IAS Goes Public In Bid To Retain Competitive Edge

Ad verification and measurement provider Integral Ad Science went public Wednesday after filing an S-1 with the Securities and Exchange Commission earlier this month.

The New York-based company began trading on the Nasdaq at $18 per share – above the initial $15 to $17 price range – raising $270 million through the sale of 15 million shares. The stock price was up nearly 19% to $21.37 as of midday.

The initial public offering puts the company’s value at $2.5 billion, with an enterprise value of $2.6 billion.

IAS, whose clients include Verizon, Disney and Coca-Cola, is the latest in a slew of ad tech companies to go public in recent months. Its initial public offering comes on the heels of rival DoubleVerify’s IPO in April. DoubleVerify is currently valued at $5.4 billion, and its offering was one of the biggest ad tech IPOs in recent memory.

IAS is clearly using that wave of investor interest to help fuel its global expansion. CEO Lisa Utzschneider told AdExchanger that the company will use the funding to invest in its programmatic offerings, develop verification solutions for live feeds in social platforms, and deepen its push into connected TV.

IAS is integrated with advertising and technology platforms that include Amazon, Facebook, Google, The Trade Desk, Twitter and Xandr, among others.

The company reported $240.6 million in annual revenue in 2020, according to the SEC filing, and took in $67 million in revenue in the first quarter of 2021, representing 24% growth year over year.

The biggest driver of that growth, Utzschneider said, has been the company’s contextual solution within programmatic that launched last year and gives advertisers more control over the context of their digital ad placements.

The offering first launched with The Trade Desk’s DSP, and contextual now represents 30% IAS’s total revenue.

IAS reported net losses of $32.4 million and $51.3 million in 2019 and 2020, respectively, and as of March, the company ran a $130.3 million accumulated deficit, all of which Utzschneider attributed to the company’s technology and business investments.

AdExchanger spoke with Utzschneider.

AdExchanger: Why did IAS decide to go public now?

LISA UTZSCHNEIDER: We've reached a scale and leadership position that's resonating with public market investors. Given the high demand for global verification solutions, both for marketers and publishers, the timing felt right to take the company public.

How will this give IAS a competitive edge against other verification players, most notably DoubleVerify? How is IAS setting itself apart?

There are a couple of differentiators – the first is our global footprint. When you take a look at our revenue, 60% sits in the [United States] but 40% of it is international. We've had a deep footprint both in the EMEA and APAC for many years with deep partnerships around the world. We have over 2,000 loyal customers globally.

We continue to invest in emerging markets and the trend we're seeing, especially over the last 12 to 18 months, is more and more Fortune 500 iconic brands, like Nestlé and Coke, are looking to partner with one verification provider globally. We're signing lots of multiyear agreements because brands are seeing the strategic value and importance of brand safety and brand suitability.

It seems like every week there’s an ad tech company going public. Do you foresee a bubble?

When you take a look at the size of the marketplace, last year digital advertising was $340 billion and it is projected to grow to $540 billion within the next couple of years. Digital advertising is absolutely here to stay and this is no bubble.

How will the funding be used to fuel the company’s expansion? What solutions is IAS looking to build out or expand? And could that include potential M&A deals?

There are a couple of promising growth accelerators. The first is programmatic. We continue to invest in programmatic; it continues to grow our business, especially that contextual targeting solution we launched last year.

The second is developing verification solutions for the live feeds in social platforms. Twitter announced at the end of last year they selected us and another player to build a solution this year and we're heads down doing just that.

And the third promising opportunity is connected TV – it's the first inning of a long game. In connected TV, there's some very interesting technology out there regarding video classification, video imagery, and language translation. We’re excited about CTV and we'll continue to invest in our M&A strategy.

How will the IPO help IAS maintain its integrations with DSPs?

With programmatic in particular, the sweet spot for IAS is our prebid contextual targeting solution. It will enable us to continue to innovate in contextual targeting and deepen our integrations with the DSPs.

With the growth of streaming and CTV, do you expect an increase in ad fraud? And could those scams move into audio and podcasts?

The digital ecosystem continues to grow. It also has become more complicated for marketers and media wastage is a massive problem for marketers and IAS is here to solve that problem.

With fraud detection alone, third-party research companies have cited fraud to be a $100 billion problem over the next couple of years. Marketers are really looking for sophisticated fraud detection solutions.

When it comes to fraud in CTV, what we've seen is higher detections of fraud in programmatic CTV. And as more and more marketers invest in programmatic CTV, we see it as an opportunity for IAS to continue to innovate and provide best in class fraud detection solutions across all of CTV, but in particular, programmatic CTV.

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