DoubleVerify $DV CEO Mark Zagorski - the $100B war against digital ad fraud

Mark Zagorski is the CEO of DoubleVerify (NYSE: DV), a $3.4B market cap company that provides digital media measurement and verification software to major advertisers and platforms. In this episode of World of DaaS, Mark and Auren discuss: The $100B digital ad fraud economyWhy marketing data is wrong but worksThe death of cookies and what's nextBuilding sustainable independent adtech companies This episode of World of DaaS was brought to you by Alkemi. Check out alkemi.ai to learn how Alkemi ...

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Auren Hoffman?

  Hello, fellow data nerds. Welcome to World of DAS. I'm your host, Orin Hoffman, CEO of Incubate and GP of Flex Capital. Discover more episodes, get weekly data as a service news, original content, articles on data and more at worldofdas.com. That's worldofdas, D-A-A-S, dot com. This episode of World of DAS is brought to you by Alchemy AI. Sourcing and integrating third-party data is the most expensive and time-consuming stage of developing AI. Alchemy helps data providers engage AI developers and sell on-demand access to their data while maintaining transparency and control over IP. Alchemy helps unlock the booming AI market

• 0:46Auren Hoffman?

  without compromising IP. Hello, fellow data nerds. My guest today is Mark Sikorski. Mark is the CEO of Double Verify, a publicly traded company that provides digital media membership and verification software to major advertisers and platforms. Double Verify is a $3.4 billion market cap company. It trades under DV. Prior to Double Verify, Mark was the CEO of Talaria, which he founded with Rubicon to form Magnite, and he was also on the founding team of Exulate, which is where he and I met 15 years ago. Mark, welcome to World of DAS.

• 1:21Speaker 01

  Thanks for having me, Orin. Good seeing you again.

• 1:23Auren Hoffman?

  Really excited. For listeners who aren't like deep in ad tech, which is probably like most of our listeners, can you explain like the types of fraud that's common in like ad tech and CTV?

• 1:33Speaker 01

  Where DV fits into the scheme. What we do is we actually work between buyers and sellers of digital media to ensure that transaction is safe and verified. And one of the things we check for is fraud. And believe it or not, fraud is a multi-billion-dollar industry, if you want to call it that. And we see fraud across all different types of devices. We see across connected television, we see it in the mobile space, we see it in the open web. And it takes different forms in each one of those spaces. So we see something called spoofed URLs, which are URLs that are pushed out into the ad-buying ecosystem and made to look like legitimate, for example, connected television inventory.

• 2:16Auren Hoffman?

  Is like somehow it'll say it's like ESPN, but it's not?

• 2:19Speaker 01

  Yes. So it misrepresents actual property.

• 2:23Speaker 01

  We see things like fake apps that make their way into the app store. I always tell people, do not download fireplace apps for your CTV. All those things are are giant ad machines that secretly run ads behind those crackling flames that you see on your television screen. We see it in fake apps. We see it really everywhere. It embeds itself in the buying ecosystem. It embeds itself in the application ecosystem. And it embeds itself even in the hardware, some cases itself, in apps that end up in different types of hardware, everything from the obvious cases like mobile phones and CTVs to household devices that are connected. We've actually discovered connected refrigerators impersonating connected televisions and people

• 3:08Speaker 01

  running ads on single pixels on those screens. So it's crazy.

• 3:11Auren Hoffman?

  That was embedded at the manufacturing or somehow there was like a virus that got installed on the refrigerator?

• 3:18Speaker 01

  So someone basically hijacks the operating system of the screen itself and then represents that device as a different type of device.

• 3:25Auren Hoffman?

  But it's coming from a legitimate IP address, it's coming from a legitimate household in Kansas City or whatever it might be.

• 3:32Speaker 01

  Yeah, it's basically hijacking your personal device. We see that all over the place.

• 3:37Auren Hoffman?

  And how much money could someone make from like hacking someone's refrigerator and running ads in the background? Is that dollars per day? Is it tens of dollars per day?

• 3:46Speaker 01

  Millions of dollars per day.

• 3:48Auren Hoffman?

  But for each one, if they hack one refrigerator, how does it work?

• 3:52Speaker 01

  There's that old saying is, why do people rob banks? Because that's where the money is. Why are people creating fraudulent CTV impressions, connected TV? Because they're the most expensive ones.

• 4:02Auren Hoffman?

  You can do a $50 CPM type of thing.

• 4:04Speaker 01

  Exactly. Sell it into a market at $50 CPM and in someone's screen. So a good example of CTV fraud that occurs is ads that run in the background of an app that actually don't get delivered, no one can actually see them, or ads that run while a TV screen is off. Because people think when they turn their TV off, that the OS turns off, but in many cases it doesn't. Think of in an hour session, how many fake 30 second spots can you run? Many, many, many of them. And then you multiply that times tens and tens of thousands of devices and you're looking at tens of millions of dollars a year just on a single fraud scheme. We've broken up fraud schemes that have generated upwards of 10, 20 million dollars a month for fraudsters.

