TikTok, Reels, YouTube Shorts: Short-form video is 'attracting a lot of ad dollars,' says DoubleVerify CEO

Shares of digital advertising company DoubleVerify tumbled 14 percent despite reporting revenue that was in-line with forecasts and reaffirming its guidance. DoubleVerify CEO Mark Zagorski tells Yahoo Finance Live that in the advertising space "social continues to grow" much of it "driven by short-form video." Social media platforms like TikTok and YouTube Shorts are "really driving a lot of customer engagement and attracting a lot of ad dollars as well."

Video Transcript

SEANA SMITH: All right. Let's talk about another name that's on the move today-- DoubleVerify. The advertising data platform failing to impress the Street with its second quarter results. You're looking at the stock closing off just over 14%. It's the latest reading on the health of the ad market following mixed results that we got last week from some of the largest players in this space-- Snap, Meta, and Google.

So here with more, we want to bring in Mark Zagorski. He's CEO of DoubleVerify. Mark, it's great to see you here. So revenue of $133.7 million, meeting the Street's expectations. You reaffirmed your full-year forecast. What can we learn from your results that's indicative of the broader ad market economy right now?

MARK ZAGORSKI: Yeah. I think it's an interesting take, because as you noted earlier, there's a little bit of, you know, variability in what's going on in the ad market. There's definitely winners and losers. And since we're pretty equally spread across the ad market, we get to see a lot of it.

So our growth, which was definitely in line with analysts expectations, we actually beat on the EBITDA line and gave pretty solid guidance for the rest of the year, saw certainly spikes in certain areas. So our social business grew at over 31%, which is, you know, a really nice growth rate. Our programmatic business grew particularly, our ABS product grew at 51%.

And I think what it shows is that expectations are pretty high for an advertising rebound. But that advertising rebound across the board is a bit uneven. You know, one other interesting proof point that we've seen is the ad rebound outside of the US, particularly in international markets, has been much stronger. Now, they're coming from a much lower base. They had a tough ad year last year. But markets like EMEA, for us, grew at 33%. And you know, APAC grew at almost 50%.

So for sure, you know, we're looking at some uneven growth. But it certainly feels better if you ask our advertiser clients. It feels better than it did at the beginning of the year. So I think we are coming to a turning point.

AKIKO FUJITA: Yeah. Mark, you mentioned that rebound that we're seeing is uneven. We certainly saw that reflected in big tech earnings that came out last week, whether that was from Meta or Alphabet, talking specifically about digital ads. Where are we seeing the biggest upside if you're talking about the ad space overall?

MARK ZAGORSKI: Yeah. I think, you know, social continues to grow. And I think, driven by short-form video, right? So the revolution driven by TikTok, which has now been adopted by Meta through their Meta Reels product and YouTube through YouTube Shorts is really driving a lot of customer engagement and attracting a lot of ad dollars as well. So I think you're seeing social continue to grow and social that's focused a lot on short-form video. I think traditional digital media is where there'll be some challenge. So traditional publisher-focused digital media is still, I think, challenged. So I think social, for sure.

Connected television, CTV, growth, a lot of expectations there. We're still seeing nice volume growth there. But the competition is growing, too, with the addition of HBO Max, Netflix with an ad-supported tier, Disney+ with an ad-supported tier. You've got a lot of quality inventory coming into the CTV space fighting over ad dollars.

So, you know, areas growing that are solid-- social, short-form video continue growth and CTV. Challenged digital areas, maybe traditional digital publishing.

SEANA SMITH: Mark, you announced an acquisition of an AI ad tech firm. I'm curious from your perspective, how was AI revolutionizing the advertising industry? And in order for companies to take advantage of that, who's done that best so far?

MARK ZAGORSKI: Yeah. You know, AI does touch everything. And you know, beyond being a buzzword, there are real applications for it in the digital media world, particularly around the idea of optimizing ad spend. So 85% of digital media outside of social and search is bought and sold programmatically. And programmatic advertising is all about bidding and finding the right bid at the right time for the right impression.

The ability for AI to supercharge that bidding process and the ability for AI to make sure that the advertiser is delivering against their KPIs, I think, is a real value proposition for advertisers. And I think it's going to be a turning point for how ads are bought and sold even in a more aggressive programmatic way than it has in the past.

AKIKO FUJITA: What about generative AI? I mean, that's the thing we're trying to figure out. AI, the technology, has been utilized in ads for years. And we've seen it really sort of fine-tune being able to target the right customer. But where does GenAI play into all of that? How do you see that?

MARK ZAGORSKI: Yeah. GenAI is interesting, because again, it will touch both the buy side but also the sell side. You know, GenAI can be used to create dynamic advertising, right, and change ads on the fly for individual consumers and individual advertisers. It's also being used, though, in probably not a greatly positive way and actually creating what's called made-for-advertising content and kind of perpetrating huge amounts of websites and content that's been created by machines, not written by humans, that are kind of proliferating all over the internet.

So generative AI, you know, has the ability to do some really interesting and positive things. But it's also creating tons of content. And some of that content can be considered misinformation or disinformation or not brand-safe. And that's where, I think, that's a place where companies like ours come in to ensure that an advertiser is not just buying an impression the most efficiently, but buying a quality impression that's brand-safe and brand-suitable. So AI, generative AI is really starting to touch lots of different aspects of advertising.

SEANA SMITH: All right. Mark Zagorski, great to get your perspective on all that, CEO of DoubleVerify. Thanks so much.

MARK ZAGORSKI: Thank you.