Episode 119:🚨Blockbuster episode🚨The Google antitrust ruling + Mark Zagorski on what the critics have wrong about DoubleVerify

Summary

Marketecture Podcast Summary

Title: Marketecture: Get Smart. Fast.
Episode: Episode 119: 🚨Blockbuster Episode🚨 The Google Antitrust Ruling + Mark Zagorski on What the Critics Have Wrong About DoubleVerify
Release Date: April 18, 2025
Host: Ari Paparo
Guests: Alan Chappelle (Monopoly Report), Ariel Garcia (Check My Ads), Mark Zagorski (CEO of DoubleVerify)

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1. Emergency Discussion: Google Antitrust Ruling

Guests: Alan Chappelle and Ariel Garcia
Timestamp: [00:00 - 19:10]

Overview: In this urgent segment, hosts Ari Paparo, alongside Alan Chappelle and Ariel Garcia, dissect the recent U.S. District of Virginia court ruling declaring Google a monopolist in the ad tech market. This discussion delves into the implications of the ruling, the judge's findings, and anticipated next steps.

Key Points:

• Immediate Reactions:

  • Ariel Garcia [03:02]: "All of the times that Google's pro competitive justification arguments were called protective... that was the highlight."
  • Alan Chappelle [03:24]: Observes that the ruling aligns with expected outcomes, stating, "I don't know if there's any huge surprise coming out of this."

• Ruling Details:

  • The judge affirmed that Google’s Ad Server and ADX markets were monopolistic. However, acquisitions like AdMiddel and DoubleClick were not deemed monopolistic behaviors.
  • Ari Paparo [06:48]: Summarizes, "There is a market for Ad Server publisher Ad Server... Google acted monopolistic in those two markets."

• Market Definition and Legal Insights:

  • Ariel Garcia [06:48]: Discusses the judge's focus on customer relationships over competitor interactions, referencing the Trinko decision.
  • Alan Chappelle [09:18]: Highlights potential areas for appeal, especially contrasting ad tech with telecom regulations.

• Remedies and Future Proceedings:

  • The ruling currently excludes remedies, indicating potential for another trial phase focused on remedies.
  • Alan Chappelle [10:36]: Suggests, "There's still a separate event that needs to take place for them to determine what the remedies are."
  • Anticipates hearings and potential divestitures, such as spinning out DoubleClick or other assets.

• Global Implications:

  • The ruling notes Google’s global impact, not just the U.S., which could influence international regulatory actions.
  • Alan Chappelle [13:54]: Mentions Canada’s stance on enforcing divestment independently of U.S. proceedings.

• Predictions:

  • Ariel Garcia [18:32]: Predicts divestiture of both the ad exchange and ad server.
  • Alan Chappelle [16:14]: Considers possible settlements by summer, aligning with other legal actions against Google.

• Final Thoughts:

  • The panel expresses frustration over delays and the uncertain timeline for final resolutions.
  • Ari Paparo [14:58]: Uses a poker analogy to depict Google's strategy in handling the ruling.

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2. Interview: Mark Zagorski on DoubleVerify's Position and Strategies

Guest: Mark Zagorski, CEO of DoubleVerify
Timestamp: [22:17 - 43:45]

Overview: Mark Zagorski discusses DoubleVerify’s role in the ad tech ecosystem, addressing criticisms, recent acquisitions, and the integration of AI into their services. He provides insights into the company's strategies to enhance media quality and performance measurement.

Key Points:

• DoubleVerify’s Role and Challenges:

  • Mark Zagorski [22:26]: Highlights the dual challenge of managing adversaries and balancing client expectations, stating, "If you're someone who doesn't like what we say about your content or context, you're gonna hate us."

• Handling Criticisms from Atalytics:

  • Mark Zagorski [26:36]: Defends DoubleVerify against Atalytics’ critiques, asserting, "We think there were many flawed perspectives in the initial report."
  • Mark Zagorski [27:22]: Clarifies, “I would say a little bit of both [facts and presentation].”

• Business Model and Measurement Philosophy:

  • Mark Zagorski [32:43]: Elaborates on evolving from media quality to performance measurement, emphasizing, "Let's find what works, let's find it cheaper."
  • Ari Paparo [35:10]: Notes the shift towards performance-focused advertising, to which Mark agrees, “every brand advertiser is becoming a performance advertiser.”

• Acquisitions and Strategic Growth:

  • Mark Zagorski [32:43]: Discusses acquisitions of Cybids Optimization and Rocketbox, aimed at enhancing performance measurement and attribution.
  • Ari Paparo [36:15]: Points out the criticism of "grading your own homework," which Mark addresses by emphasizing DoubleVerify’s commitment to unbiased performance insights.

• AI Integration and Future Plans:

  • Mark Zagorski [40:58]: Details investment in AI, especially for analyzing short-form video, stating, "We've used AI to do predictive modeling... to contextualize the video."
  • Ari Paparo [42:51]: Asks about future AI enhancements, to which Mark responds, “AI is embedded in everything we do and it continues to evolve those tools.”

• Industry Standards and Transparency:

  • Mark Zagorski [37:47]: Comments on the chaotic state of top-of-funnel measurement, “There's still a lack of standards in that space.”
  • Advocates for transactional data transparency to drive performance across platforms, moving beyond traditional viewability metrics.