• 4:46Auren Hoffman?

  There's kind of the hard fraud, which is you're talking about. And then there's also kind of the softer fraud, which is maybe ads that the consumer doesn't see. Maybe they're below the fold or on the side. Someone's paying for the ad, but the consumer never has the opportunity to engage with it or interact with it.

• 5:01Speaker 01

  We wouldn't call that fraud as opposed to just ads that really shouldn't be monetized. They're not viewable by human. They end up in content that's not considered safe for an advertiser. Pornography or something like that, where an advertiser actually would never have bought those impressions. We look for those types of incidents as well. So what we look at is everything from true malicious fraud, where someone's driving impressions and falsely misrepresenting it being a viable ad environment, to impressions that are driven by bots, to misaligned impressions that end up in geographies that maybe that ad is not legal to be shown in, or in places where it really isn't viewable. So an ad is not viewable at all.

• 5:47Auren Hoffman?

  There's been some people talking about, okay, we're going to have this whitelisted of very, very reputable publishers and you should only run your ads there or something, which obviously limits what people could do. What are some of your thoughts on this controversy internally in the ad tech world?

• 6:03Speaker 01

  The beauty of what's come up in the digital world is this whole idea of like, there's tons of voices. There's lots of different places where people engage with content. There's not 500 great places. There's tens of thousands of great places.

• 6:17Auren Hoffman?

  Like I might go to my little niche pickleball site or something like that.

• 6:21Speaker 01

  Yeah, that's just as valuable to you as the New York Times is, getting specific information about something. So I think the beauty of the programmatic ad tech world and ad tech world as a whole is, hey, we can help monetize lots of folks, local people, marginalized voices, people that focus on a specific niche. And there can be quality there, too. So if you want a thriving, open internet, it's not 500 sites. It's not the AOL world of 20 years ago. It is the diverse and open and free universe of sites that there is today. So I get what folks are trying to do. But, look, you and I both lived this world. It was called an ad network. That's all it is. It's a fancy ad network in which

• 7:03Speaker 01

  you say, here are the top 500 places to run an ad. But most of them are going to run on these ones over in this side over here, anyway. So we'll put the logos up, but you'll get mostly the stuff that you probably didn't want to begin with.

• 7:14Auren Hoffman?

  If you think of data in marketing, a lot of data is bad. It's either wrong, or the metrics are low, or the attributes are wrong, or the signals are noisy. Yet, this data and advertising is still like a very, very important thing. How do we get that better over time?

• 7:31Speaker 01

  Data fidelity has been a challenge since the day the internet was launched. You make some strides, then they get knocked back. The accuracy of digital data is, it's mostly found in places where users take an active role in providing that data, i.e. in opt-in situations, in social networks, in walled gardens, in which folks are actually able to present that data and it can be verified. Once you start moving out of there, everything starts becoming algorithmically estimated, or coming up with some type of pinpointing down to a more accurate take on it. That being said, you come from the data world,

• 8:15Speaker 01

  and I live in the data world, too. You can be incredibly accurate by using really smart models. And I think the emergence of AI tools to work in that system, I think, helps as well. Because, again, the world doesn't exist within a Opt-in walled garden universe. Tools are getting better to define audiences. However, you're working in a world that also has various levels of privacy agreements out there that challenge the accuracy of tools that actually sometimes get in the way of providing better information to consumers just due to the fact that they're so meat cleaver in their approach.

• 8:55Auren Hoffman?

  These walled gardens seem to be getting more powerful because there's this idea that you could do whatever you want almost with first-party data, but you have almost very limited things you can do with third-party data. And of course, they're like writing the rules. In many ways, they are the regulator. Apple and Google is the ultimate regulator. They're the bigger regulator in many ways than the FTC or something like that is. And then, of course, they're writing the rules with other places. Do you see that power that they have continuing? Or do you see they're going to have less power in the future? Or where do you see that kind of world going?

• 9:28Speaker 01

  I think you nailed it, which is they are both the rulemakers and the people that benefit from the rules, which is not really a fair ecosystem.

• 9:35Auren Hoffman?

  Yeah, it's the kleptocracy in a way.

• 9:38Speaker 01

  There's definitely not a fair understanding of the exchange that people realize when they enter some of these areas. This is what they're giving up and this is what they're giving back. And I think there needs to be more clarity around that. The power is getting to be more. Those platforms are getting stronger because in many cases, folks like Amazon have the ability now to tie that data into a commercial transaction that solves the holy grail of advertisers, which is, hey, how do I connect an exposure to a purchase? They can do it. They've got the loop. And now, as they move into the areas like connected television, it's like all media can now be part of the Amazon universe or all media that advertisers really care about, which is digital display, mobile, connected television, retail media networks.

