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Mark Zgutowicz on Success Drivers in the Video Ad Market

By May 2, 2022November 14th, 2022No Comments

Mark Zgutowicz, Senior Research Analyst at The Benchmark Company, joins Cross Screen Media CEO Michael Beach to discuss how short-form content videos are pulling ad dollars from mainstream players and the future of ID and privacy in the Connected TV space. Watch our latest Screen Wars Thought Leader Interview here and read the full transcript below!

MB: All right, Mark. Thanks for joining us today. Give us background on where you are today and what path you took to get there.

MZ: I work for a mid-market investment bank named “The Benchmark Company.” It services institutional investors, as well as mid-market-sized companies, in terms of access to capital.

I got my start in the industry when I was at American Express working for a portfolio manager. He took me under his wing and gave me about 200 stocks to follow. I got thrown into the fire quickly in this industry. Fast-forward to today, I’m covering publicly traded stocks for ad tech and commerce companies.

I pay close attention to the private world. I love talking to private companies to get a better understanding of what’s going on in the industry, and also to provide better investment recommendations for our institutional clients.

MB: Can you give us some background on Benchmark? What problem do they solve, and what’s the business model?

MZ: Benchmark is a mid-market investment bank. We provide research and investment recommendations to institutional clients, which are fund managers. For instance, funds managers at Fidelity, as well as hedge funds, across states as well as outside.

We also provide banking services. We provide access to capital for mid-size companies looking to get access to data equity or to position themselves in the public markets.

MB: Great. Looking at the overall ad market, specifically video, what’s your overall take on where the market is today?

MZ: I think the video market today is particularly interesting. The short video market, specifically TikTok, has taken over a lot of viewership trends. Subsequently, it is getting good traction in the ad market and is most interesting to me from two aspects:

One is that it definitely is a pull of ad dollars from some of the bigger ad platforms. Facebook, in particular, has had some challenges in relation to Apple’s restrictive IDFA changes.

And two, I think it’s paramount to pay attention to the fact that Gen Z and younger millennials were born in that marketplace. That’s close to a third of the US population today, and it’s obviously continuing to expand. We’re seeing advertisers follow those generations.

CTV seeing a big amount of growth is another interesting topic. Roku and Amazon Fire TV are taking over the gatekeeper status that cable companies used to have. And that growth is interesting from two aspects:

One is, again, that you’re seeing a pull from social dollars as measurement. And you’re also seeing, generally speaking, linear TV finally starting to move a bit faster into Connected TV as measurement starts to become a bit more tangible for TV partners.

MB: Going back to TikTok. What do you think is behind their rapid success?

MZ: I find myself using TikTok a lot more now, and I actually don’t fit that demographic profile by any means. What’s interesting about TikTok is that the breadth of content on the app has expanded significantly just over the last year. What clearly began as just goofy videos has expanded to a wide spectrum of content. From mind, body, and spirit, to golf tutorials, and video tips. You name it. There’s anything you could possibly want on TikTok.

And we’re also seeing that Gen Z and young millennials are pulling more content to that platform and optimizing it for their short video habits. For instance, you see a lot of video podcasts get bite-sized highlights.

It’s interesting to see how the short-video market is pulling both ad dollars and eyeballs into the shorter video consumption. Whether it’s TikTok, YouTube shorts, or Instagram Reels.

MB: I love two recent things they’ve done. One, rolling out applications on more Connected TVs. And also the power of their algorithm. That, and expanding their content length to 10 minutes. You can see them starting to use those three things to eat into a lot of longer-form video time as well.

MZ: Absolutely. And you mentioned the algorithm. That’s so important. I think their algorithm has improved dramatically as well.

When most people start off on TikTok, they get a lot of those goofy videos, but TikTok optimizes your viewing habits very quickly. I think the next step for them is to get a little better at gathering the data signals into better returns. Michael, you and I have even chatted about providing better competitive returns with that data. And I suspect they’ll continue to get better at it.

MB: Funny that you mentioned the demographic. I don’t know if you’re a baseball fan, but we’re recording this the day after the baseball season started. Last night I watched the Reds vs. Braves on ESPN, and they had Joey Votto mic’d up, who’s one of the oldest players in the league.

He talked about how now he is recording videos of himself breakdancing on TikTok. So it’s not far away from the rest of us.

MZ: There’s so much out. I saw Brad Johnson, who used to be the quarterback of the Vikings. He has his own channel, called @BigBadBrad14. And he’s throwing footballs from a hundred yards away into baskets. It’s just funny, goofy stuff.

If you want to reach that demographic, it’s there, and it’s easy. Another unique thing about TikTok is that it’s easy for anybody to get set up and get followers, which is very different from Reels.