• Conclusion:

  • Ari Paparo [43:37]: Wraps up by acknowledging Mark's direct approach to addressing challenges, and encourages listeners to stay updated through DoubleVerify’s platforms.
  • Mark Zagorski [43:43]: Expresses commitment to improving the ecosystem, stating, “We want to make the ecosystem better and cleaner and safer.”

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Notable Quotes:

• Ariel Garcia [03:02]:

  "All of the times that Google's pro competitive justification arguments were called protective... that was the highlight."

• Ari Paparo [06:48]:

  "There is a market for Ad Server publisher Ad Server... Google acted monopolistic in those two markets."

• Mark Zagorski [24:02]:

  "Our drive is to always act in the best interests of our customers."

• Mark Zagorski [32:43]:

  "We're in the business of helping brands succeed... let's find what works, let's find it cheaper."

• Mark Zagorski [40:58]:

  "We've used AI to do predictive modeling on short form video... to contextualize the video."

• Ariel Garcia [18:32]:

  "I think it is going to be a divestiture of both the ad exchange and the ad server."

• Ari Paparo [35:10]:

  "50% of my ads are unmeasurable."

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Conclusion:

Episode 119 of the Marketecture Podcast offers a comprehensive analysis of the landmark Google antitrust ruling, featuring expert insights from Alan Chappelle and Ariel Garcia. Additionally, Mark Zagorski provides an in-depth look into DoubleVerify’s strategies to navigate industry challenges, enhance performance measurement, and integrate AI technologies. This episode is a must-listen for professionals in the advertising and marketing sectors seeking to understand the evolving landscape of ad tech and antitrust implications.

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For more detailed discussions and updates, visit Marketecture.TV.

Transcript

[Ari Paparo]

This podcast is brought to you by JWP Kinetics. JWP provides the technology that manages and delivers video, maximizes visitor engagement, and monetizes it through positive ad experiences. Find out more about how JW P Kinetics can help your company achieve [e-mail] that's jwplayer.com.

[Eric Franti]

This episode is brought to you by Zeta Global. Do you know what it takes to transform marketing into a data driven profit center? Are you able to align the C suite around your AI vision and strategy? Zeta Global has the Playbook to help you get started. Download Driving Growth in the AI era today at zetacmo AI Book Again, that's Z E T A CMO AI Book.

[Ari Paparo]

Welcome to the Market Podcast. I'm Ari Paparo. This week Eric Franti is on vacation and he chose quite a week to go on vacation. We have a lot of news, but we're going to do a very special episode this week. So we have two really meaty, exciting conversations. In the first conversation, we have a emergency podcast to react to the ruling from the U.S. district of Virginia that declared Google to be a monopolist in the ad tech market. It's a story that I've been covering extensively since last September when I went down to Virginia and covered the trial in person. So we have Alan Chappelle, who writes the Monopoly report, and Ariel Garcia from Check My Ads. We're going to talk about the ruling, what we saw in it, what's coming next in our predictions for whether there will be a spin out of the Google assets. Then we have a regular scheduled guest who's also in the news. It's mark Zagorski, the CEO of DoubleVerify. So DoubleVerify has been the subject of much writing and speculation. They've been in a bit of a war of words with critics like Atalytics. They're also in a lot of competitive pressure from new AI startups like Scope 3. And lastly, they've been moving. They acquired Rocketbox, they acquired Cybid. So having Mark on here to talk about all those issues and have a really frank conversation should be really interesting. So this is pretty blockbuster episode. Eric will be back next week and we'll do our usual refresh news. But for now you've got a double episode of really timely, interesting content. So I hope you enjoy it. All right, we have the emergency pod. Get the sirens blaring and the emoji warmed up. We're here to talk about the ruling in the Google AdTech trial case that we've all been waiting for. I have Alan Chappelle from the Monopoly Report and Ariel Garcia from Check my Ads. Thank you both for being here on such short notice.

[Alan Chappelle]

Great to be here.

[Ariel Garcia]

Yeah, excited to be here.

[Ari Paparo]

Let's do hot takes first. Like what's your, what's your quick reaction?

[Ariel Garcia]

Arielle first, all of the times that Google's pro competitive justification arguments were called protectual, like that made my day. Specifically like all of the, I think back to my bingo cards of like spam, fraud, safety, et cetera. And having the judge outright say that that was pretext was the highlight.

[Alan Chappelle]

All right, Alan, I would agree with that. For me, the big takeaway here is I don't know if there's any huge surprise coming out of this. I don't know. Did you feel differently?

[Ari Paparo]

Yeah. My take is this is right up the middle what I predicted, what many people who are observers of the case predicted, that the ad server and ADX were clearly monopolistic and the ad network or Google AdWords was kind of a weird extra in the case. It didn't make a lot of sense. And that's what the judge found as well.

[Ariel Garcia]

I'm going to challenge that briefly. I remember we, we talked about this every couple of days at trial, but I still think that the ad network piece served an important narrative component. And the judge did include in this decision the note about the search dominance lending itself to amassing all of that unique advertiser demand. That's to me like that was the, it was more of a narrative purpose of including the advertiser ad network. It was obviously very much a sell side case.

[Ari Paparo]

Yeah, I agree with you. It seemed like it was tactical where if they didn't include the ad network they wouldn't have been able to talk about it. So they had to include it as a claim even though the claim was weak.

[Ariel Garcia]

Yeah, I would agree with that.

