Hope that one's not open. No, all good. Good, good. All right. Hello everybody. Thank you for joining us. My name is Dan Costin, Morgan Stanley US Internet team. I'm very happy to be joined by Chris Vanderhook, Co-Founder and COO of Viant. Thanks for being here. Yeah, thanks for having me. Just before we begin, for important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your MS sales representative. With that, maybe for those in the audience who may be newer to Viant, maybe let's start with a quick overview of the company, where it sits in the ad landscape. You've been with the company I think since it was founded. Yeah ... 25 years ago or a little more even. Talk about how the landscape has changed. Well, yeah. My brother and I co-founded the company together. Tim's usually here, but he likes to vacation. We started in 1999, actually. The first iteration of our company. Back then we were this is early internet. Everybody was, you know, it was 468 by 60 pixel banners, pop-ups. It was wild. There was no third-party ad serving. Google didn't even exist. It was, it was the Wild West of the internet. Kind of the, I'll fast-forward this story. Mm-hmm. We actually sold the business to Time Inc. in 2015. That was quite a trip, and we thought that was gonna be the end of it. You know, we really saw the opportunity on the DSP side. While we were there, we acquired a company called Adelphic out of Boston, and they had great tech. They were self-service DSP. We saw that landscape consolidating big time, and we knew that there would only be a handful of companies. Long story short, we ended up, they get acquired by Meredith, hostile takeover bid of one magazine company over another. It was insane. We bought the company back in 2019, and we took it back. We used our own capital and bought the company back. We took the business public in 2021. What we were at that point was just a DSP. Mm-hmm. Today the landscape is, there's a handful of DSPs that exist in the world that are self-service, enterprise-grade DSPs. That's Google, that's The Trade Desk, it's us, Yahoo, and a new entrant into the space in Amazon. Great. maybe let's talk about addressability. I think it's one of three major strategic areas of focus. Mm-hmm. Let's start there, cause I think it's where you have some pretty unique assets from a data and signal perspective. Talk to us about Household ID, about IRIS ID. Yeah ... and the other unique data assets that you're leveraging, as part of your go-to market, and how are those differentiated from those competitors that you just mentioned? Yeah. If you look at digital advertising, if I go back to when we first started, we used to go to advertisers and say, "Why are you buying in linear television or traditional media? Digital is data-driven. You can measure everything, you can target ads, e-everything." Really what we were doing was laying the groundwork, which later became known as addressability. The number one thing that we think the largest platforms will have to have is addressability. Marketers want to be able to address or target their audience. They're looking for men 18 to 34, you know, you know, women 25 to 49, whatever it is. You want to deliver highly addressable advertising so there's no waste. I know that people who are like, "Well, doesn't everybody do that in digital?" No, they don't. Our Household ID has, it's basically, this is household level addressability. We think that is a more privacy-friendly approach that we've gone down, and we also have a big focus on CTV, which I'll get into, and those are household level devices. Household ID has 80% scale of every bid request that we see. We get 15 million bid requests a second. 80% of the time, we resolve that back to the household. We know which household that is. That's very powerful. In CTV, it's actually 90% we can resolve back to who the household is instantly. Mm-hmm. This is very powerful for marketers because they're not wasting their dollars on households or people that aren't in their target. If you compare that to our head-on competitor, which is The Trade Desk, they have UID2. Their ID is public in the bid stream. We see it. They have about 20% addressability. The next closest one is LiveRamp, and they have about 30%-35%, depending on the day. That's their level of addressability. We've been at this since 2013. What this process is what's called identity resolution. That's I have some data in a database, a name, an address, an email, or whatever it is, and can I resolve that back to who this household is right now? It is, it's somewhat complex, but just the headline is that we resolve 80% of the time. That's our scale, and the competitors are in the 20%-30%. We're instantly much more addressable. The second thing is to building a really good ad product that's gonna deliver great returns or sales or outcomes for advertisers. I wanna know what content you consume. I don't take my cues from The Trade Desk or Yahoo. We really study, I think, who does a very good job of, in their ad platform, especially in using AI, which we'll get into, is Meta. Meta does a very good job. They have something called Advantage+. Meta knows two things. They know who you are when you're logged into the app, addressable. They