Joe:
Hello and welcome to Innovators and Ideas, an Executive interview series from RBC Capital Markets, where we share ideas, perspectives and advice from today's industry leaders. I'm your host, Joe Colletti. Today I'm at RBC’s Technology, Internet Media and Telecom Conference, or TIMT. And I'm joined by Mark Zagorski, CEO at Double Verify. Mark, thanks for joining us.
Mark Zagorski:
Thanks for having me, Joe.
Joe:
Now, for those that don't know much about double verify, maybe you could give them a little bit more of a formal introduction at the start to who you guys are and what you do.
Mark:
Sure. Double verify helps advertisers ensure that their digital media ad spend is delivered in a brand safe environment that's free of fraud and that the impressions that they actually delivered are viewable by a human being.
So think of us as ad verification. So the ability to ensure that my spend is safe, secure and sound excellent. Now, you guys have a reputation as a very resilient company, but we're also in a very tricky macro environment, which has continued from last year.
Joe:
How are you guys? What do you think about this current environment? How are you guys sort of adapting where you need to adapt to to to make it through this environment right now?
Mark:
Sure. You know, there's been a lot of discussion around the macro, particularly with regard to advertising and how it's been challenging, you know, a challenging environment. You know, we've looked at this year as being one in which there's no there's neither headwinds nor tailwinds. Right. It's kind of one of stasis. Ad spend isn't growing in particularly great way, nor is there a huge out flux of dollars from advertising. And for us, that just put more pressure on our growth drivers. And we've got a matrix of growth drivers that include launching new products, covering more sectors with our verification capabilities and moving into new geographies and new markets of all of those have allowed us to be pretty resilient. You know, we're certainly not insulated from massive shifts in ad spend or massive changes. However, because we've got these multiple growth drivers, we're not concentrated on one sector, we're not concentrated on one market or or even one type of media. So when dollars shift from, you know, connected television to short form video or from open market to social, you know, we're there to take advantage of those dollar shifts, plus the fact that we're pretty under-penetrated.
On the global marketing perspective of the top 800 plus or so global advertisers, we work with around 320 of them. And what that means is we still got a lot of room to grow. We got a lot of customers, too, to go out there and meet and and grow with. And so I think we've been pretty resilient. As a matter of fact, growing, you know, multiples faster than the traditional ad growth rates since we IPO'd in 2021.
Joe:
Excellent. That's great. Now, you mentioned your IPO in 2021. And I want to ask you a little bit of question. Going from private to public company. You know, you tell us a little bit about what that was like, lessons you sort of learned how different it was.
Mark:
We do a private tech conference in the spring. So is a popular question and topic. Sure. For many of our clients, the most basic way I look at it is when you're a private company, you raise money every two or three years. When you're a public company, you raise money every day, right? You're constantly selling your investors that are that are constantly interested in what you're doing.
And so there's a lot more transparency you need to provide. And I think it creates much more rigor in what you do as well. And I think those are good things. So if you come out of being a private company with that rigor, being a public company is not a big switch. If you've come out relatively loose on those fronts.
And being a public company is a pretty rude awakening.
Joe:
Ain't that the truth? I want to shift a little bit. I mean, you know, you guys are in the business of trust. I want to talk a little about brand safety. I mean, obviously, in today's climate, brand safety is top of mind and just going to become increasingly important as time goes on. What industry challenges are you kind of most focused on in this space? Like what are you hearing from your customers? What kind of things are you doing? You know, both from an innovation standpoint, but just in general to deal with this sort of increasing concern for customers?
Mark:
Yeah, you know, look, brand safety is a constantly changing and evolving, you know, you know, area of advertising, right. What may be considered brand safe or brand suitable. Two years ago, three years ago was no longer and what may be considered non brand safe today may in the future may be considered brand safe. So it's a constantly moving target for advertisers. And I think the thing that's most important for us and maybe even for your listeners to understand is, you know, safety is pretty binary.
Advertisers don't want to be around pornography or hate speech, but things like suitability, you know, is this relevant for me as a brand, really are specific to certain brands. We work, for example, with Unilever. Unilever sells Dove soap to moms and it sells ax body spray to teenagers. What's suitable for one audience is not suitable for the other.
And I think that's where our focus and our capabilities and the ability for us to be very granular and to be able to be adaptable for brands, for markets and even for media, different types of media have different levels of brand suitability is critical. An environment like Ticktalk, for example, is a different type of environment for different types of brands and what may be considered suitable there, maybe different than an open market buy on a publication like New York Times.
Joe:
Right. So I think having flexibility and being flexible has been a big part of our evolution as a company being in the brand safety world today. Well, you mentioned Tick-Tock, which triggered another kind of question in my mind when it comes to social. Sure. Obviously, increasing focus there. Powerful, powerful platforms. What are you guys seeing in that space now?
Mark:
Social increasingly is attracting advertiser dollars now that they have in the past. But the proliferation, for example, of short form video has really exploded the space. So whether it's Tik Tok or Meta with reels, product and YouTube shorts, there's an increasingly amount, an increasing amount of advertiser focus and consumer engagement on those platforms. So we've seen them open up to whole different groups of demographics and also for different types of advertisers.
So it's been a pretty significant shift, but it's added to the complexity of looking at brand safety and suitability as well. Because if you think of, you know, a Facebook feed or a static page someplace, you're usually looking at text or maybe an image. When you're looking at a short form video in the form of a TikTok or a meta newsreel.