• 10:23Speaker 01

  It can be there. They can control the first-party data.

• 10:26Auren Hoffman?

  By the way, the retail media stuff is very powerful because you're searching on Amazon or Walmart or Instacart or wherever you're searching. And then they kind of show you some Dove soap. You're like, I'll take some Dove soap or whatever it might be. That's very, very powerful and that seems very unlikely to ever go away.

• 10:42Speaker 01

  Retailers have been dreaming of that cycle.

• 10:45Auren Hoffman?

  So they can extract more dollars from the merchant.

• 10:48Speaker 01

  It's incredibly powerful and people scratch their heads like, why is Amazon going into media? Why would they want to be a video service? And it's like, oh my God, this is beautiful. They can control the means of which they engage human beings in one situation and then ensure that when they get that information from them, they can know that the transaction will occur in their ecosystem. If NBC would have thought of this 40 years ago, they would have bought Walmart and had a media business and a retail business that totally tied together and crushed it.

• 11:17Auren Hoffman?

  There's this joke in the industry that eventually everybody becomes an ad tech company. And you're seeing that with Instacart and Amazon and Netflix and Walmart and Uber. Is it just going to go forever? Eventually, that's just inevitable that everyone becomes like an ad tech company too?

• 11:33Speaker 01

  We mentioned the other day, we work with over a hundred retail media networks. Instacart is a partner of ours, Uber, Ulta Beauty, name a retailer. Dollar General has a retail media network.

• 11:45Auren Hoffman?

  Wow, I had no idea.

• 11:46Speaker 01

  Yes, they do. So anybody who's selling anything in retail also is now engaged in media. Now, a lot of those, I think you start to get burnt out at a certain level. Do you need retail media network 340 to try to track that? If you're a CPG company to try to sell Dove soap, I don't think so. But I think the ones that have been really successful have seen it as a lucrative revenue generator. A nice ancillary of that is look at the credit card business for Delta Airlines. It's billions of dollars. I didn't realize this. I don't know if you ever looked at this, but Delta makes $10 billion from the Delta credit card.

• 12:23Auren Hoffman?

  United is a financial services company masquerading as an airline, essentially.

• 12:29Speaker 01

  Yeah, exactly. If you can make money off of your data, which is what retail media networks do, there's something to be said there for that. I do think that there's a difference between Amazon as a retail media network and a real retailer and some of the other businesses who look at this as an ancillary revenue source, but will never truly capitalize it in the way that someone like an Amazon could or even a Walmart potentially could.

• 12:55Auren Hoffman?

  You worked at Nielsen, they're famous for their TV demographics and historically, it's been fairly accurate kind of understanding, but now there's kind of a tack on that side of it and just people don't know who's watching what and ratings. Where is that world going?

• 13:11Speaker 01

  Nielsen obviously has been blind for many years of saying, oh, you have a panel of X size and how can you actually estimate the United States? Digital data is so much more accurate and that's what we really should be measuring on. But ultimately, when people started like actually banging models against it, they're like, ah, this is pretty accurate. Real people sitting in front of a TV screen, that's not a bad measure, other than the other things that we're trying to estimate. Where I think it goes though, to be honest, we think a lot of that becomes irrelevant, based on what we just talked about. So, understanding the reach and frequency of a show or an impression is not as important to an advertiser's understanding, did that program or did that exposure to a program actually drive a decision to buy something?

• 13:55Auren Hoffman?

  And also, back in the day, you would run ads to everyone who's watching that program. Now, it's usually to a small subset of people who are watching that program.

• 14:03Speaker 01

  That was the promise of connected television. We're going to give you the sight, sound and motion of TV, but we're going to give you that digital accuracy that you can get with traditional online advertising. That story is still one to be played out. I don't think we're fully there yet. I do feel like where it's fast forwarding to is, people said, digital is going to just help us do reach and frequency more accurately. It's kind of like, we're going to make a horse and buggy go really, really fast by changing, instead of putting a horse there, we'll put some other animal that runs faster. And it kind of like, well, maybe we should rethink the entire way of doing this. Rather than just having like a reach and frequency number, what about if we just tie an exposure to an outcome? And that's how I buy my ads. I want to sell more shampoo. If I exposed

• 14:48Speaker 01

  it to X million people and none of them bought, well, I got a great reach and frequency number, but it was worthless to me. There's a whole industry built around trying to tie exposure to multi-touch attribution. How do I attach an exposure to an actual outcome? We can do that now.

• 15:06Auren Hoffman?

  Back in the day, they'd run the ads in the Phoenix area and not the Tempe area or something, or the Tucson area. And then they would see, okay, Phoenix versus Tucson, what happened? And then, okay, the Phoenix sales were up 3%. And the only thing they did differently was run this ad. So therefore, this ad had some sort of hopefully thing. That was kind of the way they did it back in the day.