know what content you're consuming because it's on their platform. If you've ever used, like, Reels, somehow you're consuming whatever niche piece of content watching, and they're really good. They have an algorithm that feeds you more of that, and then they match an advertiser that closely associates to that content. That's what drives the power of Meta's ads business. It's completely lost on people and lost on even our competitors in the space. Like, no one's really interested in that. There's a company that we, Tim and I actually invest in. There's a VC firm that invests in, like, ad tech companies called Aperiam. We're an investor in that, and they invested in a company called Iris. I met the two founders of that. I thought it was really interesting. They work with content owners in CTV. They go to them, and they say, "Hey, send me, you know, Paramount. You have 20,000 titles in your VOD library. Send us every video." They stamp it with what's called an IRIS_ID. Behind that IRIS_ID, what they do is they take that video, they run computer vision, and they say, "What is this content about?" It's, you know, season 1, episode 2 of Yellowstone. It's a Western. It has Kevin Costner in it. In this scene, there's fishing. The next scene, there's, you know, a bar fight, blah, blah. What we're doing is pulling out all the content intelligence about that video file so that a marketer, when they go to target in CTV, they can show up relevant. My customer, Cabela's, when there's a fishing scene, they wanna then show an ad about their fishing rods and all that. If I have, you know, a customer, you know, if I have a customer that sells women products, I'm probably not gonna show it. They probably don't wanna buy that. This offers incredible content intelligence that helps us in CTV. I mean, that was the thesis behind the acquisition. Problem was they were a small company. They only had 7% penetration in CTV. In our last quarter, we reported we were in the high 30 percentiles of penetration. We have earnings next week. I'll give the update on where we are there, but we're signing more and more content owners every day. We have every OEM. Publicly, we've announced we have every major television manufacturer who's adopted that. We have a bunch of content owner, large content owners that we'll make announcements about as well. Great. Let's shift over to ViantAI. you know, I think that since really you went public, you've been pretty consistently talking about autonomous advertising. Yeah. Over the course of the year, past two years, you've been launching these AI products with the goal of kind of a fully autonomous ad platform, if I have that right. Talk about the various components of ViantAI, you know, the launch cadence and then where we stand with that. Yeah. We saw this migration. The industry went from managed service, where people managed absolutely everything, and then DSPs came out, and then it went to self-service. What that meant was agencies wanted to control every decision. They wanted to pull all the levers. They wanted all the transparency, and self-service has been amazing for the industry for 10 years. Now these systems, these DSPs, they're like Bloomberg terminals. You know, if somebody new, you know, started, you know, and I look at these DTC e-com companies, they want data-driven advertising, but they don't have, like, reams of staff and traders and like. They don't. They want, they want automated systems that just deliver them sales. That's what they want. We, again, we looked at the future was gonna be autonomous. These platforms are overly complex, and it's too much for a human trader or a room full of human traders to make optimal decisions. We came out with ViantAI, and we started that about 2 years ago, all with the goal of moving towards full autonomy. The first thing we launched was AI Bidding. 70% of our customers are the traders. They belong at an ad agency for us. The first thing that they do is they set up a campaign. It's complex. What they do is bid on every publisher, every audience segment. They're trying to bid the right price at the right time, and that actually is, you know, that's an exercise of utility for them because this is a 24/7, 365, 15 million bid requests per second. A human can't possibly change price at that speed. We launched AI Bidding 2 years ago. It's just an AI model that predicts a bid the lowest possible price for that ad, you know, for that ad request. What's the price that we should bid? We have 85% customer adoption on that product, and what we're saving customers 40% our model does versus human bidding. That's been a tremendous product that we have out there. The next thing we launched was AI Planning. Agencies have tons of people that work in planning, and a traditional media plan takes at best six weeks to eight weeks, tons of market research. It's very expensive. They're designing a media plan for, you know, their marketer. We do it in 60 seconds. You give us the URL of the advertiser or product that you're gonna advertise, your budget, your flight dates, and what's your goal? Your goal might be to raise awareness. Your goal might be to generate sales. Whatever the goal is, in 60 seconds, it builds out a full media plan. It's