Hello, and welcome to the Perion Network Q4 and Full Year 2021 Conference Call. Today's call is being recorded. A press release containing the transaction details is available on the company's website at perion.com. Before we begin, I'd like to read the following safe harbor statement. Today's discussion includes forward-looking statements. These statements reflect the company's current views with respect to future events. These forward-looking statements involve known and unknown risks and uncertainties and other factors, including those discussed under the heading Risk Factors and elsewhere in the company's annual report on Form 20-F. They may cause actual results, performance or achievements to be materially different, and any future results, performance or achievements anticipated or implied by these forward-looking statements. The company does not undertake to update any forward-looking statements to reflect future events or circumstances.
As in prior quarters, the result reported today will be analyzed both on a GAAP and non-GAAP basis. While mentioning EBITDA, we'll be referring to adjusted EBITDA. We have provided a detailed reconciliation of non-GAAP measures to their comparable GAAP measures on Form 6-K, which has been filed and is available on our website as well. Hosting the call today are Doron Gerstel, Perion's Chief Executive Officer, Maoz Sigron, Perion's Chief Financial Officer. I would now like to turn the call over to Doron Gerstel. Please go ahead.
Hi, everyone. Thanks for joining our Q4 and Annual 2021 Earnings Call. Together with me on this call is Maoz Sigron, he's our CFO. Let's get started. Definitely the Q4 momentum continues, and we are delivering a record revenue growth in the Q4 , and we actually doubled our net income. There are few points or few factors, tailwind factors that I would like to mention on this call, and I definitely will dive in on some of them. First and foremost, I think that has to do with our diversification strategy and product that treats different advertising channel high impact units. The pendulum is shifting from standard units to high impact units, and it's all about engaging with new consumers.
I'll show you a few examples of great campaigns that we're doing, taking the concept of high impact, if it's CTV or video, to a different level. We are very proud of our iHub, the intelligent hub. It's AI-driven technology that 2022 is going to be the first year which is fully in operation. We have an estimate of what it's going to generate financially for our bottom line, and that's definitely something that I share with you when I talk more about 2022 guidance. We're very happy with what we're able to deliver. There is a strategic focus on video and CTV with the acquisition of Vidazoo that happened at the beginning of October, the beginning of the quarter.
Actually, Q4 is the Q1 that they are with us, and I wanna share with you some of their great results in this quarter and how it fits really well with our focus strategy on video and CTV. Last but not least, with a very successful two follow-ons that we did in 2021, and a great net cash from operation, we reach a point where we have more than $320 million in cash with no debt. We intend to continue with our, I consider is a unique acquisition framework and strategy, which definitely proved itself over time. Now with more cash, we're definitely looking ahead and there are some great opportunity in the market. Let's dive into the Q4 .
As I mentioned, the Q4 was our record revenue with 34% year-over-year growth between the Q4 of 2021 with $158 million versus $118 million last year. Very much thanks to 311% growth in CTV, $46 million versus $11 million. Another two KPIs which we very much pay attention to is average deal size. I will talk about what is the cause for increasing average deal size by 29%, and very much has to do with the cross-screen synchronization. Very, very interesting concept that we bring to market. Average of $139,000.
As you all know, the whole advantage about increasing average deal size is that the effort, the sales effort for $139,000 is the same as $108,000, and it can generate a very healthy net income. Growth in customer retention is the other KPI that we keep attention to, and we improved this from 86% in last year to 91% this quarter. Profitability was not behind and when we actually doubled.
Doron, I need you to please share your screen to show the slides. Thank you.
Oh, you didn't see it? Okay. My fault. That's the revenue slide that I talked about, and now let's move to the profitability slide, where we doubled actually our revenue from the Q4 of 2020 to the Q4 of 2021, and we reached $29 million. Pay attention, you know, to these numbers, which is the ratio between the EBITDA that we generate in the Q4 to the revenue ex-TAC, and we reach a very significant number of 45%. What are the main causes for this high profitability? I mentioned the hub-and-spoke model, and it has a huge potential of saving resources.