• 15:27Speaker 01

  Because they couldn't really tie an actual consumer to an actual purpose. And it's funny, because that's how I actually started my business. I started off in the catalog business. That was my first job out of school. And we would send catalogs to people with different prices in them. One person would get a price X, one would get free shipping. Let's wait three weeks to see what happens. Did these people buy or not buy?

• 15:48Auren Hoffman?

  That's so interesting. And then you would just use that data to hone it over time? That was your A B test, essentially?

• 15:54Speaker 01

  Seriously, it was like a two-month-long A B test. We'd be like, all right, in the first four weeks. And then we'd look at the numbers, who we sent it to, did they buy? But the reality is, as you just noted, fast forward, it's kind of like what we did in digital 20 years later, but we just did it faster. It's like, okay, run an A B test, see who clicks, see who doesn't click, all that kind of stuff.

• 16:12Auren Hoffman?

  There's been this talk of cookies going away since you and I met 15 years ago. It does seem like it is slowly going away and eventually go away. What has been the effect of these quote unquote cookies leaving the ecosystem?

• 16:26Speaker 01

  I guess if Chrome gets spun off, who knows? Does that mean cookies come back full force?

• 16:31Auren Hoffman?

  And it's just Chrome anyway, right? Which is only some portion of the browsers.

• 16:35Speaker 01

  Cookies are much maligned. They're not great, but they did serve a pretty innocuous purpose, of which now people are trying to fill the gaps with stuff which is either less accurate or more privacy concerning. That aside, cookies go away. It does a few things. People who don't have first-party data are then searching for other types of proxies. And context is one aspect of a proxy. We look for things like location. But then you start running into other challenges, which is country by country. Things like IP address are considered PII. In some places, they're not PII in other places. So cookies were pretty innocuous, because users could control them, they could delete them, they weren't super personal.

• 17:20Auren Hoffman?

  And they would be different on every site, unlike device ID or something, which is the same on every site.

• 17:25Speaker 01

  Exactly. But I do think when they go away, it will drive some more innovation on how to create more contextually relevant content for users. I do think it does play into the hands of the walled gardens a bit because they have the first-party data and they can control users. The strong will get stronger when it comes to data.

• 17:46Auren Hoffman?

  How much dollars in the ITech ecosystem revolves around cookies today? Because it does seem like a smaller and smaller piece every month.

• 17:56Speaker 01

  It's a smaller amount. Advertisers will hold on to whatever piece of old technology they can. And so that literally the day that they disappear, we've heard about these sorts of like cookies are going away. Well, we're still going to do retargeting as long as we possibly can.

• 18:09Auren Hoffman?

  I mean, retargeting is super effective.

• 18:11Speaker 01

  Yeah, it works. There's still millions and millions of dollars that are against retargeting. I mean, look, Critio is an entire retargeting business. I think they just mentioned the other day, they're moving into retail media, but it's less than 30% of their revenue. So 70% of Critio's business, which is a public company that does hundreds of millions of dollars of ad sales, is still based on cookies, based on retargeting. So it's still a big business. Advertisers still use them to retarget. There's still some level of cookie-based categorization, the way Xlate used to do it back in the day. It's not as big as it used to be. I think it's just a lot of advertisers, they've either moved money into social, where they have much stronger first-party data, targeting accuracy.

• 18:55Speaker 01

  If they're in the open web, they're using things like context and other types of tools to better align their impressions to an audience they think makes sense.

• 19:03Auren Hoffman?

  Every platform has their own definition of impression, of view, and engagement. Is there a world where all this is going to be standardized?

• 19:12Speaker 01

  It should be. Analytics can be individual to an advertiser. There's things that are important to them that they can build analytics around. But I think when it comes to, you need to have some basic building blocks that everyone agrees on. That's a role that Double Verify plays. We act as a quasi currency when it comes to things like a valid impression, identifying something that is not fraud. There are viewability standards. So groups like the IAB come up with viewability standards that the industry is aligned on. So I do think you need to have some standard building blocks upon which everyone agrees on the definition. They may have different ways of analyzing it. So DV takes those definitions and analyzes it in one way,

• 19:53Speaker 01

  but you need definitions, just like you need standard understanding of what a currency is in the financial world. If there's no definition to what that currency is worth, and there's no marketplace, then how do you transact on it? If everyone has a different definition, it's almost impossible to transact. Same with advertising. Everyone has a different definition of an impression or what is viewable, then how does someone get paid on either side? Because you have a seller and a buyer, they need to agree on a definition. What you don't want is 50 different definitions that every time a buyer goes to a different seller, they have different definitions of it. So, single definitions are important.

• 20:28Auren Hoffman?

  Antic is just really hard business because the entire industry changes every five years. The whole stack is literally just blown up. And that's not really true anywhere. A lot of financial stack is still running on old cobalt from the 70s. What does that mean for the leadership, the CEO, the other leaders of these companies to be successful when everything is changing all the time? What type of person is going to be more successful there than maybe in another industry?

