So they’re not taking. Our competitors haven’t taken chunks of that business or our competitors haven’t caused that slowness to happen. So the environment remains, as it always has been. We’ve not, as Nicola noted, seen degradation on per product pricing, between activation and measurement. So those dynamics remain the same.
Nicola Allais: Yeah. And on the second question, we — our business is very profitable, right? So — and you can even see it on the cost of sales being 1% of revenue. The dynamics we are seeing are the same as we saw at the beginning of the year, which is we are starting to see some benefits from the use of AI and machine learning around the case that it takes us to innovate. We are continuing to innovate. We’re also benefiting from the fact that, we are seeing the economies of scale around G&A in general. So the benefit of our model is basically contributing to us to be able to continue to manage our 31% margin, even though we’re continuing to invest in the business.
Michael Graham: Okay. Thank you.
Nicola Allais: Yeah.
Operator: And our next question comes from Mark Kelley with Stifel. Please state your question.
Mark Kelley: Great. Thank you very much. I wanted to ask a question just about bigger picture, just guidance philosophy, win rate above 80%, sounds like the RFP pipeline is pretty robust. You mentioned 40-plus advertisers kind of evaluating Meta brand safety. I guess when you take a look at all of the visibility that you do have to any of those, I guess, what’s the right way for us to think about how you embed that into the full year guide? That’s my first question. And then the second one is just more of a clarification. The commentary about slower pacing in April, I just want to make sure that, that is a comment that’s focused on the retail and CPG clients and not up broader statement about what you’re seeing at the corporate level? Thank you.
Nicola Allais: Yeah. So Mark, I’ll start with the second question. You’re correct. That statement was related to this cohort of advertisers, which is why we we’ve chosen to take a year down based on the volatility that we’ve seen around that cohort. And again, they are within the top 100 of their material clients for us. I think this goes a little bit into the philosophy that we took around guidance, which is not unlike what we’ve done in prior quarters, which is probably lose to the pin based on what we see at the time that we are issuing guidance. So it felt like the right thing to do to take the impact of these advertisers into the guidance. You’re correct that there are lots of positive momentum around pockets of the business as we and they will continue.
So it is a measured view of the second half of the year, but the reality around this cohort of advertiser is a material impact on what we’re guiding to today. It is a vast majority of the impact that we took on today’s guide.
Mark Kelley: Okay. Thank you very much.
Operator: Our next question comes from Justin Patterson with KeyBanc Capital Markets. Please state your question.
Justin Patterson: Great. Thank you. I was hoping you could elaborate a little bit more on just the spending from large customers. I appreciate that there’s some uneven spending there, a few large ones in retail and CPG cutting, but it’s also a pretty robust brand advertising market, started some nice trends around social within there. So just trying to get a better understanding of how macro is playing in this and perhaps that there might be a little bit of crowding out from a more price inflationary versus impression heavy market? Thank you.
Nicola Allais: Yeah. I think, Justin, we’re going to say again what we said in the first quarter, because it remains consistent, which is we are seeing issues that are specific to these clients. We talked about this in the third quarter. Some of these clients are going through a corporate restructuring and have either item that are leading them to tighten their ad spend. So we’re not seeing this — we’re not saying that this is a broader macro factor. And as I answered to a prior question, we haven’t seen this spread to other clients at all. So we’re not factoring this as a macro component at all. This is really specific to these advertisers.
Justin Patterson: Got it, which I think contributes to some of the confusion of it still a pretty solid brand advertising market in there. So is there any other factors that you’re watching, perhaps it’s just less visibility because activations become a larger piece of revenue that’s kind of driving the outlook here?
Nicola Allais: Yeah. I think we did — we added a factor, which is creating some questions around moderated growth, which is the shift to spend to social from open web and from Internet. And by the ship to spend, I mean, the shift of the growth, right? A lot of the growth that we’re seeing in our business, as we noted is coming in social. Now that business is not as rich for us as our activation businesses. So we are seeing some of that impact as we see dollars go to CTV or these dollars go to social. And we mentioned CTV a lot in the call, because we think there’s a big opportunity there. But as you and a lot of analysts have noted, we’re still underpriced in that space, right? And I think that’s something that we need to start to work on getting our value prop aligned and our value aligned with the price of those impressions. So it’s something that I think we’ve talked about in the past, I think it will be a focus of ours moving forward.
Justin Patterson: All right. Thank you.
Operator: And our next question comes from Matthew Cost with Morgan Stanley. Please state your question.
