DoubleVerify CEO on what the public markets will do for business

Yahoo Finance’s Myles Udland, Brian Sozzi, and Julie Hyman speak with Mark Zagorski, DoubleVerify CEO, about the company’s public debut and outlook.

Video transcript

MYLES UDLAND: Let's pivot here from the world of retail trading over to the world of digital advertising. Interesting market, as we saw from the results out of our parent company, Verizon, earlier today. A company going public today down on the floor of the New York Stock Exchange is DoubleVerify. Mark Zagorski joins us now. He's the CEO of DoubleVerify. Mark, let's talk a little bit about where you guys sit in the ad business and sort of what the state of digital media is with respect to how confident advertisers can be today and how you're trying to work that solution for them as we move forward.

MARK ZAGORSKI: Yeah, it's a great question. Where DoubleVerify sits and what we really are focused on is creating trust between buyers and sellers in the digital market. And the way we do that is through our software platform, which really addresses two key issues, two key secular issues that the digital advertising market faces today, the first being fraud and the increasing amount of fraud that we see, even entering new spaces like connected television, and brand safety, which has been on everyone's minds over the last several quarters and even the last couple of years as social events and challenges to what's truth and what's not truth in the content marketplace has become a real hot button issue for advertisers.

JULIE HYMAN: Mark, it's Julie here. And so to break it down, when advertisers are advertising on given platforms, what you do, or at least part of what you do, is to help ensure that the people who are seeing the ads are real. The impressions are real, right? That they're not bots, that their act-- they're not doubled perhaps. If you're looking out across the industry, what percentage of those impressions are real and can be counted as actual engagement?

MARK ZAGORSKI: Yeah, you know, it's a great question. I mean, it really-- you know, let's put it this way. Fraud is something that we've seen that started in display advertising. It moved to mobile and now is entering CTV. You know, it's hard to say what percentage of ads are truly real humans versus bots. But what we do know is that fraud and lack of viewability are a $40 billion issue.

And as recently as this week, we announced that we just discovered a new fraud scheme called OctoBot, which had stolen upwards of $5 million a week from advertisers with different machines impersonating human beings, stealing dollars away from legitimate publishers. So, it is a constant challenge. And whether it's viewability, i.e. how long an ad runs on a page or where it sits on a page, or bots driving, you know, illicit traffic, it's a challenge for the advertisers.

BRIAN SOZZI: Wow, Mark, something like OctoBot, I'm sure just hearing that term would scare a lot of companies. Now that you are a public company, what are your financials looking like this year?

MARK ZAGORSKI: Yeah, so, you know, we came off a great year last year. We did, you know, $244 million of revenue, over $70 million in EBITDA, which put us firmly in the rule of 60, you know, more than 30% EBITDA-- more than 30% revenue growth and 30% EBITDA growth. You know, we look to the year being one in which, you know, we've got great momentum. If you look at the advertising business, it's really coming back from a challenging year against COVID.

But even in that COVID year, DoubleVerify did amazing. And the reason why is what we are doing is seen as a utility by our advertisers. No one wants to spend money on fraud. Even if they're spending less than they spent the year before, they want to ensure they're getting their money's worth. And certainly brands are incredibly sensitive to where their ads show up. And that context of the page has become just as important to an advertiser as the content of their ad. So we think those are secular issues that will continue to drive our business moving forward. And we're going to ride the strong digital advertising growth tailwinds this year.

MYLES UDLAND: And I guess, you know, thinking about where your customers or you are advertising, what excites them, you know, what kind of avenues excite them. You mentioned connect the TV, which kind of feels like the next one. But, you know, I look at the good old-fashioned Yahoo Finance homepage, and it's still a lot of inline kind of display ads. And what are the things that actually work and drive conversions? And what are people excited about? Is it, you know, newsletters, which has had a little boom here? Are we trying to find ways to get people on their Roku's? What are your customers telling you that they want to be?

MARK ZAGORSKI: Yeah, I mean, look, advertisers have become incredibly sophisticated when they look at their digital ad spend. And it's no one channel that they're focused on, right? So it's usually a combination of video and display and mobile and direct emails and the emerging technologies around audio and live audio and live video.

So I think, you know, we're looking at a world which advertisers have is incredibly fragmented because people are everywhere and engaging with digital media everywhere, which makes that buy a bit more complex but also makes it important for companies like DoubleVerify to ensure that we're measuring across all of those different venues. Because advertisers want a single metric. And they're looking for a single metric to evaluate performance and a single metric to evaluate success, no matter if it's a CTV ad or a display ad or a mobile ad. All of those play into the scheme of what they look at as what is the most effective use of their ad dollars.

MYLES UDLAND: And then, Mark, finally before we let you go, obviously, you guys, you know, debuting today. Exciting day for the business. Did you guys think about staying private longer, raising capital? I mean, you had a lot of options as a company making money in this sort of environment, when there are, again, a lot of big investors out there who are ready to throw capital around.

MARK ZAGORSKI: Yeah, I mean, look, we've had a great sponsor as a private company through Providence Equity. You know, late last fall, we raised a private round that was led by Tiger Global. It included Fidelity and Neuberger, BlackRock and HighSage and, you know, a whole slew of great kind of private names.

But when we looked at what was next for us as a company, the public markets were just a great place for us to be. You know, we felt like both the visibility, plus the liquidity of capital, will give us kind of the raw gunpowder that we need to go out and continue to grow the business. So we're excited about being a public company. We think it not only helps us from a continued growth perspective, but also from a visibility perspective, as we want to continue to grow our solution across more platforms and across more geographies around the world.

MYLES UDLAND: All right, IPO price of 27 last night, 31 to 33 the latest indication as the first trades of DoubleVerify come in. Mark Zagorski, CEO of DoubleVerify. Mark, congratulations on the debut. I hope we'll be in touch as you begin your life as a public company CEO.