 11/14/24 (premium)

November 6th-November 13th // Estimated Reading Time: 15 minutes

Below is a roundup of last week’s notable industry news, with summaries and our opinions. This is a big one! Lots of juicy news to unpack, including tabloid-style drama, lots more Q3 earnings, and a flurry of acquisitions…

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Top Stories 👁️ 

Viant Acquires CTV Data Business IRIS.TV
Source: VideoWeek
November 13th, 2024

Summary: The demand-side platform (DSP) Viant is betting big on connected TV (CTV) contextual tech with a deal for IRIS.TV. The platform ingests and standardizes raw metadata from publishers' video libraries in order to make it “addressable” (e.g. targetable, measureable) across platforms via their IRIS_ID. In addition to strengthening Viant's CTV position, the companies say the acquisition will bring IRIS_ID to more major CTV publishers due to Viant’s relationships, with the goal of expanding its reach to the entire CTV ecosystem. IRIS_ID is passed through the bidstream, where IRIS-enabled partners can decode it for contextual targeting, measurement, brand safety, and planning. 

IRIS says it has integrated with more than 1,400 video content owners, platforms, and content management systems, enabling it to index more than 60M streaming video files for things like context, sentiment, and brand suitability. This goes way beyond the basic app, genre, and show level data available in CTV that advertisers typically use to make buying decisions.

After the deal closes, IRIS will still operate independently under co-founders Field Garthwaite and Richie Hyden. Terms of the deal weren’t disclosed. 

Deal Grades:
IRIS: INC (depends on how much they sold for)
Viant: INC (depends on how much they paid)

Opinion: Let’s get the basics out of the way. 

Viant is a demand-side platform that has been aggressive in identity and CTV. IRIS is a contextual data company that helps fill targeting and measurement gaps (see: identity) in CTV.

Well, maybe. 

IRIS makes money by making their data as ubiquitous as possible across the programmatic ecosystem, within DSPs, SSPs, identity solutions, brand safety solutions, etc. Now that IRIS is part of Viant, that gets a little harder to do, since Viant is a DSP that is competing with other DSPs like The Trade Desk, Google’s DV360, Yahoo DSP, etc. If Viant is going to maximize IRIS, Viant will let it continue to do its own thing, which seems like their plan for now. But still, other DSPs (and even SSPs) may think twice now before working with IRIS to avoid propping up a competitor in Viant.

For Viant, offering IRIS as part of their suite of CTV targeting solutions and identity graph gives their DSP a boost. And surely, Viant will create some advantages around IRIS that other DSPs won’t be able to offer (e.g., pricing, ease of execution, data carve-outs, etc). But they can’t do much more than that if they want IRIS to thrive, right?

It’s like if Whole Foods went out and bought Ben & Jerry’s with the intention of letting them operate independently and continue selling their ice cream at every grocery store. Is that really better for Ben & Jerry’s business? And wouldn’t Whole Foods be better served investing their money into a more clear-cut 2+2=5 oppotunity?

On yesterday’s emergency AdTechGod Pod about the acquisition, Viant’s Co-CEOs said it’s all about backing a company that is building cool tech in order to enable smarter CTV buying that will help the ad tech industry compete with the big walled gardens. And that if all the non-walled garden CTV boats rise, so will theirs. That’s a great story! But from a business perspective, for these two specific companies, especially without knowing the financial terms, we don’t quite get it…

Q3 Earnings 📈

Viant (👍): Okay Viant is on a roll! Revenue was up 34% to $80M, beating estimates. Ad spend on Viant's platform hit a record, driven by "unprecedented" CTV spending, which grew nearly 50%. Shares rose nearly 13%.

AppLovin (👍): Revenue was up 39% to $1.2B, crushing estimates. The end-to-end mobile ad monetization platform attributed growth to AXON, its AI advertising engine. Profitability soared 300%. Q4 guidance also blew past expectations. Shares skyrocketed 46%, and its stock is up more than 600%(!) in 2024. AppLovin is now the most valuable independent ad tech company on the public market by far, valued at roughly $95B!

The Trade Desk (🤷): Revenue was up 27% to $628M, beating estimates. CTV is now the independent DSP's fastest-growing and biggest media channel, and it's also bullish on audio and live sports. Investors apparently wanted more; shares fell 8% before rebounding.

Pinterest (👎): Revenue was up 18% to $898M, beating estimates. Global monthly active users were up 11% year to 537M. The social media platform says food and beverage ad sales are weak and its Q4 guidance missed expectations. Shares nosedived as much as 15%.

DoubleVerify (🤷): Revenue was up 18% to $169.6M, beating estimates. The brand safety and verification vendor apparently won 70% of its Oracle RFPs and won Microsoft as a key customer. Shares fell nearly 6% in after-hours trading before rebounding.