[Ari Paparo]

So why'd this take so long? Does anyone know? Because we all expected this back in December or January and we also thought there would be remedies in the finding. But it took three and a half months past the judge's self imposed deadline and there's no talk of remedies. Does anyone know anything?

[Alan Chappelle]

Yeah, I mean, I mean Ariel, you and I have talked about the conspiracy Kitty, you know, theory that there was some big settlement taking place or some discussion taking place across multiple entities. I mean, heck, we even have to add Canada now into the mix. But everybody that I've talked to that, that has a lot of, you know, direct knowledge on how the court system works specific to that circuit. Even with the rocket docket said that that's just not possible. So it just may be that the judge wanted to get things right and had a couple of other things on her plate.

[Ariel Garcia]

I think it could literally be as simple as Judge Brinkoma had other cases. So I feel like. And then, you know, you read through the decision and you're like, wow, the amount of detail that was captured. So I think all of us are a little bit impatient unfairly because. Because I can't even imagine what it would have been like to write this decision.

[Ari Paparo]

Yeah, it's like 120 and they're dense pages. Every sentence has multiple footnotes, it seems. Yeah. The thing about the delay, some people are speculating that Judge Brincomo might be ill. So we know that Megan Gray, friend of the podcast, went to her office just to look through the window and she saw that Judge Brinkma was thankfully very hale and healthy. But enough of the armchair quarterbacking. Let's go through what the actual ruling says. I'll kick it off. Which, as it said, very high level. There is a market for Ad Server publisher Ad Server. There is a market for open web exchanges. And by market, I mean a legal market in an antitrust sense because there was arguments about what the market was and that Google acted monopolistic in those two markets. And further, interestingly, and I want to bring this up, neither the admilled acquisition nor the DoubleClick acquisition were part of that monopolistic behavior. Ariel, what are the things I missed that are really important and what's your take on those different rulings?

[Ariel Garcia]

No, I mean, I think you captured most of it. We already spoke to the fact that they didn't succeed on the Ad Network side. I'll speak super briefly to why. Like there were a couple of things that jumped out at me that, that the Advertiser Ad Network wasn't in the judge's view, a commonly understood term that unfortunately the idea of cross channel buying the PMAX argument seems to have landed. That's probably my least part favorite part of this decision. But no, I think you captured everything well. I mean one thing that I found interesting was that the Amex, like one big two sided market argument did not succeed. Happy to see that. It was nice to see the kind of realization that DSP doesn't allow publishers to monetize their inventory. Like those silly reasonable substitute arguments failed. And then I guess the last thing that I think is worth touching on, which is more of like an antitrust nerd thing, is Trinko, like we got. Yeah, we, we got a sneak peek at this during closing arguments where the judge said, you know, at first this is like super attractive, but then as I thought about it more, it wasn't. And basically she reiterated that sentiment here, saying that this is really about its customers, not its competitors. So that was an important distinction that the judge drew.

[Ari Paparo]

Yeah. For those of you who are not following at home, what, what effectively happened was that every single one of Google's arguments was thrown out. Even though they didn't lose on all points of the case. The points they lost on were just factually disputed, like that ad meld was a monopolistic activity. But Google's arguments in the case that the market was defined in a way that was too narrow, it was totally rejected by the judge. The argument that the transactions had to be evaluated both buy and sell side, that's the Amex case. And that you couldn't just look at the publisher ad server as one piece, totally rejected that argument. And the Trinco decision was about the so called duty to deal, which is the idea that Google shouldn't be compelled to work with competitors. And there's a case called Trinco in the telecom world where that was ruled and she threw that out also. So it was as if the Google defense just didn't exist and the DOJ's case was evaluated just on its own. Alan, do you have any kind of thoughts on the legal side of this before we go into what the practical aspects are?

[Alan Chappelle]

I agree with what you're saying, but there's still a lot in there for an appeal. I mean, even within Trinco they distinguish it because adtech is unregulated. The trickle decision involved telecom, which is highly regulated. So that's going to be, I think that's surface area. Right, right there for them to lodge an appeal. I was also sort of struck that ADMLD and DoubleClick weren't on their face viewed as anti competitive just by virtue of acquiring them. And I'm not sure if the judge was trying to draw a distinction as between like anti Competitive on day one versus anti competitive on day 60 or day 300 or. The reason I think that's going to be important is that that may have an impact on possible remedies.

[Mark Zagorski]

Right.

[Alan Chappelle]

If the goal here for the DOJ is divestment, does that impact their ability to get there?

[Ari Paparo]

Yeah, that was my thought as well, is if the proposed remedy is spinning out DoubleClick. But the acquisition of DoubleClick wasn't considered competitive monopolistic. Behavior then kind of raises a question. All right, let's talk about remedies. So there's nothing in the document on remedies. Like it's. The last paragraph of the 120 pages is, oh, by the way, I expect the parties to tell me what they want to do about remedies. So are we in for another trial? Is this a two parter? Because I thought this was not a two parter.

[Alan Chappelle]

It's a distinction really, without a huge difference. So in the search case, there was very clearly a phase one trial and then a remedies trial. Here the judges sort of has set it up as all, as one trial, but it's a separate set of hearings, a separate set of motions. So maybe it'll be a little quicker than if there was a completely separate trial. But to me, it's still, you know, there's still a separate event that needs to take place for them to determine what the remedies are.

[Ariel Garcia]

My understanding is that there is, to your point, like, yes, there are hearings anticipated. I know. I saw some speculation about whether there would be witnesses there. I think because the language around hearings was used, like, I do believe that, that there would be witnesses there.

