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The Refresh News: Accelerating Growth in Advertising with StackAdapt's Vitaly Pecherskiy
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A
Foreign.
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Welcome to today's episode of the refresh by AdTech God where we bring you the latest and greatest in advertising news. Don't forget to follow the Marketecture account on TikTok, Instagram and YouTube for more news. Related content before we start, I wanted to cover some market announcements. March 17th is our first conference. Market Thriving in Chaos is taking place in New York City. It's a high energy, no nonsense conference and is built for marketers, publishers, agencies who are ready to tackle the unpredictable future of advertising head on. We also have our Miami Lights party which is set for April 28th in Miami, Florida. This will not just be a gathering of agencies, brands and ad tech leaders, but it will be an experience filled with neon and great music. You can visit@techgod.com or@tech God events.com to put your name in. To attend to our podcast, we actually have Vitaly Pachersky, the CEO of StackAdapt. There's been some major news in the last couple of days. I'm excited to really dig in with him today. I've never personally met Vitaly, but I'm really excited to hear about what he's building and what the future looks like. Vitaly, welcome to the Refresh.
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A
Thanks so much for having me. Excited to be here.
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B
Thank you. Vitaly, huge news. I mean the number that we heard is 235 million, which is incredible. But before we kind of dig into what that means for you and what that means for your team, could you give us a little bit of insight as to what StackAdapt does and how you fit into the overall advertising ecosystem?
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A
Yeah, for sure. Happy to do that. You know, I thought would be maybe a good place. I don't know how many people know about StackAdapt because I've heard the comment that we fly under the radar. It's not intentional, but maybe to frame the conversation, why don't I tell you a little bit more about myself and how it led to StackAdapt and maybe that will give more perspective of what we're trying to solve and where we're going. But I studied finance and when I graduated my immediate plan was to get a job in investment banking. So my strategy was to go ride elevators and office buildings and hand out my resumes trying to land my first job. And three weeks later I got a job, but it was completely not in investment banking. It was an eight person ad tech startup that was one of the first ones to get access to Facebook's API. So this was 2011 and suddenly I went from portfolio management to promoting games on Facebook. And I thought that job was hilarious and I loved it. And I found myself on the deep end trying to figure out how to do all of that because those know, eight people startup. So that was the really, really early days of brands really starting to advertise on social and essentially saw the large opportunity within Internet. And once the company got acquired, I went to work at WPP where I end up meeting one of my co founders, Ildar. And so I was working at Zaxis, he was working at Mindshare, and he started a few weeks before me. And we essentially found ourselves learning programmatic industry using lots of different platforms and realizing in a matter of months that the industry, the platforms that existed, that's not the products that we wanted to use. So we thought if we had built a product that we would want to use, what would that look like? And so that summer of 2013 I met our third co founder, Yang, who runs all our engineering and data science. And so three of us basically said, let's go on our own and try to build a next generation platform. And the key sort of product tenets at that point were essentially how can we build really a solution? What we've seen in the market, it was essentially dominated by platforms that have taken the approach of being essentially switchboards. We always thought buying advertising, it only means to an end. At the end of the day it only matters if it produces outcomes for the businesses that invest in advertising. So we thought how can we build a platform that functions like a solution to, to solve business outcomes for our customers? We quickly realized that the hands on approach that so many companies had related to just media trading, it has a limit to it by virtue of having so much data within this ecosystem and the capabilities that these platforms unlock. Like realistically, only automation can truly scale and unlock a lot of this value. So we thought the second pillar will be automation and AI. And the third one was we always wanted to have a great software platform that people can log in and run everything themselves. So solution, automation and experience. On the software side, these are the three product tenants with which we launched our product. And so thinking about the early wedge of how we wanted to get in the market, we thought native advertising made a lot of sense because at the time so much usage was shifting from desktop to mobile, publishers did not have any formats to monetize that inventory. And we saw successes on social media of how social platforms monetize that inventory. Us not really being deeper on the publisher side, we said we want to stay on the demand side, we want to be sort of working directly with companies that want to advertise. So we quickly partnered up with a bunch of exchanges that enabled us to get that early traction around native advertising. We quickly expanded into a larger and larger platform. We never wanted to stay a point solution. And right now, native advertising, I still think we probably have done the most in that, in that space, but it represents only a small portion of our business at this point. And I would say, you know, one thing you should know about Stack it up is that when we started, we never aspired to build a number one platform or a number one programmatic platform. We always wanted to think about what is the purpose or what is the ultimate why of why our company exists. And at the end of the day, we exist for the purpose of accelerating the growth of our customers. And so we always just wanted to challenge ourselves to be the best growth technology platform for businesses. And it just happens to be that right now we're focusing on programmatic because we understood that opportunity. By no means we want to limit ourselves in the long run with how we want to create that value.
