On Thursday, CTV ad server Innovid announced its first quarterly earnings since going public last year.
Innovid’s Q4 revenue was up 13% year-over-year to $26 million driven mostly by CTV, which itself grew 48% YOY in 2021.
CTV was responsible for nearly half (45%) of Innovid’s total revenue in 2021, compared with 40% the year prior, Zvika Netter, the company’s CEO and co-founder, told investors. Most of that growth is attributable to personalized ad creative and Innovid’s measurement capabilities, as well the addition of new global markets and advertiser clients.
It wasn’t all roses, though. Innovid lost $7.6 million in Q4 operating expenses, which it blames on the supply chain (like everyone else).
Innovid has been around since 2007, but it didn’t start focusing on the measurement game until 2019. By that point, it was clear from advertisers that a hybrid solution combining digital and linear was the way forward.
“Demand has matured, and advertisers have been seeking a converged view that includes linear,” Netter said.
All about TVSquared
To help check linear off its list, Innovid bought technology and TV measurement provider TVSquared earlier this month. Onboarding TVSquared into Innovid’s offerings is a “monumental step to [getting] linear addressable, CTV and digital [all] in one platform,” Netter said.
Thirty-eight agencies and advertisers ran campaigns through Innovid’s platform in 2021. Netter expects that number will grow now that Innovid also offers linear TV data.
Ironically, sometimes you’ve got to look backward in order to move forward, Netter noted. Retroactively tacking linear onto its solution, for example, will accelerate Innovid’s presence on the international stage. The integration with TVSquared expands Innovid’s footprint so that it’s now in 75 global markets, Netter said.
Originally, international expansion wasn’t on Innovid’s immediate road map, but the company decided to go for it because of buyer demand. For example, Innovid had been mulling entering China for four years – it’s a huge market, after all – but ultimately decided not to go in because of how complex it would be to build infrastructure … until Innovid’s clients, especially its larger ones, insisted on the necessity.
“Once we had enough demand [for China], we hired a team there to support our clients’ global demand,” Netter said, stressing that the move isn’t just about selling locally in China or outsourcing. “It’s about delivering ads in every corner of the world.”
Currently, international markets account for only 9% of Innovid’s total revenue, but that number is expected to grow once the deal with TVSquared officially closes.
The third thing TVSquared brings Innovid is a different array of brand and agency partners. TVSquared got its start in linear with smaller, performance-oriented brands, which should help Innovid move down the funnel.
TVSquared “has a product that caters to performance-minded advertisers like DTC, ecommerce and local advertisers, so the self-service measurement of linear and CTV can support a longer tail,” said Tal Chalozin, Innovid’s co-founder and CTO. “We’re not giving up anything – we’re gaining a diversified revenue stream.”
Diversification is especially important when the headwinds start to blow.
Innovid’s revenue from ad spend on CTV slowed down in Q4 because of the supply-chain shortage, which affected advertisers in the automotive, CPG and electronics verticals in particular. (Citing supply-chain issues is starting to sound like the ad tech world’s way of saying “my dog ate my homework.”)
But according to Netter, supply-chain hiccups were only an issue in the fourth quarter.
“Despite headwinds, the macro trend is advertising budgets shifting to CTV,” said Netter, who claimed Innovid should benefit from this “secular trend” because the company is now onboarding high-caliber clients, including Mercedes-Benz and CVS.
The number of advertisers that generate at least $100,000 for Innovid on an annual basis grew to 109 last year, and the company’s client retention rate rose to 97% from 94% the year prior, said Innovid’s CFO Tanya Andreev-Kaspin.
On Wall Street
Investors seem convinced by Innovid’s narrative, at least for the time being. Innovid’s share price opened at $3.75, dropped to $3.60 following the morning earnings report, then leveled back out to around $3.80 Thursday afternoon.
Still, it might be too early in Innovid’s public market lifespan to deduce much from the minor dip and bounce back.