[Ari Paparo]

You think they'll be able to call new witnesses and put new evidence into evidence?

[Ariel Garcia]

I would expect that they would be able to call new witnesses.

[Ari Paparo]

Does this mean you and I are going to have to hang out in the pews again for like a couple of weeks?

[Ariel Garcia]

I mean, I really hope so, to be honest with you. To be fair. Like, this week was supposed to be my, my vacation. That's going great for me. And the search decision dropped on my birthday. So I think that this is just the way things go.

[Ari Paparo]

Well, Alan is actually on vacation right now calling in and he, he's quoting the, the, the paperwork. So he's had a busy day away from his family. Alan, what do you think? How do you think the remedies are going to play out?

[Alan Chappelle]

I mean, hasn't Google already put a good chunk of the sell side part of their ad tech stack on the table as part of a settlement? So I think that those are gone. It's just a question of when. But really it's an ultimately a question of are they willing to divest Krone? I know that's a separate trial, but all of this stuff is interrelated. And I mean, heck, there was even a couple of references to the search trial within this decision. I mean, they're very aware of how intertwined all this is. And that's really what it comes down to, didn't, like, the head of the.

[Ari Paparo]

DOJ just say this week that they're going to be kept separate, or is that just in public negotiation?

[Alan Chappelle]

I think that's public negotiation.

[Ari Paparo]

Some background for those of you who don't follow this as well, which is in the fall, like in September of last year, Reuters reported that Google had offered to spin out the ad exchange, not including the ad server, and Europe rejected that request. And previously, the previous summer, they proposed putting the ad exchange and the ad server into a separate division of Alphabet, and that was rejected. And we also, I think there were some rumors that they had offered something similar to the DOJ recently. So that card is on the table. It's just a matter of when they're going to play it and how it's going to be played. This also brings up kind of the next question. So there was this one interesting little bit of the finding where it was declared that the behavior and the effect was global, not us. And I had someone in my DMs telling me that was the thing that their lawyers were the most excited about because it expanded the potential. Fine. I'm kind of confused about this because shouldn't it just be us? It's a US court. Ariel, do you have any thoughts on that?

[Ariel Garcia]

I'm going to kick this one, Alan. I feel like Alan probably has more thoughts on this one.

[Alan Chappelle]

I really don't. Again, all this stuff is so intertwined and we even now have Canada saying, you know, a week ago that as far as they were concerned, they were going to enforce divestment regardless of what the US does. And so, you know, whether that means that this is just going to be a big free for all or there's going to be, I don't know.

[Ari Paparo]

Well, there's also reporting, I think like recently, very recently, like last month, that the EU had already found against Google on the exact same basis, but was waiting for this report to drop their report. So if that's true, within the next probably week, we will see the EU come out with the exact same report or finding against Google. Which all brings up my theory that I've had for a long time, which is that Google wants to get rid of these businesses, but they don't want to play their cart too early because they'll lose all their negotiating leverage. They want to tie everything up in one bow and just be done with it. This ruling being what they expected is just to use the poker analogy, just like a random three being turned over and now it's time to get to the end and figure out how to deal with this.

[Alan Chappelle]

The way I'm looking at it is you can compare this to like the EU search case, which, I'm sorry, the shot Google shopping case, because there it was, it dragged on for seven years. And the reason it dragged on for seven years is because it was in Google's interest. They kept making more and more money every year and since, and they were able to very easily outrun whatever the fine structure is. I think we're in a little bit of a different game here where if they could have just divested their ad tech stack, they would have done that already. So the question now is, are they going to agree to a divestment of Chrome or is that going to get ripped out of their cold dead hand and then maybe are they going to agree to some flavor of divestment of some of their owned and operated, specifically YouTube? That's I think, where the negotiation is and that's where the. Does the government go for broke thus delaying things, or is there a deal that can be had in the next six months to 18 months? I'm sort of hoping for the latter.

[Ari Paparo]

But boy, yeah, I mean, Google is better off seeing more cards turn over. They're better off. Even if they don't want to divest this thing, they're better off appealing and delaying and delaying and then seeing what happens in the search case because that will give them more information. And if they do appeal, then we're talking once again years before this ever gets resolved, which is sort of a pain in the ass.

[Alan Chappelle]

I think a decision in both the search case and in the ad tech case remedies phases probably by the end of the summer, just as the state AG case. To me, that's a really interesting point where maybe there needs to be a settlement.

[Ari Paparo]

Yeah, it would certainly put a relief on a lot of people's minds to just get this over with. No one's enjoying this except for maybe the three of us.

[Ariel Garcia]

I mean, I just don't see how they can realistically be treated separately. Like if they don't have to divest Chrome at the end of the day, I don't know what the ad tech trial ultimately ends up accomplishing. So I don't know, I just. You'd have to figure that there has to be coordination there in reality.

[Ari Paparo]

Well, if they win on Chrome and they don't need to divest it, that's what they care about the most, though, they win on Chrome, then I think they actually become more likely to settle this thing. Because then they, then they jettison ad tech and they have a nice healthy business. If they lose on Chrome, then they go to war and they appeal everything and don't settle on anything.

[Ariel Garcia]

Yeah, agreed.

[Alan Chappelle]

I think so. But somewhere in the poker game there's a percentage of market share that they're losing in the new AI search game that, you know, their hands are being tied and like, you know, and so at what point do they say, you know what, let's cut our losses and make it the best deal we can.