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B
So Vitaly As a core, StackAdapt has obviously focused on their solutions, the automation and the experience for these traders. Right. How would you categorize StackAdapt as a product within, I guess, the Lumascape?
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A
I mean, the easiest way to understand it would be the band side platform because at the end of the day, to your point, customers won't understand which part of the value chain you're sitting in. I think what I want to articulate is that decisions around our product are not guided by the fact that we're sitting in a value chain at the DSP layer. Dsp, I would say, is just the how.
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B
And recently I heard in the news just that you secured 235 million approximately in funding. And this came through the Teachers Venture Growth Fund. It's a massive amount of cash to be invested into your company. And you have historically really been a company that was operating as a, as a startup, as a bootstrap, with the exception of 2022. What are your plans to utilize that debt injection of money? And what are your plans to build more for your clients that are using your platform?
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A
Yeah, I would say in many ways it's business as usual at the company. And it's a bit strange to wake up after all this noise and so much publicity to be like, okay, team, now kind of forget about this, let's keep building. And really there's no changes to our ambition or the vision that we have, if anything, sort of the way I think about investment is just a way to buy time. If we think about where do we want to be in five year time, the core investment thesis is just how do we condense time and get there faster. That is how we think about where we want to invest. But at a macro level, the two areas that we want to disproportionately focus on is research and development. Being a technology company, that is ultimately the value that we're creating and around distribution of that value. How do we support our customers globally as well as we do in North America? How do we continue to create more value for them using technology? That's an area that we also want to continue investing in.
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What would you say generally is your customer breakout? Is it mostly large brands? Is it particular verticals of clients or is it pretty diverse across the board?
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A
So from vertical perspective, it's essentially anything under the moon. And I think that in part has been helpful coming out of COVID years. So we essentially have seen pretty much every major vertical advertising platform, anything from healthcare to cpg, retail, travel, education. And from a customer perspective, it's a mix of, I would say on the majority sides, agencies. We've always built sort of an agency first business. We understood that they play an important role in the value chain because we at the end of the day focus on a very narrow set of problems. To grow a business is very challenging. Nobody just looks at programmatic and say like this is the only thing that we need to do to be successful. Marketing agencies create a ton of value by putting it all together. So naturally that would be our major customer. But you know, if you look at our customer base, it sort of spans everything from smaller agencies and smaller brands all the way to enterprise brands, holding companies, retail and so forth. So a bit of a bit of everything.
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B
So Vitaly, one thing I've heard in the market about your company and about Stack Adapt in general, and this is good. I've actually heard your culture is really good. There's a few people I know that work at Stack Adapt. They've talked about just the overall culture being very healthy and very driven. What is it that you think is driving that healthy culture and helping all your team as you're expanding? Because I've heard so many people joining StackAdapt the last, you know, 12, 18 months. What do you think it is about your. You and the culture and that you're trying to build that's really attracting people to join as employees and to be part of this growth phase, culture is.
- [10:33]
A
A topic that we've focused on for a very long time. And it's an area that I'm, I would say perpetually learning as well. But I would say, you know, it's not a specific list of values or it's not as codified as one might think. I would say there's two beliefs that we could keep coming back to that everybody in our company. And this is ultimately the message that I'm trying to reinforce with the team, that everybody in the company can shape the company culture. So whether you're an intern, whether you're a C level exec, everybody has an impact on the culture. So everybody should understand that they have the power within them to mold the company culture around them. Naturally, sort of your spotlight or radius around you is a lot greater if you're more senior or maybe more tenure. But naturally, even somebody earlier in their career, they still can mold the organization around them. And the second piece is that culture is just created through action. So what I'm trying to reinforce with the team is that in many ways every single person understands what is a good company culture. And on a subconscious level, we already know what it is. We don't need to necessarily codify it, but what's important is how do we act in accordance with these values? So that in my view, culture is a perfect example of a self fulfilling prophecy. By virtue of acting in accordance with these values, you should reasonably expect these values to manifest around you. And action is just one of those key items. And I think we're holding ourselves to very high standards around how do we show up every day to work and how do we present ourselves to the team in a way that is congruent with the values we want to see across the organization?
