If the message in ad tech company Conversant’s year-end quarterly was one of renewal following a rough 2013, its Q1 was about stability and sustainability as the company beat the guidance it provided in its Q4 2013 call. This was largely due to improvements in the company’s display business as well as its work in cross-channel client campaigns.
Conversant’s Q1 revenue was $145.9 million, a year-over-year increase of 8%.
Q1 media revenue grew year over year to $103.5 million, an increase of 7%. Media revenues include Conversant’s CRM, mobile, video and cross-channel technologies business along with its display business.
While declines in Conversant’s display business in 2013 resulted in a companywide down period, display picked up this quarter, said CFO John Pitstick. This contributed to Conversant’s growth, Pitstick said: “The main driver of better top-line growth was better performance in our display business.”
Revenue from cross-device targeting campaigns also factored in Conversant’s positive quarterly. Forty percent of revenue, said CEO John Giuliani, came from “client campaigns targeting consumers across multiple delivery channels, such as display and mobile.”
Mobile in particular was one of the fastest growers for Conversant. Video grew faster, Giuliani said, but it’s a smaller part of Conversant’s business.
But he anticipated Q2 financial shakiness ahead, particularly in CRM, where Giuliani noted that one client had filed for bankruptcy and another had undergone significant organizational changes that reduced its budgeting.
“Certainly (these two issues) will be a headwind for Q2, as well as for the back half of the year, depending on what this second client ends up doing with its budget,” Pitstick said. “With the bankruptcy, we assume that budget is 100% gone.”
Revenue from Commission Junction, Conversant’s affiliate marketing arm, grew to $42.5 million, an 11% year-over-year increase. This is better than what Conversant anticipated last quarter, when Pitstick said to expect only a 4% increase. However, external factors worked out in the company’s favor.
“There was a case where a client switched to a lower cost provider, realized that wasn’t working very well, and came back to us,” Pitstick said.
If 2013 was a year of recovery for Conversant, 2014 is the year the company expects to execute its vision. Following a rebrand and the acquisition of video advertising tech firm SET Media in February, Conversant intends to merge its tech assets into a single platform, fueled by a common data source.
Ideally, this data will be shared between Conversant’s media segments and its affiliate marketing segment, and vice versa. If executed properly, clients will understand how these once-disparate elements can tie into an overall marketing plan. The hope is that Conversant, as Giuliani put it, will be able to “provide an ROI at an ID level.”
There’s still integration work that needs to be completed, of course. SET Media, for instance, is designed to provide contextual targeting around video, addressing brand concerns around brand safety and viewability. But Conversant plans for this component to be integrated by Q3.
The bottom line: Q1 2014 was a nice start, but it remains to be seen how thoroughly Conversant can execute on its stated vision, and whether it can alleviate some of its expected client losses with client gains. The ad tech space is competitive and Conversant certainly isn’t alone in its attempts to bring to market a cross-channel ad stack.