[Ari Paparo]

Yeah. The thing that really decides these cases is having a new CEO. And until they have a new CEO or they pay off a billion dollars to Donald Trump and his family, this doesn't get resolved. That's just my very, very cynical point of view.

[Alan Chappelle]

I agree with you. And look, we can never say never with the current administration, but it really is starting to look like Google and Meta are the proverbial odd men out here in terms of just support politically outside of the specific administration. The support that both those companies have is, is not what their CEOs want. You know, maybe they can buy their way out of it, but it's starting to look like that's going to become really hard.

[Ari Paparo]

Any final predictions? Will anything meaningful happen on this in the. Well, let's go with final predictions on what the remedies side will be in this trial. Ariel, what do you think the remedies are going to be decided?

[Ariel Garcia]

I think it is going to be a divestiture of both the ad exchange and the ad server. There's obviously going to be behavioral remedies too. But I think what I'm most interested in is the divestiture piece and I do think it'll be both.

[Ari Paparo]

Alan, Agree.

[Alan Chappelle]

In the divestiture there's going to be behavioral remedies. Google will figure out how to, how to make that into a bit of a circus to the point where they're entirely meaningless. You may have a little more optimism on that than I do. AR because, you know, maybe there's a way that, that, you know, that, you know, they can open up some of their pipes on the demand side and that could be sort of forced without it being a complete farce.

[Ari Paparo]

But I think spin out when we say behavioral. The most likely behavioral would be something that said the Google Ads needs to spread its demand across a lot of different places. But Google will always want a loophole that they have the option to not put their demand anywhere. And I think that one of the booby traps here is that they may just stop bidding on open web entirely, which would screw everybody and would make the divested Ad X worth nothing. So those are some booby traps there. I think one thing that neither of you mentioned is a very, very large fine. I think there may be like a 10, I don't know how many figures I was about to try to figure. It's like a $10 billion fine that's put into some subsidized publishers in the media forever kind of thing, like the Ford foundation for Journalism or something like that, I think that's the wish list of a lot of the publishers involved. The other alternative, which I know some people have said, like Richard Kramer has said, like it's spin out the ad server to a nonprofit or a B corp, because otherwise its abuses will naturally come back in someone else's ownership. I don't think that's likely, but it's an interesting twist.

[Alan Chappelle]

I guess my take is $10 billion in terms of the amount relative to everything else. And also I have a hard time seeing a Republican administration sanctioning the government bailout of. Of journalism, the news industry.

[Ari Paparo]

Yeah, Give it all to Newsmax. The just on the 10 billion number. I want to just throw out my math, which is, you know, one of the big accusations is that ADEX charges too much. It charges 20%, and the expert witness for the DOJ said the correct rate should be closer to 16%. So you could do some math. That's a 4% overcharge. And ADEX's total gross volume is around $10 billion. So that's a $400 million a year overcharge on the industry. So 10 billion doesn't sound too big to me and just, you know, bubble. All right, let's call it there. There'll be a lot more on this. I imagine Alan will write about it next week in the Monopoly Report. I'm going to be on it. A lot more coming. Ariel, you're a very busy person. I'm sure you'll be talking about it. Go to check my ads for all the documents and latest on the DOJ and the whole case. Thank you, Ariel and Alan for being here on very short notice. This podcast is brought to you by audiohook, the leading independent audio dsp. Audiohook has direct publisher integrations into all major podcast and streaming radio platforms, providing 40% more inventory than what could be accessed in omnichannel DSPs. What's more, audiobook has full transcripts on more than 90% of all podcast inventory, enabling advanced contextual targeting and brand suitability. Audiohook is so confident that in addition to CPM buys, they offer the industry's only pay for performance option, where brands can scale audio and podcasting with peace of mind, knowing they are only paying for outcomes. Visit audiohook.com to learn more. That's audiohook.com all right, and I'm here with Mark Zagorsky, the CEO of DoubleVerify. Mark, thank you for being here.

[Mark Zagorski]

Absolutely. Thanks for having me, Ari.

[Ari Paparo]

Your ears have been ringing. Your name's in the media a little bit here and there as a nice, quiet time to be CEO of a public company.

[Mark Zagorski]

Yeah, this is what I always dreamed of. People ask me how I'm doing. I'm, like, living the dream, man. This is what I wanted. Now, look, it's an interesting time, and it's something that comes with the gig, right? We are a large public company, which means we're super transparent on a lot of different fronts, and we occupy a role in the ecosystem which people love to hate, which is if you're. If you're someone who doesn't like what we say about your content or context, you're gonna hate us. And if you're somebody who feels that we're, you know, we're being too prohibitive or not prohibitive enough, you know, there's kind of a no win situation, so. But that's. That's why we get paid, and that's what we do.

[Ari Paparo]

When you're watching a sports event like the NFL, are you rooting for the refs?

[Mark Zagorski]

I feel for them, let's say that. Compassion. I've become much more compassionate about the ref situation. But also, you know, look, I've been on the. I've been a player too. Right. I've been on both sides of this equation. So I know what it's like to be a player. I think the best refs have always been players. Right.

[Ari Paparo]

All right, so, okay, so let's talk about your philosophy on this stuff. I think it's fair to say that no ref can be perfect. No measurement is perfect at DoubleVerify. How do you think about this problem of missing stuff or having the wrong information at some times and how the critics may jump on that?