• 20:56Speaker 01

  I like to call it dynamic industry. Maybe people call it bipolar industry. It does blow up. Things go away.

• 21:02Auren Hoffman?

  Yeah, it's creative destruction.

• 21:04Speaker 01

  Part of that is because a lot of companies in this space actually aren't really companies. They're just features. They build features, and those features get eaten up by bigger companies, and then the rest of that sector kind of goes away, and they get embedded into things. But when it comes to kind of leadership in the space, I do think some of the basics are always the same, which is a sense of curiosity and enthusiasm. Number one, you have to be curious and enthusiastic about learning more, because if the space changes so much, if you're not curious, you're going to be left behind. And because I think you have to have a willingness to disrupt and innovate and move out of a comfort zone. Financial software, that is one where we just want to need to make sure.

• 21:45Speaker 01

  The transactions get passed from A to B and it's really stable and innovation comes with risk around it. That's the exact opposite of space where we're like, no, we need to innovate and take risks and push the envelope, knowing that there will be a payoff to that risk. So to be a leader in this kind of space, I think you need to be curious, you need to be want to drive disruption. You want to take risks and I think those are all really the basics for any type of entrepreneurial or innovative space.

• 22:12Auren Hoffman?

  TV is a public company, we're private equity owned and then we became a public company. And then these mid-market public companies are in some ways especially difficult today to run. How do you run that market cap company in an industry that is changing all the time?

• 22:28Speaker 01

  Look, it's a balancing act. You have the pressures of being a public company, which are every quarter you need to produce. And the public markets are incredibly unforgiving. They don't want to hear about what's going to happen tomorrow. Show me today what you're delivering against, but you live in a universe like I just noted where it's all about. We've got to be building for tomorrow. We're lucky enough, we've got a very profitable business that continues to grow at a great rate. And we're able to invest in innovation and technology. We get a lot of pushback.

• 22:59Auren Hoffman?

  Do you have to kind of like help these shareholders along? They might not be used to these industries that are changing all the time.

• 23:06Speaker 01

  Ad tech, if it's confusing to folks who are just in the technology space, imagine generalists in the investor space. They don't even understand what we're doing. Ad tech is also a world in which there are a lot of people touching the delivery of an ad between a buyer and a seller. And there's money to be made there, but you never want to be considered just a middleman who's taking a vig without actually providing something that's incredibly valuable. So you need to continue to drive that value prop. Investing in that value prop takes innovation. Innovation takes money. Investors are like, why can't you drive your margins up? Drive your margins up. And I'm like, we could do that, but we're not going to innovate in three years from now. We're going to be in trouble. We have to have constant innovation cycle.

• 23:46Auren Hoffman?

  There's a lot of ways to optimize for the short term and borrow from the long term. You don't want to do that. But of course, as a public company, you're going to have some pressures both ways. If you were talking to your buddy who's now becoming a CEO of a similar market cap company, what advice would you give them? Say, you're now going to run a public company. Here's the Mark advice, the Sage advice that I'm going to give you for my last few years.

• 24:11Speaker 01

  First, I'd ask them, do you really want to do this?

• 24:15Auren Hoffman?

  By the way, your hair looks great. You don't have that many gray hairs.

• 24:17Speaker 01

  Oh, please, trust me.

• 24:19Auren Hoffman?

  Looks incredible.

• 24:20Speaker 01

  It's all pushed to the front, or you can't even tell. There's a giant hole in the back here. You've got to be willing to stick to your guns. And I know that it sounds like a cheesy metaphor, but if you believe in something, you're here to continue to build long-term value for your customers. And if you do that, you're going to be okay. You're going to have to suffer a bit again of the ups and downs of the public markets. And one of the hardest things, it's not even what you do. It's what you don't do when you're a public company that is the most painful. There could be major economic events halfway around the world and your stock can go down 10%. You're like, we had a great quarter and the team is like, we just delivered on our new product solution and the clients love it.

• 25:02Speaker 01

  Stock goes down 10% because somebody bombed somebody somewhere else and they're like, oh my God.

• 25:07Auren Hoffman?

  Though at least in that, you can take solace that everyone else in your industry probably also went down the same thing. It's bad when you go down and everyone else is still doing great.

• 25:16Speaker 01

  That's the hard thing to discover. And then I think being transparent with investors, why you're doing what you're doing. We get a lot of questions, again, why are you continuing to lean in innovation? Why not just start taking profits and driving margins up and getting them to understand? This is a long-term play. Every investor will say they're long. We're like, we're long for this business. I'm like, are you really long? Are you going to be here with me five years from now when we're still out there building stuff and growing? You've got to balance investors who are here to make money off your stock. And that is what they're there to do. And the fact that you are here to build a long-term business, a long-term value prop, and you've got to balance those two demands.

• 25:54Auren Hoffman?

