When Canadian ad tech business StackAdapt announced earlier this year that it had closed a $235 million equity funding round led by Teachers’ Venture Growth, the news picked up a lot of attention thanks in part to the size of the figure. Funding rounds of that size aren’t nearly as common in ad tech generally as they once were, and certainly not in the demand-side platform category, where StackAdapt sits. And within that category, StackAdapt was perceived as a smaller player focused on the mid-market (though CEO and co-founder Vitaly Pecherskiy says he’s not sure where that perception has come from, since the company works with agencies of all sizes).
But while it’s true that size-wise, StackAdapt sits below the tech giant-owned DSPs and The Trade Desk, StackAdapt’s funding in part reflects a belief that there’s still plenty of room for growth in the DSP sector, and lots of potential for disruption. “I think it’s fair to say that when you look at the leaders [in the ad tech market] today, that will change dramatically in the next five years,” Pecherskiy told VideoWeek. “Just by virtue of looking at who the leaders were five or ten years ago, a lot has changed. So I think we’ll continue to see many more new entrants, and change in terms of who the market leaders are.”
And StackAdapt believes its formula, focused on business outcomes, user experience, and AI, can help it fight for a leadership position.
When is a DSP not a DSP?
StackAdapt was launched back in 2014 by Pecherskiy alongside co-founders Ildar Shar and Yang Han, inspired by Pecherskiy and Shar’s time working on the agency side. “Essentially five months into us working there, we realised there was a clear gap in the market in terms of the software that could exist,” said Pecherskiy. “So we left to start a new generation of platform solving for three key gaps we had observed”.
The first of these market gaps was that most platforms in the DSP space, according to Pecherskiy, built their software using a marketplace model. “When you think of a DSP, it’s typically a marketplace of third-party solutions like inventory, data, measurement, you name it”, he said.
StackAdapt’s approach has been to focus instead on building an end-to-end platform focused on business outcomes, where advertising is the means of driving that growth. “So we think less about the means of buying ads, and think instead about accelerating the growth of our customers, using advertising as a channel which is very scalable and with tremendous opportunity for growth — programmatic is the ‘how'”, said Pecherskiy.
As a result, StackAdapt’s big challenge is to make advertising predictable, profitable, and scalable. The difficulty when working with a wide range of different client types (which not all DSPs do, but StackAdapt does) is that different categories have widely different challenges. “What you can do for e-commerce is very different from what you can do with travel or healthcare, for example,” said Pecherskiy. “So engineering solutions for every vertical and subvertical requires a lot of precision. And we have to make our platform intuitive, but still make it very relevant and personalised for each vertical.”
That approach is one of the reasons StackAdapt doesn’t describe itself internally as a DSP, though (helpfully for journalists) Pecherskiy doesn’t mind the label. “From a product perspective, we’re not a DSP, but from a macro perspective, if you say we’re a DSP, it’s the easiest way to place us in the value chain,” he said. “Our main clients are advertisers, we buy advertising through SSPs, so from a value chain perspective we’re a DSP.”
Balancing automation and control
The challenges around making the platform intuitive and personalised feed into the second opportunity targeted by StackAdapt — user experience. “We’ve seen so many companies which operate in a managed service world, where it’s slow and users lack control,” said Pecherskiy. “So how can we build a fast and intuitive self-serve platform which people can interact with directly?”
Speed is a big focus here. “A couple of years ago we had this slogan, ‘speed that makes the difference’, and we’ve marketed our platform that way,” said Pecherskiy. “We’ve decided to really lean into speed, and I challenge anyone to find any platforms which are faster than ours when it comes to navigating the platform and pulling data.”
But speed isn’t the only factor. The aim for StackAdapt is to make its platform accessible and easy to use while still driving business objectives efficiently. The third gap identified by StackAdapt, automation and AI adoption, also comes into play here.
Obviously AI of one sort or another is present in a wide range of ad tech solutions. The differentiation, according to Pecherskiy, is the level of sophistication, which is validated by the results a platform is able to drive.
“AI and machine learning can be applied across every aspect of the platform, from brand safety to targeting to price optimisation, you name it,” he said. “And predictive AI and generative AI open up a whole new paradigm of use cases.”
StackAdapt’s view on the role of AI however is quite nuanced. Given the company’s focus on AI and on driving outcomes, it might be assumed that the ultimate goal for the company is to create a product where advertisers enter their objectives, and the platform makes all the decisions and runs the campaign by itself. But Pecherskiy says that’s not necessarily the case, at least in the short term.
“It’s a delicate balance, and over the years we’ve gone in different directions,” he said. “In the early days, we were very firm on the idea that we knew the best setup to drive performance, so the question was how can we guarantee that our customers use that setup. We started building up more walls and forcing people into specific workflows, but the reaction to that wasn’t universally positive! So we walked that back and decided instead to guide people through the setup which we know reliably works, while still making sure they can contribute to campaign setup and optimisation whenever they want to take control.”
Reducing friction and engineering success
StackAdapt’s data shows that most of the time, automated campaign setup works best. But not always — some people can beat the algorithm. And even if they can’t, some users prefer to maintain control nonetheless, particularly in areas where measurement is more difficult and it’s harder to prove what is and isn’t driving performance.
“Where measurement is challenging, people might gravitate towards human-led strategies, because they trust their gut,” said Pecherskiy. “And I think that’s not entirely a misguided strategy — a lot of people really understand their brands well, so they should be able to take control if they want to.”
The role of AI, therefore, is more about guiding users through the software efficiently, and helping them the platform well while still giving them control when they want it.
“How you use software matters,” said Pecherskiy. “Think about a product like ChatGPT: how you prompt it matters in terms of the output you’ll get. Our software isn’t unlike that, how you use it really matters. So it’s a combination of educating users on how to get the most out of the product, but also engineering the product so it’s failproof, giving people the highest chance of success out of the box.”
“Ours is a fairly complex product,” he added. “From planning, to creative, to campaign execution, to building audiences, all the way through to measurement, there are many different stages. We’re not at a place yet where you can just press a button and everything magically works, and I’m not sure if it’s possible to get there in the near term. But there are so many ways to augment the user journey using generative AI, and our strategy is really to reduce friction throughout the product using generative AI in ways which weren’t possible two years ago.”
“Incredibly bullish” about programmatic
These three ‘gaps’ aren’t the only areas where StackAdapt believes it can differentiate and grow market share.
Pecherskiy said he sees a big opportunity geographically, since a lot of the major players are heavily focused on North America. “We see a really big opportunity in the UK, Western Europe, Asia Pacific, Latin America — obviously those markets are challenging and fragmented, and some of them are years behind in terms of the sophistication of programmatic,” he said. “But there’s a huge opportunity, and we’re playing the long game here.”
Maintaining a truly omnichannel approach — linked to StackAdapt’s outcome focus — could also provide an advantage. Pecherskiy said that CTV is a major growth area, but CTV has to be combined with other channels to deliver the best outcomes for advertisers. “All the data points show that campaigns run in multi-channel formats perform better than single channel campaigns,” he said. “So to be a leader in CTV, we have to be a leader in everything else, and that means we have to be thinking about channels which other platforms maybe aren’t focusing on.”
But while StackAdapt sees plenty of areas to differentiate from its competitors and grow market share, Pecherskiy also still sees plenty of room for growth for the market overall.
“I feel incredibly bullish about programmatic and the space we’re in,” he said. “I spend a lot of time with clients, and I can see how difficult things are, navigating change and growing and running profitable businesses. There’s so much value to create for those companies, and as a B2B software company whose purpose is driving success for other companies, we feel like there’s an unlimited amount of value to create.
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