[Mark Zagorski]

Yeah. I mean, look, the reality of it is our drive is to always act in the best interests of our customers.

[Ari Paparo]

Right.

[Mark Zagorski]

And to. When we talk about doing that, it's the best interest of the customers at scale. And we see well over 8 trillion transactions a year. And we see them not just in the open web, but across walled gardens and connected television and Mobile app. So there's a lot of places for us to dig up. And we're doing that in a universe where people and players are actively trying to do bad stuff to get around us. Right. I mean, it's different than a. In a game, people are just trying to win. Right. And, you know, and they're trying to move the ball down the field, but they're not trying to cheat, you know.

[Ari Paparo]

You know, it's not always the case. I mean, no Patriots.

[Mark Zagorski]

Yeah. Depend on who you're rooting for. There are some teams that.

[Ari Paparo]

I'm a Jets fan, so I hold a chip on my shoulder.

[Mark Zagorski]

I'm a Steelers fan, so I always feel the Ravens cheated all the time. But so, you know, I think the environment is one in which there's always someone trying to do something bad. We're always going to try to catch it. You know, we've got 1200 people around the world who their number one job is to ensure their advertising spend is safe, that it's, you know, delivered in an effective and efficient way. And, you know, there is always going to be challenges to that system. And for us, people pay us to keep up with it. So we, you know, we welcome challenges to what we do in a collaborative way. We want to make the ecosystem better and cleaner and safer, but it's one in which we literally have people around the clock working to make it better every day.

[Ari Paparo]

Yeah. You have adversaries, which are bad publishers looking to get advertising money, bad ad tech companies, scammers in Eastern Europe or wherever. I don't want to disparage Eastern Europe. That tends to be the situation. But you also have Poland.

[Mark Zagorski]

Never my people.

[Ari Paparo]

It's never Poland. Okay. The Polish are the best at ad tech. It's only those people in Crete who we have to watch out for. But you also have critics, aggressive critics who are not trying to scam anybody. They're trying to poke holes in your methodology, potentially represent other interests than what you'd like to deal with. So I want to spend a little time on Atalytics, because they're the kind of primary critic lately. And Christoph from Atalix was on this show and talking pretty earnestly about what he does, how he does it, and why he does it. I'd like to start out with, you know, what is your reaction to the work of Atalytics and Kristoff?

[Mark Zagorski]

Look, I mean, we. We look at everyone in the ecosystem as. As playing a role, and analytics plays a role. They're a commercial company, a consulting business who is looking to Garner business. They're growing, you know, growing their business. And if they can do so by going after the players that are well established and looking for flaws in the system, I mean, that is their prerogative to do so. But what's not a prerogative is actually misstatements and misrepresentations and sampling because, you know, that's not going to make the system better. That's not going to make advertisers more confident in the ecosystem.

[Ari Paparo]

Do you think they're wrong on the facts and or wrong on the way they announce the facts?

[Mark Zagorski]

I would say a little bit of both. I mean, just look at the recent MRC statement that came out regarding the last report.

[Ari Paparo]

That was interesting. So tell me about how that came about. So the MRC issued a statement sort of poking holes. Well, you could characterize it, but essentially taking your side in the latest dispute where analytics claimed that DoubleVerify and others were ignoring known bots, meaning like declared bots, kind of the lowest hanging fruit, the easiest thing to block in the world. So if you want to comment first on that allegation and your point of view on it, and second, how the MRC statement came about, that would be great.

[Mark Zagorski]

Yeah, I mean, look, our POV on that is pretty straightforward. It's on our website. You can go there and look at it. We think there were many flawed perspectives in the initial report. And the mrc, you know, they're an independent agency. We didn't coordinate with them. They came out with their own position that certainly was aligned with what we are, which basically said, this is not the way IVT is measured. This is not the way IVT is built for. These are not the protocols that the entire industry runs on. And they stood behind the efficacy of their standards the same way we stood by and the efficacy of our product. And it was pretty straightforward and very clear.

[Ari Paparo]

Let me ask you a related question about that. One of the things that sometimes comes up is this idea that the claim is that no money was spent on this traffic. And I find it a little bit hard to back up that claim because, and this is really a business model question, is that if doubleverify, let's say, shows a report that there was some bad traffic in a given campaign, it's not necessarily one for one that that money isn't paid to the media owner. It has to be negotiated by the client of Double Verify and the media owner. Is that accurate? My understanding that like assuming that if doubleverify flags something, but the ad still shows that it's not paid for. It seems like a bit of a leap.

[Mark Zagorski]

You know, it comes down to the, you know, the agreement or the relationship that the publisher and the advertiser have, or the publisher and the platform have, or the advertiser and the platform have. And remember, we're only one part of that equation. There's ad servers involved in this that also flag IVT that may not be counted in billable impressions. So it comes down to billable impressions. And where are those billable impressions? What's the record of the standard record of billable impressions? We are part of that equation. The ad server is a part of that equation. The platform that's providing those impressions is part of that equation. But by protocol, billable impressions, we do not include those in our billable impressions, so we don't charge for them. And those impressions should not be included in the buildable impressions of either the ad server or the platform. That's part of that equation.