incredible. We use all of our unique data signals behind that, all the bid stream data, our household ID, IRIS_ID that I talked about, and we build plans in 60 seconds. From there, the trader builds a plan, and it clicks a button to build it in the DSP. You know, a typical ad campaign may take anywhere between two days and seven days to set up in a DSP. It's very time-consuming. We eliminate all that time. We have about 30% customer adoption of our AI Planning. The third thing we did was we launched AI Analysis & Measurement. Just think, if you're in a DSP, there's-So many reports, what a trader is doing after setting up a campaign and then bidding, they're trying to get insights as to what's driving performance, and they wanna double down on that. That's very complex for them to get at a lot of that data. What we wanna do is completely automate it. You just basically chat with it, you create prompts, and it gives you all the insights. You could say, "Hey, for my, you know, CTV campaign, what are the top-performing publishers? What are the top-performing IRIS IDs and segments? Which shows are driving the best performance? What should I do to improve performance?" It makes recommendations to you. We have great customer adoption on that. You know, that's a phenomenal product. The last thing we did was AI Decisioning. This is our move towards full autonomy. We want to create a decisioning architecture, decisioning system that will make human-like decisions, but it'll do it at the speed that a human can't. We committed that we would launch that in 2025. We did that in the fourth quarter. We launched a product called Outcomes, which is the first fully autonomous ad product that we launched. What makes this possible is an innovation that we built, it's called a LatticeBrain. Most autonomous systems that are out there today, whether it be self-driving cars or, you know, guided missile systems or unmanned drones, they all have some type of lattice architecture that makes decisions based on a set of inputs in real time, but they make human-like decisions. I like to use the self-driving car example 'cause everyone gets that with, like, a Tesla. It's the same thing in these advertising platforms. We wanna make human-like decisions, but at a speed that humans can't. What we're trying to do is compress what we call decision latency, where in these current systems, we make recommendations or our platform make recommendations to traders every day on how to improve performance. They think about it, and then they sometimes gotta take that recommendation to their boss and say, "Well, hey, we wanna make this change." Boss might call a client, the end advertiser, say, "Hey, we need approval to do this or that." They think about it. A week later, they might make the decision. Most of the time, they don't make the decision. And then ad performance, campaign performance leaks all over the place. We wanna compress that, and that's what our Outcomes product is about. It's our first fully autonomous product. We ran a series of about 20 pilots in the fourth quarter, and the performance results were incredible. Let's stick with Outcomes there for a second. I mean, it sounds a little bit like, you know, Performance Max or Advantage+ from Google and from Meta. I guess when you're talking to advertisers about this product, where are you differentiating yourselves, and what is that process like for pitching Outcomes? Yeah. Okay. About $400 billion is spent in the United States in digital. About 70% of that is performance-based advertising, is where those dollars are going. That's predominantly in three companies: Google, Meta, and Amazon, right? Sponsored listing ads on Amazon, that's performance-based. We wanna go after that market because it's largely untapped by anyone on the open internet. It is true that some of the more automated ad products are Advantage+ from Meta and Google's PMax or Demand Gen that they have, and it is aimed to compete with those companies. They operate those automated systems, but they do them in their own walled gardens against their own content that they own. We wanna bring a solution like that for the open internet. I think that that is just an incredible opportunity, and we think that we have advantages over them. Really, those advantages, we know that we have to deliver performance that are on par or better with them. I think a lot of, you know, a lot of the performance that you will get, a marketer will get in Meta is and in Google, operates off of the thinking that whoever showed the last ad gets credit for the sale. I tell our customers all the time, "I promise you that Google, Meta, and myself, we know who's about to buy your product." Just because I snuck an ad right in front of them before they purchased doesn't mean that your total business is gonna grow. We're aimed at we're a buy-side only player. We don't have any content that we own. I only represent the marketer, and my whole goal is to drive business performance for them, but not business performance in a dashboard. I want business performance that you report to Wall Street. This is an insight that a lot of companies, had they been in digital for years, they've been seeing customer acquisition costs go down and down