Facebook’s premise has always been, “We’re going to optimize views to the biggest influencers, and we’re going to show their videos more than the Joe Schmo that starts out with no viewers.” And TikTok is a bit more balanced. They’ve done a really good job of differentiating themselves against services like Reels in that respect.

As you look forward and look at some DSPs that are really dependent on third-party data, these companies are going to have a tough time redefining themselves with their own unique IDs as we move into more of a cookie-less world.

MB: When we talk about platforms like TikTok and Roku, we mention that they’re on the rise. Whose best days are behind them on the advertising and video space, specifically?

MZ: I certainly would say TV, obviously. There’s no fall off the cliff anytime soon, but we all know what the viewership numbers are with TV.

As Roku and others in CTV get better with the measurement, that’s going to accelerate that shift of linear dollars. Whether it’s Roku, Fire TV, or Samsung TV. That’s an easy one to say their best days are behind them. 

As you look forward and look at some DSPs that are really dependent on third-party data, these companies are going to have a tough time redefining themselves with their own unique IDs as we move into more of a cookie-less world. So I think some DSPs are going to have some difficult times ahead.

MB: One of the things we have discussed before is, what is it going to take for these emerging platforms to hit scale? We talked a lot about CTV, and we partnered on some research recently, called the “State of the Screens industry pulse survey.” Our goal was to identify what’s the friction point between buyers and sellers that is keeping the market from evolving. Were there any top button insights that stood out to you?

MZ: I’m always trying to pay attention to shifts within digital, and we know linear TV is slowly moving into digital. But the shifts within digital are interesting to me because I cover all the social media companies like Facebook and Twitter, Snapchat, Pinterest, and the like.

As we start to see CTV measurements getting better, more dollars will get pulled out of social.

My belief is that as we start to see CTV measurements getting better, more dollars will get pulled out of social. And the survey supported that. It indicated that the expectations relative to social, in terms of spend on CTV, and the demands from a buyer standpoint, are outpacing at least a bit of social. I suspect that will continue.

MB: It’s a huge impact on how big the TAM can be for these markets and what business models are going to be winners and losers. 

Quick question. Nielsen sold private equity a couple of weeks ago. A big debate in our community is, is this going to be a good thing for a business like that, in terms of being able to invest in the long-term? Or is it going to put competitive pressure on them? 

Another side of this argument is the Netflix vs. HBO, AT&T argument. About a company that’s able to sustain losses while it grows, versus pressure for immediate profits and distribution to shareholders. How should we look at that question?

You're going to see a greater focus on pure digital measurement and better measurement within CTV.

MZ: It’s going to be interesting. I think it was Mark Zagorski who said the public markets are kitty cats relative to private equity, which is going to chew them up. I don’t know if you’re speaking specifically to Nielsen or in general, but it’s going to be interesting to see.

I think you’re going to see a greater focus on pure digital measurement and better measurement within CTV. What happened to Nielsen? There are a lot of things. Streaming viewership outpaced their ability to measure it. And certainly, their foundation was on TV.

I suspect you’re going to see them become tighter and more optimized in digital in a variety of ways. It will be interesting to see where they come out on the other end. There have been complaints about Nielsen obviously for multiple years. 

I think this transition to streaming is a challenging one. In a lot of cases, the eyeballs are still on traditional, but they are shifting into streaming. I think that is something that can be measured better. I’ll just leave it at that.

MB: We talked a bit about public markets. When you look at the private side right now, what type of companies are you looking at, and are you interested to see trends?

MZ: I would say the ID space is interesting, as it relates to this Chromageddon that’s coming. The importance of these IDs is going to become more evident.

We have companies like LiveRamp, Criteo, Magnite, and others. Many have their own proprietary IDs. And there are a few private companies that also have a unique way of maximizing one’s inventory.

Two shifts where the private space can help are happening. We’re going to see a lot more small walled gardens. You’re going to see the New York Times of the world sit next to Facebook and go directly to the advertisers. As opposed to wanting to jump in a pool of IDs that are shared with some DSPs like a Trade Desk with their UID2 and tend to offer.

I think there are a lot of different ways to help publishers like The New York Times, or whoever has a large base of viewers and emails, to maximize that directly with a few advertisers. And I think there are a few private companies interested in that respect.

MB: A lot of our customer base has seen the benefits of target advertising. And that’s becoming a more challenging environment where, as you said, the identifiers are going away because of changes with the browser, device manufacturer, or just privacy laws in general. It’s definitely a huge topic today.

MZ: I don’t think most are prepared for it. When I talk with industry folks, I’m always interested to hear others’ opinions on this. But Google has put the pause button on cookies a couple of times.

And there’s a certain expectation that they will pull the plug next year. But if they do, there’s going to be a lot of third-party benefactors that may be scrambling a bit. So, it’s going to be an interesting dynamic to pay attention to next year, as we get closer to that potential event.