  How do you balance your own employees? Any company nowadays, you have the stock bouncing around a lot. You could have high lows, which could be like 100% differences even within the year. Imagine it's a bit of an emotional roller coaster. You think your net worth is X and now it's 0.5X or something.

• 26:10Speaker 01

  Very different than a private company where the team doesn't have a real grasp on. They get shares and they get options, but they really don't know day to day what it's worth. Someone asked me one time, I've run VC backed companies, PE backed companies and public companies. What's the difference between VC backed and a public company? You're in a VC backed company, you raise money once every two years. When I'm in a public company, I raise money every day. That is the nature of what you do. Every day someone's grading you. People are buying you every day or selling you. So for a team, it's important for them to understand that they're owners of this machine. We are very focused. Every one of our employees owns shares. It's something I am adamant about. We get pushed back from our investors because stock-based comp can get pretty rich when you get to be our size. I want everyone to have shares.

• 26:55Speaker 01

  Our receptionist has shares. Everyone has shares in this business and maybe it's like the old startup guy in me, but I feel like everyone should be part of this ride. However, you want them to feel ownership, but not look at the stock price every day. Let's focus on our goals as a company. Let's focus on our North Star. My job as a CEO is to ensure them that if we deliver against our goals, we will be fine. The stock price will go up. Don't worry about the bouncing around. Let's worry about hitting our long-term goals. And that's the biggest job I have is ensuring that our long-term goals not only drive value for our customers, but they drive value for our shareholders too.

• 27:31Auren Hoffman?

  You and I met almost 15 years ago when you were running Xcelia and I was running LiveRamp. The industry has changed quite a lot since then. What are some non-obvious ways that the industry has changed?

• 27:43Speaker 01

  I think you brought up one of them, which was the increasing power of the walled gardens. 2010, when we met, Facebook was in its early stages. You didn't see social playing a big role. I think the iPhone had just come out. Things like short-form video and the TikToks of the world and the reels and YouTube Shorts. Those didn't play a role. Fast forward to today, social dominates the ad landscape. Short form and video is how most people engage. It's a different dynamic when it comes to ad dollars and where they're going to as well as consumer engagement time. Consumers are ingesting video, they're ingesting it in social media platforms, and that's where advertiser dollars are going.

• 28:28Auren Hoffman?

  What's your hot take of where the industry is going in the next decade? Or something you believe that other people don't believe?

• 28:35Speaker 01

  The one thing that I don't think anyone's 100% sure about is what role AI will play in the advertising space, in the ad tech space. We're leveraging it in many ways. We leverage it with our coders to help them produce more code and not have to bang it out. They can use things like Copilot to help them accelerate that. We operate in literally almost 100 different markets around the world. We operate in different languages. We have to translate those languages. AI is playing a huge role in lowering the cost of translation because we don't use people to translate. We use it to identify issues in video. So we have an AI tool called our Universal Content Intelligence that does predictive modeling on video.

• 29:17Speaker 01

  So that instead of looking at every frame of a video, we look at one out of 30 in the video and can predict ahead. So the role of AI in advertising, everyone agrees that it's going to streamline a lot of operations. Where I think the discussion point where the contention starts to come up is will AI replace creativity? We talk a lot about data, we talk a lot about technology, but the reality of it is for advertising to work, it needs to have a creative hook. I think AI can be used as a paintbrush, but it ain't going to be Van Gogh. It'll make things move faster, it'll make things more seamless, but it will never be inspired to drive real creative ideas.

• 29:58Auren Hoffman?

  Why do you think that? Seems like everything I've seen in the last year or two seems to be the opposite of that. Why do you think the humidity is still going to be so prevalent for creativity?

• 30:08Speaker 01

  I'll use my high school son as an example. How about this? He's a screenwriter and he writes really cool screenplays. And I don't think any type of AI tool will ever create something that comes from someone's soul in the same way that a true creative inspiration that gets put on a piece of paper can. It can put the words on paper, but I've yet to see anything created by AI that's even close to being as uniquely inspired as anything a human can create. I feel like there's always something special there that humans are part of. AI can make it faster.

• 30:46Auren Hoffman?

  Well, certainly, I think humans value things that other humans create. If they knew an AI created it, they would devalue it. But if a human purported to create it and had AI in the background or something, then I'm not sure people would know that art piece or something like that was created by AI versus human.

• 31:05Speaker 01

  So I was on the jury at Cannes, the Cannes Creative Festival a few years ago. And an ad that won was called "The Last Rembrandt." And what it was, was a Rembrandt created by AI that took all of the old Rembrandts and created a brand-new Rembrandt painting based on what it learned. And I have to say, it's a pretty brilliant piece of art now. Mind you, the fact that I knew it came from there, maybe look at it and a lot of people look at it and like, eh, this is kind of gross. But I am not a Luddite. I believe that we will continue to advance. Maybe in the future, in the same way live events now have become the most valuable experience humans have. People are willing to pay for live events, but digital media is very cheap.