Integral Ad Science (👎): Revenue was up 11% to $133.5M, missing estimates. The brand safety and verification vendor expanded its partnership with TikTok and launched IAS Curation with Google Ad Manager, but lowered Q4 guidance. Shares fell 10% before rebounding a bit.

Spotify (👍): Revenue was up 19% to $4.23B, missing estimates. Monthly active users were up 11% to 640M, beating estimates. The audio streamer is on track to reach profitability for the full year for the first time. Shares rose 8%.

LiveRamp (👍): Revenue was up 16% to $185M, beating estimates. Bright spots include CTV and commerce media. Deals from its clean room integration with Netflix will kick in next year. Shares rose 6%.

Stagwell 🔒 (👍): Organic net revenue growth was 8%. The challenger agency holding company enjoyed 25% growth in digital transformation revenue attributed to acquisitions and AI. Shares increased 2%.

Perion (👎): Revenue was down 45% to $102.2M, largely due to falling video revenue. Search advertising revenue also declined, due to Microsoft Bing changes (Microsoft's contract won't be renewed at the end of 2024). Shares remained flat.

Vizio (🤷): Revenue was up 4% to $444.7M, beating estimates. Ad revenue was up 31% to $161M, representing 82% of Vizio’s Platform+ category. Walmart’s acquisition of Vizio may close by early December. Shares dipped slightly.

Digital Turbine (👎): Revenue was down 17% to $118.7M, missing estimates. Losses narrowed to $25M from $161.5M last year. The company launched a transformation program that should save $25M annually. Shares sank more than 40%.

Magnite (🤷): Revenue was up 8% to $162M, beating estimates. CTV is a big growth area, with recent partnerships with Roku, Amazon Ads, and United Airlines. Curation is also growing quickly. Shares fell 5% in after-hours trading before rebounding.

Outbrain (🤷): Revenue was down 3% to $224.2M, missing estimates. The native advertising company touted its new Moments product, a vertical video feed for publisher mobile sites. Outbrain expects the Teads acquisition to close in Q1. Shares closed 1% lower.

Taboola (🤷) Revenue was up 20%, beating estimates. The native advertising company touted Abby, its new AI ad chatbot. New publisher clients include Axios and National World. Shares fell by single digits before rebounding.

Warner Bros. Discovery (🤷): Revenue was down 4% to $9.62B, missing estimates. Max added a record 7.2M global subscribers, totalling 110.5M. Streaming revenue was up 8% to $2.63B. Shares rose 10%.

Pubmatic (🤷): Revenue was up 13% to $71.8M, beating estimates, fueled by CTV and political ads. Google DV360's move to a first-price auction will drag revenue until mid-2025. Shares rose 3% in after-hours trading before falling the next day. 

Innovid (👎) Revenue was up 6% to $38.3M, missing estimates. Netflix chose Innovid as a partner for impression verification, which was a big win. Innovid's board of directors authorized a stock repurchase program of up to $20M. Shares fell 12% before rebounding.

Paramount (👎): Revenue was down 6% to $6.73B, missing estimates, hurt by declines in its TV and movie businesses. Streaming was a bright spot, with 3.5M new Paramount+ subscribers and $49M in profits. Its sale to Skydance Media is expected to close in H1 2025. Shares closed down 4%. 

Zeta Global (👎): Revenue was up 25% and the independent marketing cloud raised its guidance for Q4 and 2024 overall. But the company is still deeply in the red and investors are concerned about rising tech investments. With this report, and rumours of a legal investigation (more on that below), the stock price has plummeted 50%+ in the last couple of days. Yeesh.

Opinion: These earnings reports were all over the map. Hard to parse out any specific trends. Of the 20, more than a third missed Wall Street's revenue expectations. Most companies are growing and hitting their targets, but investors still want more. Even The Trade Desk, which seems to outperform every quarter, didn't impress Wall Street quite as much as it typically does. The outlier here is AppLovin, which has had an unbelievable run this year, up more than 600% as its AI-powered AXON 2 platform starts to scale. AppLovin expects even more growth in 2024. No wonder it's being billed as the top AI stock of the year.

Other Notable Headlines ✍️

Culper Research Questions Integrity of Zeta Global's Data and Reported Financials - Culper Research (an obscure activist investment short-seller) has accused Zeta Global of using questionable accounting practices and deceptive consent farms to inflate its growth. In a report titled, "Shams, Scams, and Spam," released Wednesday, Culper alleges that Zeta engaged in fictitious “round tripping” transactions with Kubient, whose CEO recently pled guilty to DOJ fraud charges. Culper also accused Zeta of using consent farms that trick consumers into disclosing personal information in order to generate its most valuable data. Culper says its mission is to expose companies that deceive investors by misrepresenting their operations, withholding disclosure of significant risks, or misusing capital. Multiple law firms specializing in filing securities class action lawsuits are soliciting Zeta Global investors who have lost money, citing the report. The firms, including Block & Leviton and the Schall Law Firm, say they are investigating Zeta Global for potential securities law violations and may file actions to help investors recover their losses. Clearly, Culper Research and the law firms all have their own motivations, and we haven’t seen any legitimate reporting on this yet, so nothing has been confirmed. Zeta Global issued this scathing press release in response to Culper’s accusations. More to come… 

Private equity giant KKR is in talks to acquire the ad tech company Integral Ad Science 🔒- Bloomberg reported last month that the brand safety and verification vendor had received takeover interest and hired Jeffries to explore its options. Now it appears that private equity player KKR is in talks to buy IAS. It's unclear how far along the discussions are, or if such a sale would go through. KKR is not the only one interested in IAS. Vista Equity Partners currently owns a 40% stake in IAS. KKR also owns a stake in AppLovin, which has been a top performer this year.

