Direct Digital Holdings is a Black-owned, ad tech holding company that is redirecting programmatic ad spend into multicultural publishers — but convincing the complex array partners in the programmatic ecosystem to support a more diverse, ethical supply chain is no easy task.
Mark Walker and Keith Smith co-founded the company in 2018 after identifying a gap for a buy-side platform focused on the middle market — which they define as companies with revenue between $5 million and $500 million — and a sell-side business focused on multicultural publishers.
Walker witnessed how difficult it was for multicultural publishers to join the ad tech supply chain and evade exclusion during his time as acting chief operating officer at Ebony Media, the publisher of Black culture magazine Ebony. He was responsible for overseeing the print publication’s digital transformation after it sold to private equity firm CVG Group in 2016.
“Becoming ingrained into the programmatic ecosystem was the biggest hurdle that we saw at Ebony,” Walker told Campaign US in an interview.
Walker and Smith formed Direct Digital Holdings from the acquisitions of Huddled Masses and Colossus Media, a buy and a sell side platform, respectively, for mid-market brands. The company bolstered its buy-side business in 2020 when it acquired demand-side platform Orange142.
The Houston-based company went public in February this year, raising approximately $15.4 million from its IPO. It has grown impressively since going public, with revenue nearly doubling from $11.2 million to $21.3 million year over year in Q2. Net income of $2.6 million represents a 58% jump from 2021.
The sell-side business, led by Lashawnda Goffin, has grown the fastest. Its focus on multicultural publishers that represent Asian American, African American, Latin American, Hispanic and LBGTQ+ communities has proven to be a competitive advantage in an industry that has struggled with bias and poor representation. Colossus SSPserves more than 39,000 clients and manages around 98 billion impressions. The buy-side business continues to grow modestly, serving 152 customers.
While Colossus focuses on multicultural publishers, guiding smaller publishers through programmatic integration takes time and investment. So the company props this up with large publishers that can easily plug in and add scale.
“Some of the clients we work with, we are their first partner so we walk them through the whole process of adding header bidding and helping them find the right partners. Sometimes we have to work six months to a year just to get them connected,” said Walker. “That's a significant investment on our side, but we want these publishers to be healthy, because if they're not healthy, we're not going to be healthy and the rest of the chain suffers.”
Proving the ROI of supporting diverse media
Advertisers and media buying agencies are eager to support diverse-owned media, Walker said, so long as they can prove clear ROI.
“Providing access to a very large population of multicultural audiences at scale, combined with general market, has been a winning pitch. But it's not enough to keep buyers. You have to have campaign performance or you're going to get cut from the media buy,” said Walker. “We are not just a company that we tug on the heartstrings, we are primarily focused on performance.”
He said Colossus has ranked in the top 10 SSPs on MediaMath’s Source scorecard.
The tactical execution can also be problematic. The complexity of the programmatic ecosystem causes bottlenecks. A publisher needs to obtain support from a wide range of ad tech partners to join the programmatic ecosystem — and not all of them see value in moving to a more representative supply chain.
“From the buyer to the actual delivery, there might be five or six different technology partners in between that you have to align with. We've definitely seen partners out there who are willing to help, and then for others, it comes down to just dollars and cents,” Walker said.
“Dealing with a lot of different players means progress is never fast enough, but you’re trying to change behaviors and perspectives, and that takes time,” he added.
Ad tech’s poor representation is demonetizing diversity
Walker believes much of the ad tech industry’s problems can be traced back to poor representation.
Diverse publishers struggle to monetize because the people pushing the buttons in the programmatic industry are still overwhelmingly white and male.
Ebony was regularly screened out of media plans because the word ‘ebony’ has been appropriated by the porn industry, Walker said.
“That started highlighting to me that when you have someone in charge of media plans or exclusion lists who hasn't been exposed to a certain culture or community, it's very easy to make assumptions or misunderstand terminology,” he said.
This continues to be an issue for publishers that Direct Digital works with, but there’s more awareness of the issue now, Walker said. “That’s the first step: admitting we have a problem. Then we can figure out the tools needed to fix it.”
The solution is an obvious one: implementing multicultural training and improving diversity among those people building inclusion and exclusion lists.
“Exposure in the form of training, hiring and incentivizing people to learn other cultures and other experiences is really the best panacea that we can have as an industry,” Walker said. “Also, changing the people who are building these lists so minorities have a voice at the table.”
Technology is not the answer, he believes, because technology is influenced by the unconscious bias of those building it. “Unfortunately it's all based upon human input, and humans are fallible,” he said.
He believes Direct Digital Holdings “secret sauce” is the diversity of its staff. Employing people that consume media tailored to their communities has helped the company nurture its diverse publisher relationships, he said, whether its chief technology officer Anu Pillai providing insight for Colossus' relationship with the Times of India or chief growth officer Maria Vilchez Lowrey informing its Hispanic outreach.
“Diversity is deliberate,” Walker said. “If you take a hard look at your team, and you see that everyone looks like you, you've probably got a problem.
“My belief is that tapping into diverse voices and perspectives leads to the kind of products and services that will increase profits for a wide variety of companies. At the end of the day, inadvertent bias isn't just bad, but it’s bad for business.”