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DoubleVerify: Ad spend still going to what's 'proven to work'

Advertising agency DoubleVerify (DV) reported mixed first quarter results, beating revenue estimates but falling short of expectations on adjusted earnings per share. To delve deeper into these earnings and the broader digital advertising landscape, DoubleVerify CEO Mark Zagorski joins Market Domination Overtime.

Zagorski notes that the online ad market is "in pretty good shape," with areas like connected television and retail media networks contributing to the health of the digital advertising space. Despite the challenges faced in DoubleVerify's first quarter, he observes that "across all the different verticals" of advertising, the company was "relatively healthy." Looking ahead, Zagorski expresses optimism about growth prospects both internationally and domestically, despite a concentration of spending this quarter. He believes this momentum will lead "to a solid year."

When asked about the potential impact of shrinking marketing budgets on margins, Zagorski says: "We're seeing ad spend going to places that are proven to work...Advertisers have no problem spending money and spending marketing budgets on stuff that works."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

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This post was written by Angel Smith

Video Transcript

Mark, it is always good to see you and maybe uh Mark, listen, I'm always interested to kinda start high level, get your kind of general take.

Mark on just the online ad market.

Uh How healthy and resilient is it right now, Mark and what do you see ahead?

Yeah, the, the overall uh online ad market is in pretty good shape.

I mean, you're seeing certain pockets really do well.

Um you know, one of which you, you just mentioned uh with your last guest, uh you know, connected television, connected television uh is growing substantially based on the fact that it's taking some dollars away from linear television for sure, but also pulling dollars from some traditional media publishers on, on as well.

Um You also have some growth areas like retail media networks um which are, which are booming uh right now, which are, you know, folks like uh traditional retailers who now are using their data to extend their power to the advertising space.

Uh Right.

So you can target folks who are looking for certain products um off those retailer sites.

So overall digital media spending is pretty healthy.

Um So I, I guess mark, how should people read your recent earnings then as uh a prism into this kind of spending?

Because, you know, you, you, you guys, your stock got smacked pretty hard following those numbers.

Yeah.

You know, we had some um concentration challenges with a few big customers but overall, you know, most of our customers said across all the different verticals is, is, is relatively healthy.

Um And we're especially seeing growth in areas like retail media networks where we continue to grow over 40% last quarter, uh social uh which grew percent for us last quarter.

So you're thinking about social platforms like meta Tik Tok, uh youtube continue to be strong um And growth outside the US um last quarter, growth outside the US uh uh topped 40% as well.

And for the first time, uh international growth or international spend was 30% of our measurement revenue.

Um And so we are seeing, you know, strong pockets of growth in certain areas and, and I think, you know, outside of that concentration that we had in a few big customers, uh you know, we're having a solid year.

So that's interesting mark just to kind of double tap on what Julie is talking there because it did sound like you guys were projecting slower growth.

But what it sounds like you're saying is, you know, this isn't some, you know, permanent secular downshift, this is just some uneven spending by some advertisers and you expect that, that kinda even out here.

Yeah, we, you know, we, we, we called out a, you know, a cluster of advertisers that were having some challenges earlier in the year.

Um We think they'll eventually work through those and that we see strength in many other pockets of our business, like I mentioned, um C TV continues to grow retail media, social and in particular, uh you know, business outside of the US.

Um Something else that, that caught our eyes, a recent report in the Wall Street Journal that talked about marketing budgets overall getting cut back even as ad spending still seems to be.

Ok.

So I don't know what kind of visibility you have in your business as to sort of how the bigger marketing budgets are being deployed.

Is that something that you kind of see reflected as well?

Yeah, we, I mean, we're seeing ads spend, go to places that can be proven to work.

Um So you see platforms and you know, advertising entities that can show a closed loop where hey, I showed an ad and I drove an ro I um for actual performance that is eating up dollars.

So advertisers have no problem spending money.

They're spending marketing budgets on stuff that works and increasingly digital works and increasingly digital that has attribution attached to it.

So stuff like retail media networks, people like Amazon uh and platforms where you can show the exposure to engagement to actual sale um you know, that's where the dollars are heading.

So I, I would agree that, you know, marketing budgets may be uh you know, a little tight but advertising budgets that can prove lift, that can prove performance, I think are always going to attract dollars.

And increasingly there's great tools out there for the to show that can happen.