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B
Awesome. I love that. I think it's such an important aspect and even though the investment and the capital investment that you received is an important part of your growth, an important part of reshaping or shaping the future of Stack Adapt, I think culture plays a big role. So I'm happy that it's a core focus. You had mentioned earlier that there was really three core, I guess, pillars that you were building, you're building solutions, automation experience. And the main one that popped out to me is the automation piece. AI has really been a hot topic. We could call it automation, we can call it AI, but the industry is really focused on balancing the efficiencies and concerns around fraud and brand safety. How do you see the investment allowing you to develop more automation while also ensuring that this responsible and effective advertising is something that you provide.
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A
Yeah. So I mean, AI is undeniably a very exciting area. And with what we thought would be possible to do with AI, in many ways, it's a lot more. The topic of AI covers a really large surface area in programmatic. Anything from to your point on fraud prevention, brand safety, audience targeting, performance optimization and measurement forecasting, all of that can be supercharged using machine learning or AI. And all of them play an important role of putting it all together into effective advertising strategy. As we all know, we're operating in a very fragmented, a complex ecosystem and there are just so many pieces that have to come together in a right way for them to be effective. One way to think about AI is just maximizing way for all these components to be compatible and effective working together. At the end of the day, from investment perspective, it's all about people. There's no stack it up without people. There's no innovation without people. And for us to be a successful technology company, we know that we need to continue investing in our engineering data science capabilities, which is essentially what what I mentioned earlier.
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B
Where do you see the biggest opportunities for you as a company when it comes to differentiation or innovation? We know that, you know, privacy regulation is constantly in the trades. We know cookie deprecation. We have measurement challenges. And you touched up a little bit on the fragmentation in ad tech or in advertising. But where do you see yourself innovating and differentiating?
- [14:46]
A
There are no easy businesses, that's for sure. And I would say probably every industry is now under a lot of pressure from change, from technological or geopolitical change. I don't think programmatic per se is any more difficult, but it definitely has its own particularities. Maybe when I talking about opportunities, maybe like one way I can maybe frame it is just how we think about areas of opportunities for us. And we usually try to come back to just fundamental truths that should remain constant for foreseeable future. I would say one of the fundamental truths that is probably the most important to us is the fact that businesses will always need customers. When we think about about a lot of things that we do, they are invented concepts, even programmatic. Yes, it is an effective and scalable channel to reach users, but it is the how, right. There's other ways to do essentially what it does or what it promises to solve. So for us as a company, what we want to just continue reminding ourselves on is what is the objective fundamental truth that we have to continue coming back to in the long run. And customer acquisition is A fundamental truth. So we know that for us, advertising is the how of how we're creating the value, but it's not really the why. And so that's why we just try to maybe over index not on us individual trends within programmatic, but rather on fundamental value that gets created for our customers.
- [16:24]
B
Yeah, you mentioned earlier in this podcast that know outcomes was so important to you. And, and you, you mentioned outcomes, you mentioned solutions, which is basically the same. It seems to me that you're really focused around driving those KPIs that your clients are looking for so that they have the right type of roast and really driving the outcomes for these people, which is incredible. I want to take it to another important question. Where do you see StackAdapt in five years? And. And how do you see your company positioning itself in a market that's pretty competitive?
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A
So we never tried to obsess with competitors too much. We've always wanted to challenge ourselves to just be better than stackadap last year. So we always wanted to think of how we can continue becoming the best version of StackAdapt and in our view to become number one. It's not an act of copying an existing leader, it's being distinctly unique in what way, how we create value. In a massive industry that we operate now, there's room for so many ways to solve problems and create value. I don't think it's a winner takes all type of environment sort of in a five year time. We have a very clear game plan. Some of that will be unveiled in May that we're working towards. Launches across many different product lines that we're. That we think will lay foundation for our evolution over the next three to five years. So excited to share that, but it's a bit too early now. I would say a very high degree of clarity over what needs to be done now.
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B
Incredible. Vitaly, that really brings us to the end of the podcast. I really appreciate your time. Is there anything else you'd like to say to the listeners before we sign out?
- [18:08]
A
No. It's been a pleasure being here and excited to have been a part of this, so thank you for the invite.
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B
Same here. Batallion. And congrats to you, your partners, to your team. I'm really looking forward to seeing and hearing about your growth.
- [18:20]
A
Thanks so.