On Thursday, ad server CTV Innovid reported its first quarterly results since going public last year.
Innovid’s fourth-quarter revenue rose 13% year-over-year to $26 million, driven primarily by CTV, which itself grew 48% year-over-year in 2021.
CTV was responsible for nearly half (45%) of Innovid’s total revenue in 2021, up from 40% the previous year, Zvika Netter, the company’s CEO and co-founder, told investors. Most of this growth is attributable to Innovid’s personalized ad creatives and measurement capabilities, as well as the addition of new global markets and advertiser clients.
But all was not rosy. Innovid lost $7.6 million in operating expenses in the fourth quarter, which it attributes to the supply chain (like everyone else).
Innovid has been around since 2007, but it only started focusing on the measurement game in 2019. By then, it was clear to advertisers that a hybrid solution combining digital and linear was the way to go. .
“Demand has matured and advertisers are looking for a convergent view that includes linear,” Netter said.
Everything about TVSquared
To help verify linear of its roster, Innovid bought TV technology and measurement provider TVSquared earlier this month. The integration of TVSquared into Innovid’s offerings is a “monumental step for [getting] addressable linear, CTV and digital [all] on one platform,” Netter said.
Thirty-eight agencies and advertisers ran campaigns through Innovid’s platform in 2021. Netter expects that number to grow now that Innovid also offers linear TV data.
Ironically, sometimes you have to look back to move forward, Netter noted. The retroactive addition of linear to its solution, for example, will accelerate Innovid’s presence on the international scene. The integration with TVSquared expands Innovid’s footprint so that it now has a presence in 75 global markets, Netter said.
International expansion was not originally on Innovid’s immediate roadmap, but the company decided to take the plunge due to buyer demand. For example, Innovid had been considering entering China for four years – it’s a huge market, after all – but ultimately decided not to enter due to the complexity of building infrastructure…until something Innovid’s customers, especially the bigger ones, insist they need.
“Once we have had enough demand [for China], we’ve hired a team there to support our customers’ global demand,” Netter said, noting that the move is not limited to local China sales or outsourcing. “It’s about getting ads to every corner of the world.”
Currently, international markets represent only 9% of Innovid’s total revenue, but this figure is expected to increase once the agreement with TVSquared is officially concluded.
The third thing TVSquared brings to Innovid is a different array of partner brands and agencies. TVSquared made its shelf debut with smaller, performance-focused brands, which should help Innovid move down the funnel.
TVSquared “has a product that caters to performance-minded advertisers like DTC, e-commerce and local advertisers, so self-service measurement of linear and CTV can support a longer queue”, said Tal Chalozin, co-founder and CTO of Innovid. “We don’t give up anything – we earn a diversified revenue stream.”
Diversification is especially important when the headwinds begin to blow.
Innovid’s revenue from ad spend on CTV slowed in the fourth quarter due to supply chain shortages, which particularly affected advertisers in the automotive, CPG and electronics sectors. (Quoting supply chain issues is starting to sound like the ad tech world’s way of saying “my dog ate my homework.”)
But according to Netter, supply chain issues weren’t an issue until the fourth quarter.
“Despite the headwinds, the macro trend is for advertising budgets to shift towards CTV,” said Netter, who said Innovid stands to benefit from this “secular trend” as the company now onboards high-caliber clients, including Mercedes-Benz and CVS.
The number of advertisers who generate at least $100,000 for Innovid on an annual basis increased to 109 last year, and the company’s customer retention rate increased to 97% from 94% the previous year. , said Innovid’s chief financial officer, Tanya Andreev-Kaspin.
On Wall Street
Investors seem convinced by Innovid’s narrative, at least for now. Innovid’s stock price opened at $3.75, fell to $3.60 after the morning earnings report, then stabilized at around $3.80 on Thursday afternoon.
Still, it may be too early in Innovid’s public market lifespan to deduct much from the minor dip and rebound.