• 31:48Speaker 01

  In the old days, it was the exact opposite. You bought a record, they were expensive. You could see a concert, it was like two bucks. Now, it's the exact opposite. I think maybe art and things created by humans will be seen as expensive and valuable, and creativity created by bots or AI will not be seen as that much.

• 32:06Auren Hoffman?

  There's been a lot of folks that have dabbled with the advertising world and made some maybe significant bets in it and then eventually pulled back. We saw Oracle recently do that where they made a bunch of acquisitions, Data Logix, they bought one of your competitors, Moat, they bought a few other companies out there, BlueKai, et cetera. And eventually, they threw in the towel and decided this wasn't the right thing for them. We all kind of understand why it's seductive for a big company like Oracle to play in the market. Why do you think it didn't work out for them? And what can like other companies learn from that?

• 32:44Speaker 01

  It goes back to one of the things we were just talking about earlier, which is, this is a space that's constantly changing. It takes a ton of focus, takes investment and innovation, and it's hard. It's like a messy space. It's not like the cloud business or the infrastructure business. We're on to something here. We just got to build a shit ton of it. We got to build big stacks and big clouds. This is like, ugh, you mean we have to build something specifically for P and G? We have to do this innovation because this new platform came. There's this short form video thing called TikTok. We have to build something for it? What if it never catches on? What if no one ever gets into this thing? Remember Clubhouse was going to be the next big thing?

• 33:22Auren Hoffman?

  Totally. Yeah, it was big. Yeah, probably a lot of people wrote for that for like at least a few weeks.

• 33:27Speaker 01

  Yeah, everyone's like, oh man, we got to start building. My team is like, should we start building like verifications, tools for Clubhouse? I'm like, ah, let's feel it out. Let's see. What I'm getting at here is this is a space that's constantly changing because it's driven by creativity and humans and human engagement with media and that changes all the time. So you have to be on top of it. You have to be willing to invest. You have to be willing to make commitments, to innovate. And when you don't do that, you die. And it goes back to another thing I just mentioned. I get investors talking to me all the time. Well, again, why do you need to put so much into R and D every year? And I'm like, well, it could be us or we could be Moat. They didn't innovate. They didn't have tools for social. They didn't have a robust, dynamic pre-bid solution. They

• 34:10Speaker 01

  never built an attention solution or an optimization solution like we have in CyBids. You start not focusing on things. You start to not be innovative and you're not innovative. In the ad tech space, you're just going to die. There's no doubt about it. It doesn't mean that big companies can't do it, but it takes time and effort and money.

• 34:29Auren Hoffman?

  Some of these bigger companies that have flirted with it, whether it be Oracle or even Microsoft, Salesforce, some of these very large companies, if they were more involved, that would, in some ways, increase everyone's valuations. They're massive companies. They could acquire more things. They could pay more things. There's very few, if not maybe zero, acquirers of double verified. You just kind of have to be an independent company because nobody would allow you to sell to Google or Facebook or something. If there were more of these, it might increase everyone's value, yet it just doesn't seem that's in the cards for the next few years.

• 35:03Speaker 01

  The messiness of ad tech is that there's value and innovation in small features and functions, but there's also value and independence in many different aspects of the space, whether it's the data space or the verification space. Being independent has a good amount of value because as the people who are buying and selling media become more and more concentrated, more functions are held within this walled garden universe. The ability to actually stand outside that and call bullshit on things that don't look right is really important. That is a core part of our value prop is we stay out of the transaction. We're independent.

• 35:44Speaker 01

  No one tells us what to do with respect to how we judge things. But even us, we get accredited. So we have people look at our processes, the MRC and other accreditation firms, look, make sure we're doing the right stuff. But there's value in independence. And I think every industry has the big players, the big transactors, but also if it's going to involve some type of exchange of value between a buyer and seller, having someone who stands out of that exchange to be able to judge whether or not it's fair, I think is critical. Finance has that. Advertising has it. Retail has it in some ways. You have credit card vendors who, their job is to ensure that that transaction between a buyer and seller

• 36:26Speaker 01

  in a retail environment is safe and valid. So there's always a role for independence to play.

• 36:31Auren Hoffman?

  Okay, a couple of personal questions. What is a conspiracy theory that you believe?

• 36:36Speaker 01

  I've always been one to believe that there is something that the government knows about aliens.

• 36:41Auren Hoffman?

  It's funny. That is, I think, the most common one. There's something in the water where everyone's still like really in the aliens thing.

• 36:48Speaker 01

  There has to be, there has to be. I grew up reading all those books and chariots of the gods and all that kind of stuff. They've been here. I'm telling you, they've been here at some point. Somebody knows something.

• 36:59Auren Hoffman?

  I like it. All right. Last question we ask all of our guests. What conventional wisdom or advice do you think is generally bad advice?

