Programmatic Fuels Integral Ad Science’s Q2 Growth

programmatic fuels integral ad sciences q2 growth

Ad verification and measurement provider Integral Ad Science held its first earnings call after going public just over a month ago. Revenue increased 55% to $75.1 million year-over-year.

That growth was largely fueled by programmatic revenue, which jumped 94% to $31.8 million compared to the same period last year. Programmatic accounts for 42% of total Q2 revenue, as Integral Ad Science handles a higher volume of impressions and average CPMs rise.

The New York-based company – whose clients include Verizon, Disney and Coca-Cola – held its earnings call two days after it acquired sell-side CTV ad server and analytics company Publica for $220 million. CEO Lisa Utzschneider said the acquisition will allow IAS to “leapfrog” faster into the CTV space.

Integral Ad Science’s initial public offering in June put the company’s value at $2.5 billion. The company raised $275 million, CFO Joe Pergola said.

Back in June, Utzschneider told AdExchanger that the company would 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.

programmatic fuels integral ad sciences q2 growth

IAS’s gross profits increased 57% to $62 million – at an 83% margin. But net income showed a loss of $35 million due to costs associated with going public, like offering stock compensation.

Utzschneider attributed previous net losses in 2019 and 2020 to the company’s investments in its technology and business.

As ad dollars permanently shift out of linear TV budgets and into digital due to changing consumer behaviors caused by the COVID-19 pandemic, it has fundamentally changed demand for IAS services, especially around programmatic, CTV and social, Utzschneider told investors.

“Leapfrogging” into CTV

Publica will continue to operate as a stand-alone entity for “the foreseeable” future as IAS plans an integration strategy. Utzschneider said Publica’s unified auction, video ad server and deep relationships with publishers and SSPs will give IAS a more immediate path to offer solutions in CTV. eMarketer estimates CTV is a $13 billion market.

“We see Publica as an opportunity to accelerate our CTV efforts … both in terms of getting us access to massive amounts of CTV programmatic inventory and also access to data,” she said.

IAS’s CTV revenue, she added, increased 404% in Q2 from the same period in 2020, which she described as a small base.

“We are expecting a more meaningful contribution in starting in late 2022 into 2023,” Utzschneider said. “CTV is the first inning of a long game.”

All About Context

IAS’s Context Control tool, which launched in March 2020, was a major driver of programmatic growth and represented 30% of programmatic revenue in Q2. The solution is integrated with all major DSPs, including Google DV360, and provides contextual targeting capabilities for digital ad placements.

Utzschneider told investors that IAS has seen “strong market adoption” of Context Control in the wake of Apple’s recent AppTrackingTransparency privacy framework, Google’s planned third-party cookie deprecation and looming privacy legislation, all of which are fueling “demand for targeting tools that do not rely on gathering audience-based data.”

Among the clients using the platform are American Express, Deutsche Telekom, Disney, Johnson & Johnson and Volkswagen.

Being Direct

IAS’s advertiser-direct revenue, meanwhile, climbed 40% to $35.3 million, driven by higher impression volume, particularly on Facebook and YouTube, as clients such as Coca-Cola, L’Oréal, Estée Lauder and Nestlé invest more in social, Pergola said.

Video revenue saw strong growth as well and now accounts for 39% of total advertising direct revenue.

Social makes up 37% of ad-direct revenue and is expected to rise to 45% by 2023, as IAS develops in-house solutions to detect “undesirable” content in live news feeds.

IAS struck a partnership with TikTok to classify video, audio and text to ensure content is brand safe and meets Global Alliance for Responsible Media standards for in-feed video. The tool is currently in beta in a handful of markets, with a planned rollout later this year.

IAS rival DoubleVerify is also working on a viewability and fraud solution in open beta with TikTok in 14 markets.