[Ari Paparo]

The other criticism. Well, I'll start from Christoph's point of view. So Christoph says that one of the reasons he does these sort of media blitz type approaches when he comes up with a new finding is that he doesn't want to tip off the folks who might be in his crosshairs, because in the past, and I believe this is true, when he's found some misbehavior, especially on the publisher side, they cover it up right away. Like if it's a bad webpage, they just disappear it before his announcement comes out. And that may not be exactly relevant to what he's talking about with you, but it does seem like the advance notice and collaboration with the targets could be a problem. Whereas I would characterize some of your statements, your company statements, as saying that he doesn't collaborate in there, therefore we feel ambushed. How would you square those two kind of points of view?

[Mark Zagorski]

I mean, you have to look at the motivation. If, if, if the business wasn't a business and was literally just someone who's out there trying to do good and expose challenges, that would be one thing. It's, it's a, it's a business, it's a competitor. We compete for business. So, hey, it's a great business methodology, you know, that's all I can say to it. Do I think it's something that we would do now? Do I think it's, does it help the industry? No, I think it creates, it sows confusion and creates a sense of people running for the gates and just saying, I'm just going to go work on social, I'm Going to go work on a walled garden because at least I feel comfortable there.

[Ari Paparo]

Are you currently suing Analytics? And there was a report as well that you recently sent a letter to check my ads that might be in advance of a lawsuit.

[Mark Zagorski]

We don't comment on any of that stuff.

[Ari Paparo]

But are you currently in a lawsuit? I mean, that's kind of a yes or no question.

[Mark Zagorski]

No.

[Ari Paparo]

No. Okay. All right, let's talk about measurement in general. So if you go back like six months, a year, I think your space was feeling very tired. It was like verification, viewability and fraud, Right. It had been around for a while and I think the market was asking for something more comprehensive. And you've made two big moves in the past 12 months on the acquisition side. First to acquire Cybids Optimization and recently Rockerbox for conversion, Attribution Media mix modeling and stuff like that. So tell me, what business are you in nowadays?

[Mark Zagorski]

We're in the business of helping brands succeed and it started with media quality. Think about it, once you take garbage out of the system, what's left works better? So we've always been in the performance business, but the pushback we always got was, hey, this stuff costs us too much. We get it, it's brand aligned and it's more viewable according to IAB standards and it's, you know, it's valid traffic. But why is this costing us so much? And that was the first tip to like, how do we compress the cost of what works? And that was cybids, right? Can we help advertisers find what's good, better? And I think that was the first stage. There's. We also looked at cybids to be direct, as defensive because we looked at the future, just like you said, where, hey, is this stuff getting tired? Do people really care about viewability? What if they just care about what works, right? So, so, you know, we are like, well, Sibyns finds what works, right? And they kind of throw everything into a big bucket. Viewability, they could throw a hundred different factors in and say, these matter and these don't, but this is what's driving results for you advertiser. So we looked at it also as defensive and saying, well, what if someday someone just says, we don't need tv, we don't need any of these other companies, we're just going to see what works, right? And this whole performance mantra becomes a thing. So we said, well, let's, we should be part of that, right? Why are we going to stand here and say that's never going to happen? Well, it hasn't happened yet, but it's been a nice compliment to what we're doing which is hey, let's find what works, let's find it cheaper. And Rockerbox closes the loop there, which is let's find what works, let's find what's good, let's find it cheaper. But now prove to me that it actually had an impact.

[Ari Paparo]

Let me give you my take, my hot take on this, which is Viewability was a data product that really appealed to upper funnel marketers and some of them had sort of, what generally is called brand response kind of goals where they had both brand and response but some didn't. As you went down the funnel to more response, more outcomes based viewability became like a independent variable but not the end goal. And so Cybids and Rockerbox take you into different kinds of, not necessarily different advertisers, but certainly different goals and different strategies.

[Mark Zagorski]

1000% that's part of the equation which is, you know, first off, every brand advertiser has a KPI, right? So Diageo is a big cybits partner and you know, they're selling liquor, they're selling liquor brands, right? But their KPI is about moving bottles off the shelf, right? So they are a brand advertiser but has a real KPI on, on, on moving product. So I think a, every brand advertiser is becoming a performance advertiser for sure. But we've also seen this whole movement towards black boxes, right? And on all the major platforms which is like, hey, just give us your money and we'll make it work for you no matter who you are, Mr. Advertiser. And you know, that's a challenge. Like we're trying to create a more transparent way for advertisers to drive that performance and measure it and do it cross platform. And I think that's the take because we are still outside of that equation. We don't make money off media, we're not buying and selling media, right? So can there be an independent arbiter not just of quality where the business started, but of performance as well? And I think that's where we're headed.

[Ari Paparo]

So, so the criticism of grading your own homework is a little subtle here, right? So when Rockerbox acquisition was announced there was, there are definitely some chirps out there saying oh, grading your own homework. And the rationale for that criticism is effectively that the original double Verified products were evaluating whether media was good or not and you know, allowing targeting or not. And now you're saying, well, oh yeah, our targeting, our pre bid targeting was so good that it produced better results. So you should buy more of it. So how do you address that kind of criticism?

[Mark Zagorski]

Grading your own homework is a bit of a stretch when the result is what it is. I mean, you know, like we, you know, when we look at RockerBox, DV data is certainly not the only data that influences a decision. And in many cases, in most cases it's not even involved. I mean, Rockerbox works with a lot of performance customers that we don't even have a relationship with. So at the end of the day, we're still outside of the media transaction. We don't care if the advertiser buys an impression on Platform A or Platform X. What we want to show them is what works and what doesn't work. And I think, you know, if it's DV data, great. If it's not DV data, that's fine as well. I mean, for us there is an inherent trust that we have to build with the advertisers to say ultimately we want to. Moving the needle is what's important for you. That actual outcome and whatever moves that needle is what we're going to tell you about, you know, for sure.

