An economic slump isn’t an ideal environment for an ad tech company to prove itself – especially during its first year as a public company.
Take ad server Innovid.
The company, which reported Q4 earnings on Friday morning, confirmed plans to lay off 10% of its global staff this year. Innovid’s headcount was just under 400 as of the end of 2021.
But considering the external pressures, things could’ve been worse.
Innovid closed 2022 with $127 million in total revenue, a year-over-year increase of 41%. Innovid reported 30% YOY revenue growth for the fourth quarter, although that number drops to just 5% after accounting for the company’s recent acquisition of measurement provider TVSquared.
And Innovid estimates that it lost out on $18.4 million in revenue this year, including $3.4 million in Q4, due in part to lower ad spend but also thanks to acquisition-related expenses.
Still, even if revenue growth remains flat this year, Innovid will have “improved profitability compared to 2022,” said CFO Tanya Andreev-Kaspin.
Innovid is banking on connected TV (CTV) demand and measurement to stay profitable this year.
“Our core CTV business will continue to outpace other channels in terms of overall video impressions,” CEO Zvika Netter told investors, adding that measurement in particular is now a “significant revenue driver” for the company.
All in on CTV
CTV makes up around half of Innovid’s total revenue. In Q4, CTV-related revenue was up 13% YOY, excluding TVSquared.
Connected TV accounted for 51% of the impressions Innovid served last year, a number the company expects will keep ticking up as a result of better measurement capabilities.
Measurement services made up 20% of Innovid’s total revenue in 2022 and will continue to be a priority for Innovid across both CTV and linear.
Although Innovid is looking to CTV for growth, most of its clients still spend the bulk of their budgets on linear. TVSquared is mainly a linear measurement provider. But because TVSquared favors impressions over panels when measuring linear TV households, Innovid is now in a better position to profit from both linear budgets and streaming budgets.
Standing out
But while the entire TV industry is toasting consolidation, Netter emphasized that it has its limits.
“We firmly believe that the advertising industry needs to separate critical technology infrastructure from media buying and selling,” Netter said.
The DOJ’s recent antitrust suit against Google for allegedly monopolizing multiple digital ad products “reinforces our view” that software and ad sales should stay separate, he said.
Plenty of supply-side platforms are boasting that direct integrations between their ad severs and their sell-side tech will protect them from being swept away by the market’s enthusiasm for supply-path optimization.
Innovid doesn’t have an SSP and has never sold media, so Netter’s comment may seem out of place, but his point is this: You can’t blame Innovid for tying (or for trying).
Call it self-serving shade, but you’ve gotta do what you’ve gotta do to attract limited ad dollars during an economic slump.
Innovid is focusing on building its ad serving and measurement capabilities to position itself for sustainable profitability once the economy improves, CFO Andreev-Kaspin told shareholders.
But investors don’t seem convinced. Shares plummeted 13% on Friday morning.