Matthew Cost: Hi, everybody. Thanks for taking my questions. I have two. I’ll start with one just on the large customers. I guess last quarter, you articulated kind of the same headwinds and uneven spend that you saw from the NIM that you’re talking about now. I guess, how are you getting confident at this point now that three months later, it’s a little bit worse than you thought it was when you guided last time. How are you getting confident that it won’t keep getting worse for these large customers? Like why should we be confident that this is appropriately de-risked in the second half, given that you have the same mix of revenue in the second half that you had last year, but you don’t have this drag that could get worse over the course of the year? And then I have a follow-up.
Nicola Allais: Yes. I think, look, we’re getting — we are feeling it’s the right thing to take the number down for the pattern that we’ve seen in the first four months, right? So there actually was a good — there was a pickup in spend in March, but April is now uneven again. And so we are taking the impact of all of that into the second half. It is — it certainly feels like the right thing to do for the second half of the year. So I think if you back into that, then the question is really how to think about the second half and what is happening there, and the sequential growth from new customers is one of the factors that is going to help us deliver sequential revenue percentage growth in the second half of the year versus the first half of the year, along with other opportunities. And we do think that –from what we can see now, the right thing to do for the average other was to take it down in the second half.
Matthew Cost: Got it. Thank you. And then you mentioned some of the new dollars coming in sort of being more focused on social and CTV rather than open web. Is that a structural issue that maybe gets worse when cookies go away at some point in the future? And if it’s not, I assume it’s because eventually you’ll launch the full suite of products that you have on open web on social and CTV, but how long does it take for that to unfold? And then could there be a mismatch in how quickly dollars shift next year on to social and CTV versus your road map of launching all your products on those verticals?
Mark Zagorski: Yes, it’s a great insight. And I want to be clear on one thing is that we don’t need to wait to launch new products to take advantage of this growth, right? So we’ve — our expansion already across Meta and TikTok has borne a significant amount of fruit based on the solutions that we have in place. So we are experiencing that growth, and that will continue to be a factor in our trajectory moving forward. So I think we certainly are not banking our ability to grow in CTV or social on new products. I think they will enhance our opportunities there and kind of give us even more fuel to continue to grow at the trajectory we want. With regards to cookies and the role they’ll play there. I mean this is something where I think it’s probably less about cookie deprecation than it is about performance.
And as advertisers push for more granularity, more transparency and more performance, both on social and CTV, that will be the biggest deciding factor on how it works. And performance is directly tied, not just remember to like closing a loop, but what the CPMs are of those platforms. So if demand on those platforms starts to be so much that it exceeds the value or the ROI of spending on those platforms, then dollars will shift to where it’s cheaper, whether there’s cookies or not. And we actually saw this earlier this year with some of the social platforms and the people complaining that prices were being bid up by a lot of Asian reselling companies that advertise on the Super Bowl were driving CPMs up and lowering ROI for advertisers, which means they fled some of those platforms.
So we’ve seen this before. So I think it’s going to be a balance of dollar shift plus ROI on those dollars shift that will impact where spend goes. So I don’t think — without giving — it’s not game over yet for the cookie-based or non-cookie-based environment. It’s going to be a story of return, ROI and CPMs.
Matthew Cost: Great. Thank you.
Operator: Thank you. And our next question comes from Youssef Squali with Truist Securities. Please state your question.
Robert Zeller: Hi. This is Robert Zeller. Thank you for taking the questions. I just wanted to ask a clarifying question on the uneven spending pattern as well. Do you think advertisers are pulling back on ABS like product specifically or the programmatic space altogether? And if an advertiser ships more spend social, I’m just curious why DV shouldn’t see a greater tailwind in that channel? Thank you.
Nicola Allais: Yes. I’ll take the first one is, the spend uneven this is across their entire spend. This is not specific to a product. It’s overall lower spend. And as we said earlier in the call, we’re not seeing any of these advertisers turn off the product, they’re just overall spending less. In terms of the shift to social, yes, it is. I mean, it’s ultimately a positive for us, right, because it is part of the ecosystem where we do have products and that they are continuing to evolve. And if you think about the evolution here is we can get those social measurements going and then we are developing the products that will allow us to do a solid activation offering for social. So it is a positive overall for sure. In the short term, the activation products are premium priced. And so as more volume growth goes to social, we will have an impact there in terms of the revenue that we can extract. But over time, it is a positive for us in the industry.
Robert Zeller: Okay. Thank you.
Operator: And our next question comes from Vasily Karasyov with Cannonball Research. Please state your question.
Vasily Karasyov: Thank you. Good afternoon. I wanted to ask you if you are already having conversations with big connected TV platforms, apps and publishers and so on. And also, with the advertisers who use TV through the open programmatic channels? And how far along are you in those conversations in terms of the growth opportunity you outlined? And connected to that question is when — how long would it take for you to sort of get into that market and make that revenue stream sizable enough to return to growth in the 20 — can we even say that when all is said and done, we will be growing at 25% again? Or do you think it’s just a few percentage points growth a year? Thank you.