[Ari Paparo]

One thing I was surprised about, and I wrote a newsletter almost a year ago about, about your company and, and one thing I proposed was that it focuses on measurement, sort of top to all the way the bottom of the funnel. And I'm glad to see you did some of that. But I'm a little surprised that you've never dove into real top of the funnel measurement like reach reporting. And the measurement at the top of the funnel is very chaotic right now because you have companies with lots of individual problems and private equity owners and stuff like that. So what's your thinking on that?

[Mark Zagorski]

We've been kicking that can around for, since the day I started here. Right. We were both Nielsen alumni, right. So we were both there. I think your stint was a little shorter than mine.

[Ari Paparo]

Hey, I got, I built DAR while I was there. I popped in, built DAR and left.

[Mark Zagorski]

Very good. So I think, you know what, you just, the word you just use right there is the one why we've avoided it, which is chaotic. There's still a lack of standards in that space. I think when we talk about really reach and frequency measurement, what we're really talking about is for TV and connected television. And that's where the big money is right now. And I think despite the early successes of some of the challenger currencies there, Nielsen still is doing it they're doing okay, there's still the currency. But I also feel like, look, at some point, and I think you believe this too is kind of like, does reach and frequency matter if we're looking. Look at Amazon. Does Amazon care about reach and frequency or do they care about. Look, I can show you that an ad drove a sale, right? I'd rather be in that mushy middle and that hard bottom of the funnel, which is like exposure to transaction because that's where advertisers are really, like really focused. There's always gonna be something that like, hey, just tell me reach and frequency and they need to cover that. But I mean, our biggest customers are CPG customers, right, who are the reach and frequency kings who are just like, you know, get crest in front of as many people as possible. Right. But the reality of it is they're now looking at transactional like data that they are focused on what moves the needle. So everyone's a bottom of the funnel advertiser now.

[Ari Paparo]

Yeah, the outcomes era, as some people have put it. Another great quote, I think Eric Seifer said this was that the wanamaker quote of 50% of my ads are waste. It should be updated as saying 50% of my ads are unmeasurable. Next topic I'd love to queue up is AI and its impact. It feels as though. Well, it doesn't feel as though. I think it's a fact that a lot of the contextual and verification technologies that were built in the 2000s and 2010s are all like sort of keyword based and sort of last generation technology. And now you have at least two competitors out there, Scope 3 and Mobian, that are pushing really hard on AI. Because AI is uniquely suited for the problem of understanding context. So what's your, what's your game plan there?

[Mark Zagorski]

Yeah, I mean, look, we, we have been investing in AI for the last few years. Most of it has been focused on our proprietary platform solutions because video has blown up so much, right. And video by its nature is heavy and hard to analyze and you need tools like AI to do so. And some of the first implementations of our AI solutions were across short form video. Because the cost of analyzing each frame of short form video in the traditional way is like insane. You can't do it on TikTok right at scale. So we've used AI to do predictive modeling on short form video so that we can look at one frame out of, let's say a hundred to predict what's happening next and use that to contextualize the video. So a, we've leaned into it pretty heavily in advancing all of our tools around AI, particularly within the proprietary platforms. We are, you know, the latest buzzwords agentic AI. Right. And I think it's, you know, how we can leverage agents for our clients is something that we'll be talking about quite a bit over the next several quarters. But I think there's a mistaken perception that companies like DV and others in this space have not evolved at all, that we're still basically using keywords in URLs to define what content is. That is far from the case. I mean, that is part of the solution. It's kind of like looking at Nielsen and saying, well, you guys are still doing paper surveys, right? And up until a few years ago they were, but they supplemented those with, you know, set top boxes and now they're supplementing with big data. And I think when you're in a position, we are, it's you don't shut off your system overnight. What you start to do is you evolve it and you enhance it and you add the tools on top of it. So it is better, but it comes from a core of quality that actually did work.

[Ari Paparo]

So should we expect a announcement that DVE is upgrading its contextual relevance and contextual targeting marketing stuff with AI in the near future?

[Mark Zagorski]

We've made announcements on that ad nauseam. So even our news accelerator, which is a project that we've been working on, has moved beyond keywords to use different types of analysis, which are large language models to understand news and recategorize news. In the last month, we've launched solutions on Roblox and on TikTok and on Spotify that all leverage our AI tools. So it's happening today. I don't think there's a bold day where we initially launched like, hey, here's our AI solution. It's like now AI is embedded in everything we do and it continues to evolve those tools for sure.

[Ari Paparo]

All right, well, Mark Zagorsky, thank you so much for coming on and addressing some of these tough issues head on.

[Mark Zagorski]

It's great being here. Thanks, Ari.

[Ari Paparo]

Thank you for subscribing to marketecture. New interviews are added every week at markitecture TV and your favorite podcasting app, Foreign. Thank you for listening to the marketecture podcast. New episodes come out every Friday and an insightful vendor interview is published each Monday. You can subscribe to our library of hundreds of executive interviews at marketecture tv. You can also sign up for free for our weekly newsletter with my original strategic insights on the week's [e-mail]. and if you're feeling social, we operate a vibrant Slack community that you can apply to [e-mail].