and down, you know, get more and more efficient, but results they report to Wall Street don't tell the same story. There's lots of customers who have this problem, and we want to drive incremental growth in their business, not the same growth or the same sales they were gonna get anyways. Meta and Google prey on less sophisticated advertisers who don't know the difference. We are out-- When we deliver our Outcomes product, it's about delivering new growth to the brand, not the same sales. We think that the vehicle that does that most effectively is actually in the CTV channel. Mm-hmm. I think that those are some of the ways that we're different than them. It sounds like you're kind of in the business, at least with this product, of eliminating, I don't wanna say wasteful spending, but certainly helping people focus on the spending that they can actually tie back to dollars on the P&L. Yeah. It's a more focused way of doing it. I guess, what's the financial opportunity for Outcomes? The Outcomes, I think it's absolutely massive. Just start with the 70% that we, I believe we currently don't touch today. You know, there's probably about 10,000 advertisers that buy on the open internet. There's probably 1,000 or less advertisers that buy in television. Meta has 10 million customers. That right there, I really like that opportunity. To me, that's sort of like freedom because if I produce a return on ad spend for you of whatever your goal is, when I do that, you give me more money. In the television business, if you raise unaided awareness by 2 points, you don't get more money. Like, the brand has a fixed budget amount they're gonna spend for the year. We like being able to go after this performance opportunity because that money's heat-seeking. They don't care who they spend it with. The other insight too on Meta, these e-com and direct-to-consumer. Of the $10 million, I believe most of their growth is driven by a few hundred thousand of these e-com and direct-to-consumer companies. Most of these companies spend all their money with Meta. They're only on Meta. They run their whole business there. A lot of them tap out on performance, and you can see it if. There's a whole, they call it a DTC on X, like these groups on X, and they put a bunch of content out, and you see them regularly. In the fourth quarter, they get absolutely squeezed on Meta's pricing. Performance dips, they have nowhere else to go. We think that it's an unbelievable opportunity to go to them, deliver an autonomous product, yes, and Outcomes, but we can bring them into CTV, and we see it across all customers. The incrementality or the net new sales that you get in a channel like CTV, it absolutely trounces Google Search, which has zero incrementality. I've not had one customer where I've seen any notable point gains of incremental customers from Google-branded search, which is 40% of all search buying. In Meta, you typically see around 20% incrementality in Meta. In CTV, on average, we see somewhere around 150%-200% growth on average. It'll be interesting to see how that develops. Sounds like a really big opportunity. I guess flipping the AI debate around to the other side... Mm-hmm. There's a lot of questions being asked right now about the durability of software business models really across tech. We hear about it for the past couple of years at this conference, but certainly, you know. Yeah. very intense this year as well. Can you talk about the set of concerns? You know, how do you believe Viant may be insulated from this idea that AI can stand up a software solution that could replace- Yeah. replicate a DSP in an afternoon? Yeah. Well, first, I, you know, I think Well, at first it was the SaaS apocalypse, then it was the AI apocalypse, 'cause then it was like it was gonna take out all enterprise software, and then it was like, "Oh, wait, it's also gonna take out all marketplace businesses like DoorDash." No one said Amazon, but I mean, that's the biggest marketplace. Then basically, I watched through that, you know, our stock get absolutely hammered with everybody else, and, you know, internally, everyone's like, "Well, no, wait. We are the company that's moving towards autonomy. We are attacking the workflow, like, that is what we do. We're leading that." It was a bit of a lazy take, I think, by investors. However, just to hit it, head on, I do not believe that, I don't believe that people are gonna vibe code everything. I don't think that they're gonna vibe code all software. I think you can vibe code a UI. Like, I have a DSP, you can vibe code my UI, and you can vibe code The Trade Desk UI. Sure. I think if that's your moat is your UI, which is for a lot of software companies, once you get someone who knows how to use your software, you get lock-in on that. We benefit from that. The Trade Desk, they benefit from that immensely. There's so much more that I think is lost on people with this narrative. It's the last mile that's everything. What I mean by that is, when we were competing against The Trade Desk for years, my whole original thinking was we just build a UI that's very similar to theirs, and we get to feature parity, and I should be able to win half the customers because, I don't know, I can sell