Yeah, you've got video, you've got audio, you've got text, you've got metadata, and you may even have text on top of the video, none of which may relate to each other. If you've ever been in a TikTok video, you know, the text on top of what the imagery is on the screen may be totally unrelated. So the analysis of all of those to ensure that it's suitable for a brand becomes pretty complex.
Joe:
So the complexity of the brand, safety and suitability challenge is only growing and social growth in those areas have made it even more of a of a of a daunting challenge but a great opportunity for a company like Double Verify. That's quite a landscape out there. And we wouldn't be at a tech conference if I didn't ask you about A.I.
Sure. So I'm curious, kind of, you know, what your views around AI, you know, being maybe a tailwind just generally in the sector, but also I think more specifically how you guys are thinking about harnessing it.
Mark:
Yeah, from a broad base perspective, we look at the ability to use AI within our organization as one that will accelerate our ability to, for example, understand languages. So we operate in dozens and dozens of countries around the world. We analyze languages and content in context, in multiple languages. The ability to translate those language languages without humans in our analysis engine is only being accelerated by and so our ability to launch across different markets, it helps us accelerate, helps us code faster. Those are all big things.
Many of those are consistent across multiple types of companies. But specific to us, the whole idea of kind of context, contextual understanding and contextual predictability. So when we analyze, for example, a video, we don't need to look at every frame of a video because we can look at selected frames and then predict what will happen next based on using A.I. tools, right?
It cuts the cost of video analysis. Those are great efficiency drivers and effectiveness drivers. But when we look at the market opportunity, A.I. plays a different role and some would say potentially nefarious in some aspects. But but potentially good for our business, which is we've seen a massive proliferation of what we call made for advertising content. And this is content that's generated by A.I.
You may have seen some of these websites out there, you know, seven Ways to Cure Belly Fat. You know, those kinds of articles which used to be a bunch ofvery low paid article writers someplace in the world writing those today. AI is creating those, and they're not creating, you know, ten or 12 articles a day an agent create a thousand articles a day and push them across 10,000 generated websites.
So you're looking at millions and millions and millions of more pieces of information and documentation, information that gets pushed out every day. That created by AI bots and attracts advertising. And some advertisers are not don't understand where the nature of the content is and, in some cases, don't want to be around that content. So for us, it's created an opportunity to build tools and filtering tools to avoid things like MFA content made for advertising content.
So in some way we're actually using fire to fight fire. We're using AI driven analysis to smoke out AI driven content so that advertisers can avoid that that information. Well, it's really fascinating and challenging, obviously, for our customers.
Joe:
I'm going to pivot and ask you a general question about M&A, because how can we not sure how do you guys think about M&A and, you know, separately, how does it or does it not sort of fit into how you think about your sort of growth in the future?
Mark:
We're we're in a very, you know, fortunate position. The fact that we have a core business that continues to grow well ahead of where the industry is growing. We are doing so incredibly profitably. So when we look at M&A, it's never, you know, as a survival mechanism or a way to, you know, supplement growth because our core growth is slowing. We look at it in a few core ways, really to accelerate roadmap, our product roadmap. So do something faster than we already have had roadmap today. We look at it for small ancillary solutions that we can throw into our basket of goods that complements what we have. So maybe we could build it fast enough. So let's buy it so we can quickly get it into the basket of goods or to help us move into a new market, a new geographic market where there may be a smaller competitor.
That's just easier for us to more or less buy their customers and kind of move into that market. So for us, we look at May as being an opportunistic way to grow what we currently have not to be to shift or diversify our business because we've got so much more runway to go after. We just want to move as fast as we can to to get down that runway.
Joe:
Absolutely. And I think that this probably leads us well into sort of the final question for you, which is really, as you take a step back, what are you kind of most excited about, you know, around your space, your company and your opportunities, you know, in the next 3 to 5 years and beyond. And there's so much to be excited about.
Mark:
And I say that not as a buy a CEO of a company in the space, but you know, as a consumer as well, you know, we've seen the explosion of growth of social short form video and the engagement around that. But we've also seen an increasing number of challenges, right, to be direct. We are we're in a world where there's no lack of potential minefields that advertisers have to negotiate and get through.
And content is becoming more and more sensitive as social takes up more people's minds. Your social is filled with lots of different opinions and advertisers, unfortunately, in our position where they have to take a position on those opinions and ensure that their brand is aligned with who they are, it shows up with content that aligns with who they are.
So for us, the biggest opportunity is making sure that we're taking advantage of not only the explosion in different media types of media forms, but also ensuring that brands are protected in those areas in a way that as they become more controversial. So lots of opportunities down the road there. We as a company haven't even scratched the surface of areas like audio, which we're engaging with today, which obviously podcasting and live streaming are big areas. Gaming, which continues to attract a lot of dollars. So I think these are opportunities for us that we get excited about as the world becomes more digital. As you know, the ad space becomes more focused on digital media and there's more opportunities for us to grow across those.
Joe:
All right, Mark, it's been a pleasure. Really appreciate you coming here, taking some time out of your busy day of investor meetings to join us. And we hope we can have you on again.
Mark:
Awesome. Thanks, Joe. Smooth, easy for you all. Good. Thank you. Also, thank you very much for doing this.