Adalytics who?
DoubleVerify reported its Q4 earnings on Thursday with nary a mention of nor an investor question regarding the letter it received from Sens. Marsha Blackburn (R-Tenn) and Richard Blumenthal (D-Conn) earlier this month in reaction to an Adalytics report linking the company and others to the alleged monetization of child sexual abuse material.
But investors had lots of questions about DoubleVerify’s plan to acquire attribution platform Rockerbox for $85 million in cash. The deal, announced on Wednesday, is set to close next quarter. Rockerbox was advised by Brian Andersen and Mark Greenbaum of Atlas Technology Group.
DoubleVerify CEO Mark Zagorski called the acquisition “relatively small” but with “great scaling opportunities.”
Combined with Scibids, the AI startup DoubleVerify acquired in 2023, Rockerbox is a big part of what he called DV’s “evolutionary story” toward being an end-to-end measurement solution that also includes measuring outcomes.
The reasoning behind Rockerbox
Acquiring Scibids and Rockerbox in quick succession is about making DoubleVerify more attractive to potential customers and stickier with existing ones.
Scibids didn’t have “a ton of revenue” when DoubleVerify bought it, in terms of adding to DV’s bottom line, Zagorski said, and neither does Rockerbox.
But revenue wasn’t the strategic rationale behind either deal.
Rockerbox “creates a differentiator for us that helps us win business and catalyze growth,” he said.
The results
Q4 wasn’t a boon, however.
Although full year 2024 revenue increased by 15% to $657 million and Q4 revenue was up 11% year over year to just over $190 million, the final quarter of the year fell short of the company’s own expectations. DV’s stock fell by roughly 15% in after-hours trading.
Zagorski called Q4 “disappointing,” but blamed the shortfall on a series of “isolated headwinds.”
In addition to a slowdown in ad spend after the election, six large customers scaled back their ad spend throughout the year, including a dramatic reduction by one of DV’s largest customers in Q4.
This customer, a CPG brand, was facing billions in sharply escalating commodity costs and was forced to pull back across the board. Its belt-tightening initiative also impacted the CPG brand’s other advertising and marketing partners, Zagorski said.
From open web programmatic to ‘proprietary platforms’
Headwinds aside, he said, DV has opportunities to tap into this year.
Zagorski pointed to DV’s supply-side partnerships with Index Exchange, Criteo and Google Ad Manager, as well as an increase in demand from retail media platforms. Zagorski also played up social measurement revenue, which increased by 9% in Q4.
“We saw the continued shift of ad dollars from open web programmatic to proprietary platforms, like social, where most of our activation solutions were unavailable until early this year,” he said.
Although DV’s solutions “are playing a bit of catch-up to have the same kind of efficacy and scale as we had in the open web,” he said, “I think we’re in a good position now.”
DV launched content-level controls for Facebook and Instagram Reels earlier this month and recently expanded its viewability and brand safety coverage across more ad formats on YouTube. It’s also been investing in pre-bid solutions across Meta and TikTok.
Social media now accounts for more than 60% of digital ad spend, excluding search, Zagorski said, “yet today DV measures only about 5% of all US social impressions.”
URL-level reporting
So, the future looks rosy. But the elephant in the room – the intensely negative full-court press challenging the viability of ad verification technology in general – went unaddressed.
Although, to be fair, one investor did ask about the announcement earlier this week that DV is expanding the availability of URL-level transparency to all customers. This data was previously only offered on request.
In their letters to DV and Integral Ad Science following the Adalytics report on child sexual abuse material, Sens. Blackburn and Blumenthal asked explicitly about providing advertisers with URL-level reporting.
“As a vendor whose code appears directly in ads that serve on a given page, DoubleVerify should have visibility into the full-page URL where an ad is rendered,” the senators wrote in their letter addressed to Zagorski. “However, we understand that DoubleVerify generally withholds long-term, granular page-level data from its clients.”
The investor who asked about URL-level reporting, however, didn’t bring up the letters. He was curious about the potential lift that URL-level reporting could provide for metrics such as retention and spend per customer.
Zagorski demurred.
“It’s more of a transparency initiative than an actual revenue or growth driver,” he said. “It kind of shows our commitment to driving greater transparency in the ecosystem, to giving our advertisers comfort and confidence in where and how they’re buying.”
