DSP Q3 2024: AI Tools Drive Above-Market Growth, Margins Seen Rising
- Strong Technology Differentiation: Executives highlighted the innovative ViantAI and IRIS.TV integrations during Q&A, emphasizing that their AI-driven tools enhance campaign planning, bidding efficiency, and contextual targeting—providing a compelling edge over legacy DSPs.
- Robust Customer and Revenue Growth: Q&A participants detailed that both existing and new customers are increasingly utilizing advanced products like AI bidding and Direct Access, which drives incremental revenue growth and positions DSP well for expanding market share.
- Future Synergies and Scalability: The discussion on leveraging combined data—integrating IRIS_ID with Viant Household ID—suggests potential for even more precise targeting and pricing improvements, underscoring a scalable platform that can attract broader advertiser segments.
- Margin Pressure from Fixed-Price Deals: Q&A participants raised concerns about the fixed-price onboarding model, noting that while it expedites new customer acquisition, it results in lower-margin revenue initially, potentially pressuring overall profitability.
- Reliance on Early-Stage Technologies: The heavy emphasis on ViantAI and the integration of the IRIS.TV acquisition, while promising, are still in early phases. If these products underperform or fail to secure sustained customer adoption, it could adversely impact growth and margins.
- Expense Growth from Acquisition Integration: The discussion on 2025 expense outlook indicated that the IRIS.TV acquisition is expected to add overhead, which might limit the company's ability to grow operating efficiencies relative to revenue, potentially undercutting long-term profitability.
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Margin Dynamics
Q: Gross vs ex-TAC margins discrepancy?
A: Management clarified it’s not 95% giveaway; the higher fixed-price model for new customers explains the 34% gross spend versus 21% ex-TAC, and margins are expected to improve as customers scale. -
Fixed Price Model
Q: Why use fixed pricing for new customers?
A: The model is designed to accelerate onboarding. Early engagements start with fixed pricing, which later transition to percent-of-spend, shortening the sales cycle and driving long-term efficiency. -
Growth Outperformance
Q: Can DSP outgrow the broader digital market?
A: Management expressed confidence that the DSP will continue to grow above market, especially in CTV, even with tougher comps and as digital ad spend evolves. -
Expense Growth
Q: How will expenses behave amid acquisitions?
A: Although the IRIS acquisition adds some overhead, non-GAAP operating expenses are expected to grow slowly, remaining outpaced by revenue and contribution trends. -
CTV & IRIS Integration
Q: How does IRIS enhance CTV targeting?
A: IRIS’s content ID provides rich contextual data that, when combined with our targeting tools, offers a strong alternative to walled gardens by enabling more precise ad placements. -
AI Bidding Enhancement
Q: Can IRIS data improve AI bidding?
A: Yes. The detailed content signals from IRIS empower our AI bidding tool to adjust bids more dynamically, improving both cost efficiency and campaign performance. -
ViantAI Go-to-Market
Q: How is ViantAI tackling new advertiser segments?
A: ViantAI’s intuitive interface helps smaller advertisers enter programmatic advertising, contributing to new client growth and broader adoption through automation. -
Political Season Effects
Q: What are political ad impacts on CTV?
A: Political ads mildly raised CPMs in swing states but had limited overall effect; management expects Q1 to see minimal seasonal drag from political spending.
Research analysts covering Viant Technology.