With greater than two dozen firms working within the digital promoting house now listed on inventory exchanges, what it means to be public has modified considerably up to now yr.
So what classes have advert tech CEOs discovered of their transition from non-public to public?
Integral Advert Science CEO Lisa Utzschneider, Magnite CEO Michael Barrett and DoubleVerify CEO Mark Zagorski talked about that have at AdExchanger’s Trade Preview Tuesday, in a panel moderated by LUMA CEO and founder Terence Kawaja.
Going public means wanting good to traders. The CEOs agreed it’s finest to emphasise distinctive strengths relatively than invite comparisons. Being completely different from the gang makes an organization extra enticing to traders.
Not that they’re encouraging anybody to go public behind them.
Becoming a member of the gang can depart firms competing for a small portion of a tech investor’s capital spend. Tech traders are likely to take a generalist method, and there aren’t lots of, if any, devoted advert tech funding companies.
“It wasn’t useful to the general valuation of the business to have that many IPOs in a single yr,” Barrett mentioned. “If I’m a generalist and 10% of my portfolio is devoted to advert tech, three IPOs have eaten up that 10%. So now I can’t purchase any extra.”
All the panelists suggested advert tech firms which are at the moment contemplating a public providing to take their time and be strategic relatively than dash to hitch the IPO crowd. “Have a transparent strategic plan, a clearly outlined imaginative and prescient. And don’t rush,” Utzschneider mentioned.
A profitable IPO comes down to a few issues, in keeping with Zagorski: a singular imaginative and prescient, a singular worth proposition for purchasers and distinctive and sustainable financials that may energize the enterprise going ahead.
Whats up, headwinds
Going public additionally means a inventory can go up and down for causes past what a CEO can management.
The record of exterior forces affecting advert tech recently is a protracted one. Kawaja pointed to Google and Apple’s identifier deprecation, privateness laws and authorized choices, antitrust motion and the worldwide pandemic. And he deadpanned that Russia’s invasion of Ukraine “can be dangerous,” to place it mildly.
As soon as an organization is publicly listed, it’s beholden to the whims of the market and market analysts.
As a result of Wall Road doesn’t have a agency grasp on the (some would say deliberately slippery) advert tech business, traders might be blind to long-term tendencies, and they’re extremely reactive to short-term fluctuations in income, regulatory and coverage modifications and anything which may counsel danger.
“You need to cope with the market dinging your valuation as a result of one other firm’s numbers have been down,” Zagorski mentioned.
For one instance of this dynamic at play, look no additional than the ripple impact Meta’s disastrous This fall 2021 earnings report had on the broader market, together with ecommerce firms.
A part of the accountability for a publicly traded firm is to assist traders perceive that what hurts one promoting firm might assist one other. Working example: IAS advantages when identification goes away as a result of it gives contextual promoting. “Your shock is my tailwind,” Utzschneider mentioned.
CEOs should proceed to level out these variations to traders as Wall Road performs catch up after the advert tech business’s IPO rush.