• 37:06Speaker 01

  I'm an avid anti-business book reader. Most business books are written so far past something actually being valuable to be talked about.

• 37:15Auren Hoffman?

  And you're anti because when you're younger, you read a bunch of them, but they weren't helpful or?

• 37:19Speaker 01

  Yeah. And I was like, yeah, this isn't working. There's one thing I think people overlook all the time, which is a lot of people don't talk about luck and timing when it comes to business. That's something you can't predict and you can't build for.

• 37:33Auren Hoffman?

  You can build for it in a way by being resilient. If you're resilient, then you could ride the bad luck and take advantage of the good luck when it comes. As long as you don't go out of business.

• 37:43Speaker 01

  That's totally fair. Luck isn't a strategy at all and neither is timing. But the thesis that the best company always wins is totally not true. You can build an amazing company and still if your timing is off, you're going to get crushed. And I think that timing and luck are an essential part of success and they're ones in which you can't control very much. So that's probably bad advice. So don't take advice from me. Don't build your business on luck. I like your take on it, which is if you're resilient enough and you're doing the right stuff, the timing will play in your favor at some point.

• 38:18Auren Hoffman?

  Is there anything like on hiring that you do differently or you're looking to hire people? Are there something that you think most people overvalue or undervalue that you value differently?

• 38:28Speaker 01

  I used to have this policy and unfortunately I can't do it anymore because we're a bit bigger. I used to meet every person that we were going to make an offer to and even just for 10 minutes. I always told the manager, the hiring manager, and this is when I was running companies that were 200, 300 people and I could do that. I just want a couple of minutes with them. And I always told the manager, I'm never going to make the decision to go or no go on that person. It's always going to be your call, but I'm going to give you the direct feedback of how I feel and you can make the call on it.

• 38:52Auren Hoffman?

  And what did you do in those couple of minutes to get a feedback?

• 38:56Speaker 01

  I didn't do anything. I came in and said, this is for you to ask me questions. Were they curious? Did they want to learn more? Cause most of them thought they were coming in for an interview. And even today, when I interview senior people, most of the time is not me asking them stuff. I want you to ask me things so I can feel like what you're into. I can't do that. We've got almost 1,500 people globally, so I don't have the time. I tried when I first started here and it's just not going to work. I don't, I can't fit them all. When I do meet with folks, I would say 75% of the time in any engagement or discussion, I leave for them asking questions of me. It's important to see how people are thinking, how much they're leaning into what you're doing and what their thoughts are.

• 39:40Auren Hoffman?

  You're trying to be like, wow, that question made me think, or that question was interesting, rather than just kind of a standard question or something, or?

• 39:48Speaker 01

  I've never been one for like, oh, let me get those five lists of gotcha questions that I can hone somebody into a box and see how they think. I want them to give me the gotcha question. That shows me like, this is going to be a person that's going to come in and challenge me, that's going to challenge what we do here. I don't want someone who's just going to take direction.

• 40:04Auren Hoffman?

  Also, if they're going to ask you that question, I mean, they have to have understood your business to an extent where they could ask that question.

• 40:10Speaker 01

  I don't think it's being lazy and not going at somebody, because I think the discussion that usually comes out of that, is it really telling to see what kind of person that would be as an employee? If they ask you the right question and you give them answer back, it's always interesting to see whether they take that and just nod and say, oh, thank you for answering that. Or they go, wait a minute. So what did you mean by that? And at some point, you don't want someone for like two hours to be arguing with you, but you want someone who's going to challenge you. Because again, the thread that weaves through everything we do here is we've got to be disruptive. We've got to innovate. And people who want to innovate aren't people who are like, yeah, just tell me what I need to do and I can tell how great I can do it. No, you want people who are like, all right, tell me what you think the problem is.

• 40:54Speaker 01

  And let me see if I can come up with an answer and you might not like the answer, but I'm going to give you some kind of answer.

• 40:59Auren Hoffman?

  This has been great. Well, thank you, Mark, for joining us at World of DAS. Really appreciate you being on. Big fan of yours, fan of what you're doing at Double Verify. I follow you on LinkedIn. I definitely encourage our listeners to get you there. This has been a ton of fun.

• 41:11Speaker 01

  Awesome. Well, thank you, Orin. Great talking again and good catching up.

• 41:14Auren Hoffman?

  This episode of World of DAS was brought to you by Alchemy AI. Check out Alchemy AI, A-L-K-E-M-I, to learn about how Alchemy can help you unlock the AI market.

• 41:26Auren Hoffman?

  Thanks for listening. If you haven't already done so, please subscribe to World of DAS wherever you consume your podcasts, YouTube, Apple, Spotify, and more. And please help us get discovered by leaving a review. And check out worldofdas.com. That's worldofdas, D-A-A-S, dot com. And of course, connect with me on Twitter, at Auren. That's A-U-R-E-N. Would absolutely love to hear from you.