As it relates to CTV, the one thing I would say is how important IDs are within the Connected TV space. Because obviously you still have IP addresses that don’t necessarily require that ID. 

So, in terms of how that transition happens within CTV, that might be less exciting, since it is predominantly walled off by a few players, at least at the moment.

MB: We had Auren Hoffman a couple of weeks ago. And one of the things he talked about was just how interesting the CTV app ecosystem is. And the fact that it is much more fragmented than mobile, and that your replacement cycle is so much longer. 

You buy a TV, and you replace it once every seven years. And you don’t have this Apple and Google kind of controlling everything, but it also leads to a fragmented process for marketers. It will be interesting to see how important it’s that those walled gardens create their own identity framework, measurement, and everything else.

MZ: Specifically within the TV hardware space, as Samsung and LG continue to expand the utility of their own guides. It’s much easier to turn on an LG or a Samsung TV today and hit the Netflix or YouTube button. It’s interesting to me to see how that changes the habits of a user who used Roku or Fire TV in the past. That’s something I’m watching.

Samsung has close to 50 million US households today, and Roku has roughly the same. They’re positioned in different markets. Samsung, at the high end, Roku, at the low end. But Roku’s starting to move up into Samsung’s camp, because they’re a bit saturated within the US market.

It’s going to be interesting to watch Samsung and LG, specifically, and how they proliferate on the ad demand side of CTV.

MB: We’ll get you out of here with two more questions. What is one prediction or trend that you think is under the radar that will be a big deal a year from now?

MZ: I certainly think if Google does pull the plug on cookies, it’s going to be a bigger deal than most are anticipating. We’ve had the pause button on it, and there are still some EU-related things that Google has to work out with the alternatives that it’s offering for tracking.

The transition is going to be very difficult, specifically, for some larger DSPs that really utilize third-party data, 

For instance, the Trade Desk, which has UID2. And, at least in terms of who I talk to in the industry, I haven’t seen an eagerness amongst publishers to adopt an ID or, at least, share that ID within a consortium.

I think that it is super critical for somebody like Trade Desk to transition to a cookie-less environment.

MB: Another question we get asked often is, what should we be reading to keep up on these topics? Any recommendations for our audience?

MZ: There are a lot of blogs that I follow. Benedict Evans has a really nice weekly newsletter that I find to be very interesting from a 360-degree view, not just focused on ad tech or commerce.

In terms of readings, I’m excited to read “The Metaverse” by Matthew Ball, which I’ve pre-ordered. It’s coming out in July of this year. He’s another guy that I listen to every word that he says because he’s been spot on in most of his predictions. 

I think the metaverse is just a concept right now, but it will ultimately be here. We need to think about a world where we’re not necessarily looking at laptops, but we’re looking more at augmented viewing through glasses that don’t look like they’re eight feet tall on your face. That’s an interesting world for me.

MB: Hopefully we’ll get him on the podcast during the book launch. We’re excited about that as well. I think we could spend an hour just talking about Facebook’s business model around this $10 billion a year investment.

MZ: Yeah. Right now, they have spent a lot of money on what still is largely a concept. It’s a really interesting space to watch, both in the public and private markets.

MB: Absolutely. Well, Mark, I appreciate your time. I know our audience is going to really enjoy this conversation.

MZ: It was my pleasure. Thank you, Michael. And appreciate your insight and your weekly as well. I can’t tell you how enjoyable it is to read every week and especially when we’re all engrossed in all kinds of things to read. It’s the easiest read and the most informative read that I have every week. So thank you for keeping it simple and direct. It’s a good one.

MB: Thank you, I appreciate that!

Download the State of the Screens Industry Pulse Survey


Mark Zgutowicz is a senior equity research analyst at The Benchmark Company, a mid-market investment bank, where he provides investment recommendations of publicly traded ad technology and ecommerce companies to institutional investors including long-only and hedge funds. Mark was ranked as a Top 50 Wall Street analyst in 2020 by TipRanks based on excess returns of his investment recommendations. He has been covering the Internet sector broadly for over 20 years on both the buy/sell side of the investment management/research industry.

Mark’s buy side tenure includes senior research analyst roles at Cornerstone Capital Management, Waddell & Reed Investment Management, US Bancorp Asset Management, and American Express Financial Advisors.  And in addition to Benchmark, his sell-side tenure includes Rosenblatt Securities and Piper Jaffray Companies.  Mark earned a BA in Business Administration from the University of St. Thomas and an MBA in Finance and E-Business from the University of Minnesota Carlson School of Management.

Cross Screen Media is a marketing analytics and software company empowering marketers to plan, activate, and measure Connected TV and audience-driven Linear TV advertising at the local level. Our closed-loop solutions help brands, agencies, and networks succeed in the Convergent TV space. For more information, visit

Michael Beach

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.