Amid all the uncertainty in digital advertising, another ad-tech company is planning to go public.
The digital advertising verification company Integral Ad Science has filed regulatory paperwork for its initial public offering, making it the latest in a string of IPOs by digital advertising companies. The company, which goes by IAS, filed its Form S-1 today with the U.S. Securities And Exchange Commission with plans to debut on the Nasdaq Stock Market under the ticker symbol “IAS.”
IAS—which works with 35% of the top 150 advertisers in the U.S.—measures digital ad performance while processing an average of 100 billion web transactions every day. It’s hoping to capitalize on the growth in digital marketing on connected TV devices and programmatic channels. IAS also offers technology to help marketers prevent their ads from appearing next to content related to alcohol, hate speech, drugs, violence and certain news-related topics.
Since its founding in 2009, New York-based IAS has grown to employ 650 people across 11 offices in 8 countries. While the firm was originally called AdSafe Media, it rebranded as Integral Ad Science in 2012 and was acquired by Vista Equity Partners in 2018. It now has partnerships with a wide range of internet platforms including Amazon, Google, Instagram, Pinterest, Snap, Twitter and Spotify, as well as digital ad companies like The Trade Desk, Xandr and Verizon Media.
The digital advertising market continues to grow. According to recent report by the research firm eMarketer, total digital ad spending will reach $455.3 billion in 2021, $524.31 billion by 2022 and $645.8 billion by 2024. The continued momentum comes at a time when marketers are navigating the future of online data privacy and hyper-targeted ads as giants like Google move away from using third-party tracking. Meanwhile, other companies such as Apple are giving users more control over what data they share and how it’s used.
Despite the growing digital ad market, IAS is not yet profitable. According to its recently released financials, the company’s net losses totaled $32.4 million in 2020 compared to net losses of $51.3 million in 2019. However, it’s managed to reduce quarterly net loss to $2.8 million for the first quarter of 2021 compared to a net loss of $14.4 million in first quarter 2020. Overall revenue totaled $240.6 million in 2020—up from $213.5 million in 2019—and adjusted earnings before interest and taxes grew to $56.4 million in 2020 compared with $38.8 million in 2019.
“We believe there is significant market opportunity to provide advertisers, agencies, publishers and platforms with measurement and verification solutions that address viewability, brand safety and suitability, ad fraud prevention, contextual targeting, reporting, and inventory yield management,” IAS said in its filing. “Based on a March 2021 analysis by Frost & Sullivan, we estimate the global market opportunity for our ad verification solutions to be $9.5 billion and expect it to grow at a 16.2% CAGR from 2021 to 2025. In addition, we believe we are well poised to expand into the ad measurement and effectiveness market. There are expansion opportunities beyond the existing use cases we currently serve such as providing measurement of ad effectiveness and efficiency to brands and helping them understand marketing performance.”
The IPO plans for IAS come less than two months after rival ad measurement company DoubleVerify made its debut on the New York Stock Exchange and saw shares jump 30% on the first day of trading. Other recent IPOs of digital marketing companies include the mobile gaming company AppLovin, the demand-side advertising platform Viant, sell-side ad platform PubMatic and the web analytics company SimilarWeb. Content recommendation platforms Taboola and Outbrain have also filed for IPOs, as have digital video ad-tech company Tremor and marketing platform Zeta Global.
In an April interview about DoubleVerify’s IPO, DoubleVerify CEO Mark Zagorski said the growth of ad fraud in sectors like CTV and social media continue to drive business momentum for companies like track ad performance. (The company also recently uncovered a complex ad fraud scheme involving more than 2 million devices a day and costing advertisers more than $5 million a month.)
“The margin play for our solutions continue to be driven by the fact that there is tons of fraud out there and it is only getting more aggressive in things like connected television,” Zagorski said. “And brand safety concerns for big advertisers only become more intense based on what’s happened socially, what’s happened economically, and the factors that are driving brands to be just as concerned about whether an ad shows up as what that ad actually says.”
After SimilarWeb debuted on the New York Stock Exchange, cofounder and CEO Or Offer said in an interview that going public was also “a very strong way of brand positioning for us.”
“If I look on the reason why I decided to take the company public now, it’s overall the best time ever in the history of tech, SAAS and digital to take a company public,” Offer said. “Because as all of the digital transformation is here and our sector is growing extremely nicely, there is a lot of demand for the services we provide.”