Trump expected to try to halt TikTok ban, allies say - TikTok may also catch a break from the incoming Trump administration. Congress passed a law in April to force TikTok to shut down in the US or find a non-Chinese buyer by January. But Trump said during the presidential campaign that he would save the video-sharing app, despite an executive order from his first term that would have banned it. TikTok is suing to challenge the ban or forced sale, which has a Jan. 19 deadline—the day before Trump takes office. Trump hasn’t yet revealed his decision, but people in his orbit say a sale or ban is unlikely. That wouldn’t be the end of TikTok’s troubles; the company has also been ordered to shut down its offices in Canada due to national security concerns, (even though Canadians would still be able to use the app).

Amazon Is Shutting Down Freevee, Its Ad-Supported Video Streamer - Amazon launched Freevee almost five years ago under the IMDb brand. The company will fold all Freevee content into Amazon Prime Video, which went ad-supported by default in early 2024. Advertisers can only access Amazon Prime Video inventory through Amazon's DSP. That access, combined with cheaper rates compared to other DSPs, has led to advertisers significantly increasing their spending on Amazon's DSP 🔒— in some cases by more than 40% this year. While adoption of its DSP grows, Amazon has scaled back its own ad spend by 20% or $700M 🔒 as it works to trim expenses. The cost-cutting has been good for its bottom line: Operating income soared 55%, Amazon revealed in its Q3 earnings report.

The CMA Wants Updated Privacy Sandbox Commitments From Google By Next Month - The UK Competition and Markets Authority (CMA) released its latest report on Google’s Privacy Sandbox, the first one since Google reversed course on deprecating third-party cookies. The report essentially states that the CMA still has competition concerns, as Google’s shift to user-choice for 3rd party cookies in Chrome will substantially decrease the number of users with 3rd party cookies enabled, giving Google an advantage. Google is working through new Privacy Sandbox commitments with the CMA and expects to release them for public comment in Q4.

Big Tech scrutiny will continue under Trump, even without Lina Khan - First thing’s first: People are making arguments both for and against Trump stopping a Google breakup. On one side, some say Trump is a populist and his administration will keep the heat on Big Tech. His administration, after all, filed the successful search antitrust lawsuit against Google that proved it was an illegal monopoly. However, Trump has already said that breaking up Google in the case would be going too far🔒. But Trump has been known to change his mind, so all we can do is speculate at this point. It's also too early to tell if a second Trump presidency will be the major cash cow for publishers 🔒that it was in 2016. Is it time to put Truth Social on the media plan? 

Other Notable Headlines
(that you should know about too) 🤓 

Media Consultancy MediaSense Makes Its Second Acquisition In Six Months - UK-based MediaSense specializes in managing media account reviews. It bought R3, a marketing consultancy focused on driving marketing efficiency, and in May, it acquired PwC’s Marketing & Media advisory team.

StackAdapt integrates with Shopify to boost e-commerce advertising - The integration aims to help Shopify merchants leverage their first-party data within the StackAdapt DSP.

Private Equity Firm Buys Alliant As The Centerpiece To Its Platform Dreams - PE firm Inverness Graham sees audience platform Alliant as a platform investment to build on through additional acquisitions.

Scope3 acquires Adloox to bolster media sustainability solutions and insights across more media platforms - Ad sustainability leader Scope3 hopes Adloox, an ad verification and insights platform, will strengthen its Climate Shield and Green Media Products.

Netflix Says Ad Tier Reaches 70 Million Users Globally - That's up from 40M in May and 22M in January. Half of new users choose the ad tier. The streamer has sold out of inventory for its Christmas Day NFL broadcasts.

The number of ad tech mergers and acquisitions is developing from a trickle to a steady flow (🔒) - We wrote about five deals in this newsletter alone, so clearly, momentum is building for M&A. 

Insider changes back to its former name as Henry Blodget leaves CEO role - It’s back to Business Insider. Barbara Peng will take over as CEO. Blodget co-founded the company in 2007.

Facebook and Instagram to Offer (Cheaper) Subscription for No Ads in Europe - This plan didn’t pass muster wit regulators when Facebook first announced it, and it’s unclear if the lower price point will get the greenlight. 

That’s It For This Week 👋

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