Operator: Our next question comes from the line of Matt Farrell of Piper Stanley. Your line is open.
Matt Farrell: Congrats on the strong results and thanks for taking my questions. For the first one, I know you’re not going to provide any quantitative commentary on 2024 today, but any way you could help us think about the qualitative, the major puts and takes for next year as you’re kind of going through your operational planning right now?
Tania Secor: Sure. We continue to expect and plan for double-digit growth in 2024. It’s still early days, and we’re deep in our budgeting and planning process. We’ll provide our 2024 outlook when we report on our fourth quarter results.
Matt Farrell: Thanks. And maybe just a follow-up. You all are on pace to drive some really solid EBITDA margin expansion here in 2023, even as you’ve made some investments in AI. How should we be thinking about the cadence of margin expansion moving forward? And what are the primary drivers kind of as we think over the next couple of years? Thanks.
Tania Secor: I would have similar comments in terms of our EBITDA margin as we look out in 2024. Our focus remains on balancing growth and profitability. In 2023, we demonstrated our ability to expand EBITDA margins by driving efficiencies and productivities. And we’re deep in our planning for next year, and we’ll provide a further update in the fourth quarter.
Operator: Our next question comes from the line of Mark Zgutowicz of The Benchmark Company. Your line is open.
Mark Zgutowicz: Thank you. I was just hoping to get maybe some cadence on measurement next year. And I know you’re not wanting to quantify anything, but just at a very high level, if you think about all the deals that you’ve signed both last quarter and this quarter, is there any reason to expect any of those deals to contribute to the first half of the year? Or is that all sort of more backend weighted or into further quarters out?
Lisa Utzschneider: Sure, I’m happy to take that, Mark. So the way we think about and size the social platform opportunities, large building blocks, medium building blocks. So large building blocks include Meta, YouTube, TikTok, to a lesser extent X. Medium building blocks are tuck-in Meta Reels and YouTube Shorts. And when you take a look at where we are in the product lifestyle and product adoption. YouTube TMQ launched in June, up and running, product adoption in place in over 30 languages. TikTok, as I mentioned before, humming, 50 markets, over 90 languages. Meta, we’re pacing towards the fourth quarter beta with Meta. And then Meta Reels and YouTube seeing nice adoption of our viewability invalid traffic and Meta Reels will also be part of the fourth quarter.
So several of these social platforms are already generating significant revenue for IAS and it’s early days. So we’re just going to continue to focus on investing in the innovation, driving the product adoption, land and expand into new markets, and have a strong start to 2024 with our social platform offerings.
Mark Zgutowicz: Thanks, Lisa, that’s helpful. And I just have one last quick one for Tania. You had commented that mid-tier was — I’m trying to remember what you exactly said, I think meaningful contributor to optimization in the third quarter. I was just wondering if you could further quantify that and sort of what the pace of that penetration might look like over the next 12 months?
Tania Secor: Sure. Yes, we were really pleased to see the growth, particularly in optimization from the investments we’ve made in mid-tier clients. In fact, the growth rate for our mid-tier revenue in optimization in the third quarter doubled from the second quarter, so a big contributor to our overperformance in the third quarter.
Mark Zgutowicz: Okay. In terms of revenue contribution, is there any color you can provide there?
Tania Secor: Yes. I mean we’ve been making investments in mid-tier around product integration, hiring programmatic specialists. We do expect those investments to continue to pay off, and we were pleased to see the ramp so quickly in the third quarter.
Operator: Our next question comes from the line of Tim Nollen of Macquarie. Your line is open.
Tim Nollen: I know we’ve had a number of questions on the social media roll on, and I’ve got a 2-part related question to that as well. I noticed that your CPMs you say were flat in the 9 months and the 3 months. I wonder if the social media CPMs, if you could talk about what the pricing might be like on those. If you might get better CPMs out of those over time? And then relatedly, it sounds like these social media roll-ons are all well underway or at least there’s a lot even more to come next year. I would assume that costs are largely done or let us know maybe if there are any incremental costs you’ll have to incur there. And if not, can this be a nice driver of profitability upside from here and a more sustainable operating income higher levels? Thanks.
Tania Secor: Yes, correct. In both the year-to-date period and the third quarter, we were really pleased to see an acceleration of volumes in measurement overall, which accelerated to 25% volume growth, up from 17%. And we were able to do that while also having at our average CPMs for the quarter consistent with the prior year period. Pleased to see that. In social in particular, it’s a higher mix of video and video is a premium to our display ads, so that was a tailwind for CPMs. The other thing is we’re really pleased to see expansion internationally in markets like Europe and APAC in the quarter with strong growth there and our CPMs are slightly lower in those markets. That was an offset to the favorable mix on CPMs.
Tim Nollen: That’s good color. Can you talk about the profitability upside potential please?
Lisa Utzschneider: Yes. The beauty of our TMQ technology that’s running in the live feeds of the social platforms now is that the product is backed by AI/ML. It gets smarter over time. And we don’t see significant increase in cost as the product scales over time. If the technology gets smarter, it gets more efficient and it operates at scale.
Tim Nollen: Right. So I know you’re not talking ’24 guidance by any means, but the implication might be if CPMs can rise on social and more social rolls on and there’s no incremental cost, we could be getting optimistic about better profitability going forward?