The second thing is our investment that we did in the previous year on automation and technology is really paying off. As you can see, while we are scaling our business, we're able to leverage our expenses. One of the major effort that we did, we established offshore operation on some of the tasks that we have in India, and that's definitely helping us from a cost structure standpoint. Display advertising. Our revenue is being structured into two buckets. One is display advertising, the other one is the search advertising. When it comes to display advertising, 46% year-over-year growth, $100 million in the Q4 , $68 million was in the previous year. Very much thanks to the CTV.
I mentioned the CTV and video growth, but here you basically can see that CTV able to get us 31 new customer, and more importantly, 20% of our customer, active customer, 412 of them, so actually 92 customers using CTV. It's a 20%, it's actually double from last year, the number of customer that are using CTV, I will show you a few example of it. High-performance drive differentiation, and more importantly, we are very happy with our ability to share formats that drive consumer all the way from awareness, you know, to performance. Cross synchronization was the main factor behind the average increase in average deal size.
I will show it to the Vidazoo platform, which is completely, you know, changing the way we are working with publishers and allows us to drive direct demand into their platform. Most of all, we are really happy with the progress that we're doing on the vertical of retailer. That all has to do with personalization. We generated around $4.6 million in the quarter working with retailers and it's all just the beginning. Hold on for a second. Okay. This is an example that I wanna show you with an $800,000 dollar campaign that we did with Advil. The brief was very interesting, and they described it as the awareness up to performance.
The idea was to what extent we are able to synchronize a few screens, the mobile screen, the desktop screen. In the end, the big screen, which is the TV screen, watch here to call to action. The call to action needs to be translated into an actual buy. By the way, it's a live campaign, so if you have your smartphone with you can scan the QR code here and add to this very significant number of 73,000 products that we added to Advil due to this campaign. Let me run it here.
Look at this guy. He's really working hard. You know what he'll get? Muscle pain. You know what he should get? Advil.
You should get Advil. One of the things, when you scan the code, the QR code, the beauty here that you drive it all the way from here to the checkout. Here you basically type the amount, the quantity, and you're there. We're saving on clicks, which is everything that has to do with the consumer funnel. If you're asking what's next, this is next. The next big thing is that we are in case this retailer is out of stock, we are getting an online indication. If this is the case, then suggesting all kinds of lookalike and alternative products that can be a great substitute based on inventory level. Why it's so important?
Because if advertiser pays so much to be at this point where this can happen, and at the end, there is no inventory, can you imagine the loss? We are adding this capability, which advertisers see it as a huge value for them. No doubt that they're increasing their amount of spend to 29%. That's a very neat technology that we developed. The next example. Hold on. This is the next example. It's the live CTV example. The whole idea is very much keep the viewer engaged and not look at it as an ad break. It works really well.
That fourth down stuff with Dak when he fumbles into the goal line and it's like, guys, just.
Light by Yuengling is raising the bar by crafting the next generation of light beer. With only 2.6 carbs and 95 calories, this is premium.
Although that's the next one. Sorry. Okay. Viewers get to enjoy sports content as it stays live. It never goes to commercial breaks. That's the whole idea. That was very much the brief that we got from DraftKings, which they very much would love to, you know, to get more. You see the quote here as how they view it. It's one of the main drivers behind the CTV growth that we've seen and very much a focus area for us. The next one that I want to show you here is the interactive CTV. Here is another example that we did with HBO. I think that the most important part is this part, the win-win.
It's the win-win for the viewer and the advertiser, and everything it has to do with engagement rate. This is the interesting part, the 32% more memorable advertising. As a result, interactivity drives 47 more times 10 with ads. That's very much the idea. You're able to see the interactivity here?
Surviving.
I will stop it just to show you. Oh, sorry. It couldn't. No, but here is a nice. That's the interactive part. I hope you can see my circle. If you really engage with what they have to show next, you click on it. Then you are very much going deep into the advertising because this is what you want as a viewer. Instead of us bargaining with another minute that makes it really annoying. That's the ICTV angle here. 40% lift in engagement rates, again, a very important factor to increase the spend. It all has to do with return on ad spend and how it's being translated into this very important factor.