pretty well, and I think I'm charismatic, and half the people will like me, half they won't. I'll win half of them. It didn't happen. What I did was we introduced, fine, when we go head-to-head, I'll just beat them on pricing. In some cases, some customers, we literally dropped our fees down to 0% or 1%. Someone else is doing that in the space right now. It's called Amazon. It didn't work. The level of differentiation that you have to have to win customers is immense in, in this industry. That's number one. Two, you have to build for the customer. You have to know what they want, and you have to build for that. That's that last mile that, sure, you could vibe code something that looks like what I have, but you're not gonna win any customers. You're not gonna be able to customize it for their exact needs. All the integration work that you have to do with CDPs and all these data warehouse companies where all the customers house their first-party data, their CRM data, they wanna use that in advertising. You're not gonna vibe code that. The infrastructure that it takes, the actual technical infrastructure to handle 15 queries or ad requests per second, you can't vibe code that. I think that that makes it defensible for all DSPs. Now, when I think about, you know, other enterprise software apps and things like that, I'm saying, well, these tools have been out there. The number one target is Salesforce. No one likes Salesforce, myself included. Anything about them. Okay, like, cool. Vibe code it, please. Someone just do it. The tools are here. Like, why do we have to talk about the boogeyman that's gonna do this? Like, someone actually do it. If it only takes two days and some nerd in a basement, like, bring all the nerds, let's go. No one's doing it. I think I don't know. I think that some enterprise apps will definitely be upended. We license tons of them internally. It's unbelievable how these businesses are created off this, like, little niche use case in enterprise software. I think some of them that aren't infrastructure, that don't represent infrastructure, that aren't connected into all other data systems, if they're very skinny, I think they can be upended. Yeah. The last thing I'll say about all the AI companies, keep in mind, 60 days ago, no one knew who Dario Amodei was. No one knew who he was. He's everywhere right now. Remember what he's doing. He's in the middle of a fundraise. I did invest in his round. I think that the whole, like, you know, AI apocalypse, like, he's selling that. That's what he's selling. He's raising money. Sam Altman's doing the same thing. A guy who was on my board once said, "Be careful of the loudest guy in the room. He's always selling something. You mentioned Amazon in there, and I wanna talk a little bit about kind of what they're doing in this space. You know, there are definitely reports coming far and wide that they're being aggressive in trying to sell this product. Have you observed heightened competitive intensity from them, and why should investors not be concerned about it? I think that, you know, my competitor at The Trade Desk publicly is every quarter, he says that Amazon's not a threat and that, no, he doesn't see 'em and all that. We don't have the same take. It's Amazon. Are they a threat? Yes. Why? Because they have the lowest cost of capital of anyone. I don't care where they point that cannon. They could point it anywhere, and you have to be concerned about that. That's just being honest. We don't really see. They have a DSP. Their goal of what I do believe about them is their entire existence is to sell ads on properties that they own. They are out offering 1%, what I do for 1%. Like, I haven't seen any degradation of my business because they're offering 1%. For what they're talking about this 1%, we charge 3% for it. Trade Desk charges 3%. No one's making a change to save 2 points. To switch DSPs is an incredible effort for brands, I don't think anyone's moving for that. We recently won a customer. We announced Molson Coors. I said to them, "You sell product on Amazon. Why were they not in the mix? Just curious." They said, "Well, we do sell product with them. I've seen their DSP. They've been in here a lot. They do not have a good DSP, which I know when I hear that a lot. It's not built for us, and their whole goal is to sell more Prime Video. We are gonna buy Prime Video from them. They have Thursday Night Football, they have the NBA. Like, we are gonna spend with them. We don't believe that they have our interests in mind. Why would I give them my customer data and let them plan all my buys on Disney and Paramount and all the other ones? Like, we're a little weary of them," was their point, and their biggest fear is that they come out with Amazonia Light, which they said they've done in many categories, so no, we're not gonna choose them. I think that, again, I think it's Amazon, so you gotta, you gotta watch them. W e haven't seen You know, they're talked about a lot in the press, but they themselves have a long way to go from a feature set standpoint, to even get to par with, some of us, the other four that are out there. Got it. You brought up Molson Coors. I wanna stick with that because, you know, I think historically