Another very important innovation that we bring into the market is a platform that Vidazoo calls the all-in-one video monetization platform. I have here a very interesting slide that we're showing, and we're trying to compare it to other companies and what they are known for. I think that the most important thing is that Vidazoo is able to incorporate outstream, the video player, ad server, syndication, monetization, and FreeWheel monetization into one platform. 50 publishers, which is around a third of their install base, are already using this platform. The interesting part is really a line which the publisher would like. It's minimize the number of vendors and have one, very much one console, one platform that covers all. We are very, very proud of what we're doing. It's creating.
That's what I mean and meant when I called it in previous call a moat. This is a moat. It's a technology moat. It's very much protecting our customer from others because it's holistic and it cover all parts of what publisher is looking on their video monetization platform. Search. Search is keep growing. We increased the number of publishers to 114 from 79. Search advertising is the second source of revenue for the company. I think we need to pay attention to this more than anything else. I think these are the most important KPI when it comes, because it's a direct impact of the geo expansion that I mentioned on previous call. Of course, the fact that we're adding more publishers.
I put here a slide that compared the number of monetized searches. Monetized searches is only searches that we are getting a rev share on. I tried to compare it between 2019, 2020, and 2021. Just to show you, first of all, it very much has to do with COVID. I think that people spend more time on screen and more time doing e-commerce, more time searching on it has to do with commercial transaction. If you're asking me what happened after COVID, I don't think it will go back to where it was before. I think that we definitely understand the advantage of searching before buying, no matter if this will be done on online or not online.
Keep in mind that we are getting rev share on searches, not on the actual purchase itself. The monetized searches will never go back. It's just going to increase, and we are very happy to see it because it has a direct impact on the fact that we're able to grow our search business by 16% year-over-year. One of the most complicated, however, the most important slide in my presentation that has to do with the hub. For those who are first time seeing it, I will just give you kind of an insight. This slide is the demand side. This side is the supply side, which, you know, every advertising technology has.
Most companies are taking position either on the demand side or on the supply side. Our diversification strategy is very much coming from the ability to drive revenue from both sides of the open web. More importantly, on this side is our ability to connect all our assets, either from the demand side or from the supply side into this intelligent hub. This is the AI that we invest the most of our engineering budget, and it's starting definitely to pay off. You're able to see the EBITDA contribution when I will talk about the 2022 guidance. When it comes to the value of the hub, we're talking about reduced operational costs and reduced costs in the millions of dollars that it will generate.
The one that we are proud of the most is this one. Are we able to increase our customer value through the fact that we are analyzing so much data? I here give you kind of an indication about the huge amount of data that we are crunching on the daily basis every day. That's the amount of data from 70 million searches to huge spend on social and 5 million daily ad opportunities. Where this all data crunching is going, one of the things that we are proud of so much is SORT, which is our cookieless technology. We launched SORT beginning of October, not more than three months away. I mentioned it on our previous call, but now I'm so happy that I'm able to share with you that we have already more than 40 customers that are using SORT.
More impressive, guys, this is more impressive that we are able to show that the CTR, the click-through rate, is 2x higher than cookie-based targeting. That's the drama. You have some of the campaigns that is running. Some of them are already started, and some already are live as we speak. The most important thing here that it does not require any integration with the publisher, nor with the user. Really a very advanced AI technology that drives more and more customer. I would like to share with you that what we did here, by the way, you have here how it demonstrate and how it looks in life. What I wanna share with you is this very interesting concept, which is how effectively SORT can be a flywheel for our business.
We start with the fact that 74% of the consumer that are engaged with this ad wants visible protection seal. This is the visible protection seal that we have on any SORT, any ad that is using SORT. They feel safe, and thanks to that, they click. They have more clicks. Then what's happened, because they click more, the click-through rate is increasing. That's why we have 2x higher click rate. Then what's happened is that we translated into return on ad spend to our advertiser. They are looking to spend more and looking to have it. They spend more with us.
I mentioned that we have already 42 advertisers that are using SORT, some of them looking at it as standard, and that's why we are able to get more users that are doing it. Currently, 208 million reachable user and counting. There is another very interesting thing. Let's not forget that it's all AI-based. So more clicks, more data. More data, it's all about the AI and more of the machine learning that we have, and we are able to improve the model. To improve the model and able to get a higher performance, which is the great definition of SORT flywheel. We are analyzing the impact of the SORT for 2022, and I will share it when I will talk about the guidance.
With that, I would like to turn the call to Maoz that will share with you some financial results of Q4 and 2021. Thank you.
Thank you, Doron. Good morning, everybody. 2021 was indeed the year when Perion separated itself from the pack with accelerated financial performance and new records of revenue and EBITDA. The widespread disruption brought on by the pandemic is challenging, but is also creating remarkable opportunities for Perion, and we are very proud of our achievements. Turning now to the quarterly results. Revenue for the Q4 was $158 million, an increase of 34% and 20% growth on a pro forma basis. We achieved all-time record levels of quarterly revenue. Display advertising revenue was a record of $100.2 million during the Q4 of 2021, up 46% and up 23% on a pro forma basis.
Search advertising revenue was $57.8 million during the Q4 of 2021, an increase of 60% year-over-year. In terms of revenue mix, display advertising revenue of $100.2 million represented 63% of the 2021 full-year revenue, compared to 58% in 2020, with search advertising of $57.8 million represented 37% of the 2021 full-year revenue, compared to 42% in 2020. This change in revenue mix is aligned with our diversification strategy. Revenue excluding TAC was $64.6 million or 41% of revenue, compared to $43.4 million or 37% of revenue in the Q4 of 2020.
The increase of 4% was primarily due to product mix, our continuous AI efforts to serve the direct demand and supply in a closed loop that is generating superior efficiency and performance and the incremental revenue with low variable costs. OpEx and COGS expenses were 25% of revenue in the Q4 of 2021, compared to 26% of revenue in the Q4 of 2020. The main reason for this reduction is due to our efforts to enhance process automation, the iHub that acts as a shared infrastructure resource and offshoring our operations. Net income was $17.7 million or $0.44 per diluted share, an increase of 97% compared to $9 million or $0.30 per diluted share in the Q4 of 2020.
Non-GAAP net income was $25.3 million or $0.62 per diluted share, up 83% compared to $13.8 million or $0.45 per diluted share in the Q4 of 2020. Adjusted EBITDA increased to $28.9 million in the Q4 of 2021, representing 18% of revenue compared to $15.3 million, representing 30% of revenue in the Q4 of 2020. Adjusted EBITDA of revenue excluding TAC was 45% during the Q4 of 2021 compared to 35% in the Q4 of 2020. Our efforts to keep the media margin level stable and to generate incremental revenue with low variable costs have improved efficiency and profitability.
Net cash provided by operating activities was $28 million in the Q4 of 2021 compared to $12.9 million in the Q4 of 2020, reflecting a 123% year-over-year growth. As of December 31, 2021, we had cash equivalents, and short-term bank deposits of $322 million compared to $60 million as of December 31, 2020. Turning now to the yearly results. This year, we have continued to deliver exceptional growth, increased profitability and significant cash flow generation, sticking to the diversity of our revenue stream and differentiation of our AI platform while delivering well ahead of guidance. Let me share with you some of the top financial achievements of 2021. Revenue for 2021 was $478.5 million, an increase of 46%. The highest revenue ever.
EBITDA for 2021 was $70 million, an increase of 112%. The highest EBITDA growth ever. EBITDA to revenue was 15% versus 10% during 2020. EBITDA to revenue excluding TAC was 37% versus 25% during 2020. Net cash from operating activities was $71 million, an increase of 221%. We also continue to bolster our financial strength as evidenced by two successful capital market transactions during the year, which ended in the aggregate more than $230 million to our balance sheet. This enables us to continue the execution of our strategic plan of organic and inorganic growth. With a scalable operating model and fortress balance sheet, we're well-positioned to continue to deliver profitable growth and expect 2022 to be the third consecutive year of more than 25% revenue growth.
We have built a durable, sustainable platform for profitable growth with clear earning power. This concludes my financial overview for the Q4 and the full year 2021. I will now turn the call back to Doron for closing statements.
Thank you, Maoz. Just let me share my screen. Can you see it? Closing remarks. The title is The Momentum Continues to 2022. What I would like to share with you is where this sustainability and predictability comes from. It's all has to do with the three dimension of our diversification. I will start and say that, one of the most important things which, sets us apart from other, you know, ad network and ad tech companies, the fact that we are, operating across the three main pillars of digital advertising. The search advertising, social advertising, and display advertising.