you've served mostly US-based mid-market customers, but with Outcomes and this Molson Coors launch, it seems like you are kind of expanding there. Talk about that win, what it means for Viant and kind of how that relationship was established, and then what does that mean for your ability to go after customers that maybe you investors would associate more with DV360 or with Trade? Every time you go to market, and this has always been the case for, I don't know, 10 years, 15 years, customers say, "All right. I get you have your DSP, blah, blah. What unique data do you have or inventory that you represent that would get me to switch?" Like that's everything. "What exclusive data do you have that I can't get anywhere else, or what inventory do you own or have access to that I can't get through anyone else?" Those are the two, like, headline value propositions. Molson selects us really based on, they had a whole press release around this, but scale of our Viant Household ID. They have about 180 million+ people in their CRM system. They own a ton of different brands. They are big time in addressable advertising. I've talked about our Household ID. What they realize, they're very sophisticated. What they wanted to do was not just take their 180 million CRM file and match it in a database. They wanna see how many you actually find out on the internet. How many people do you actually find? That's actually the real test of addressability. It's not like you matched 180 million emails in a database. No, go find them on Disney+. Go find them on, you know, Paramount. Go find them on those apps 'cause I wanna serve them addressable advertising. That was the first one that we separated ourselves. We absolutely crushed The Trade Desk. We crushed their incumbent platform. We really stand out there. The second thing was, again, what unique data do you have? They realized it in household ID. The next piece was around IRIS. This is a regulated company. They need to show ads at a certain level to 21+ households. They can't be showing Coors Light ads on kids' content. They get sued for it all the time. IRIS_ID was huge in that. If you buy CTV in any other platform, you don't get to know the content that's behind it. If you buy Paramount+, they have 20,000 titles. Well, which content is it? If they show ads on kids' programming, they can't do that. IRIS_ID was an amazing solution for them 'cause we know what the actual content is. We know the video, we know the name of the show, and we know everything about it. That was big for them, not just from avoid getting sued, but if this is live NFL football, you're gonna have a football-themed ad. If this is, you know, Let's say you're gonna show Coors Light or Miller Lite that they own. If it's a romantic comedy, you may show a different one of your products, you may bid differently. They saw the value of that is being able to increase campaign performance. The last thing is, another unique data signal that we have is something that we call the supply quality model. Beer sales are down. Only 52% of drinking age Americans say that they actually drink alcohol. It's the lowest point in 70 years, probably why our birth rate is depleting. What they have to do is get their ad dollars to work harder. When sales go down, marketing spend is a percentage of sales, and so they have decreasing budgets likely because of sales, yet their CEO is still calling for growth. In that pitch this year, because I've been pitching them for the last three years, it's, "You have a lower ad spend, but how are you gonna grow?" They're like, "Yeah, that's like topic du jour internally. How are we gonna do that with less money?" I said, "We are gonna use not only our Household ID, you're gonna be more addressable, you're gonna show ads on more relevant content, but you're gonna use and take advantage of our supply quality model. I'll give you some facts that you may not like, but the truth is about the internet that at least 30%-40% of the ads that you buy are not seen by a human, are not shown to a device that's a real device, or is not on a site that you think it is, and is likely a made, what we call a made for advertising site, that has a boatload of ads all over it. There's no content, and they get people to just click on the ads, and you think that they work." We audited and took them through their whole media plan. We used our supply quality model, showed them that for the same dollars, just by using our supply quality, we're gonna get you another 30% of more working media, and this is how we're actually gonna use a lower dollar amount of ad spend this year, but to actually drive more results. That is usually controversial for people 'cause I'm not selling a brand safety solution. I'm not. I'm just selling, how do I get my clients' dollars to work harder so that they use advertising to grow their business more effectively? That's all I want. If we start growing sales at Molson Coors, that's good for me because sales go up, budgets go up, they spend more money with me. That last piece that I told you either gets us thrown out of the room or it's a big buying signal. Got it. I think that's our time. Chris, thank you so much for being here. Thanks for having me. Thank you, guys.