From connecting everything into our hub allows us first to generate revenues on both sides of the open web, as I mentioned, the demand and the supply. Last but not least is the fact that we're able to connect all the hub-and-spoke model and ability to not just connect, but also to drive operational savings. We are estimating that due to the fact that we're able to concentrate and our resources and basically, as Maoz Sigron mentioned, work with shared resources, we're able to save $6 million on operational costs as well as on tax saving during 2022.
The other thing which is important, we are estimating that SORT and the flywheel that I mentioned before can be able to generate an additional $50 million on advertising budgets from our customers. With that, we feel comfortable of improving or modifying our guidance. I think that the new guidance here, which is a midpoint of $620 million in revenue and $90 million of EBITDA, I put it in the context of what we're able to achieve in 2020 to 2021 to 2022 in order to emphasize one point, which is the sustainability and the predictability of our business model, which is, in my opinion, one of our major strengths.
Allow us to look at the growth and also keep the organization very profitable and, in all, very proud of our ability to guide for 36% EBITDA to revenue ex-TAC in 2022. With that, I very much would like to thank you for participating. One last word, and with COVID around was a very challenging year for all of us, the 486 employees of Perion that are in 11 countries. I would like to thank all of them. Without their endless dedication and contribution, we were not able to achieve this great year. With that, we'll open the line for the Q&A. Thanks so much.
Thank you. We'll now be conducting our question and answer session. If you're dialing on the telephone, please press star one to verbally ask a question. For Zoom participants, you may type your question into the Q&A pod, or you may use the raise your hand feature to verbally ask a question. Once again, if you'd like to ask a question over the phone, please press star one on your telephone keypad. For Zoom participants, please type your question into the Q&A pod or click the raise your hand feature on your Zoom platform. One moment please while we poll for questions. Our first question today is coming from Jason Helfstein. Your line is now live.
Thanks, guys. How are you?
Great. Hi, Jason.
Doron, maybe start. That was an interesting example you gave with Advil, owned by Pfizer. One of the questions that we get from clients is, you know, what are you doing that Pfizer's agency of record, right? Pfizer, huge company, probably have a master agency. What are you doing that their agency of record can't do? Or is it because campaigns are so regional, you have certain capabilities that may not work in certain geo, et cetera. Like, what are you doing that a company the size of Pfizer need you to do for Advil? That's question one, and then I've got two follow-ups from ours.
Right. You know, I must say that we were a bit, you know, how you use the word chutzpah when we met with them, because the holy grail in this industry is ability to connect awareness to performance. When we show them the concept that their awareness dollars, which they consider always as a top funnel, it can be, with that campaign, direct impact can be translated to actual buy. I mean, there is no kind of estimation or modeling or what have you. We are taking upon ourselves to drive sales. That's it. That was the concept. For them, it was always this, you know, concept that there is a gap between the awareness dollars and the performance dollars.
Once we came and said, "Guys, we're able to bridge, you know, those two parts of the funnel in a very nice way, we're up to the challenge." They very much said, "Okay, you know what? We'll give you that chance." There is only one KPI that they shared with us from the get-go. They said, "You know what? If you're up to the challenge, we wanna see how many boxes we're able to sell." That's very much it.
I must tell you that we are working with them closely on what we said Connected Commerce 2.0, which the ability to connect the inventory part that is going to be, you know, a killer feature because think about, Jason, the amount of dollars that advertisers are wasting on performance advertising that at the end of it, you find yourself that you don't have the right size of your jeans or you're not having the right color of your shoe. That's a few ways. The ability on the fly to offer substitute products, I think that could be a very, very interesting. In a way, there is another interesting level for you to maybe discuss later on, is the merge between the AdTech and the MarTech, which is a very interesting subject that we discuss internally.
Because if you see that we're taking into the advertising logistic aspects like inventory, it's beyond of, you know, the traditional, I think advertising or AdTech frameworks that we were kind of thinking, and they are thrilled about this technology.
Maoz, just for you, can you talk about the impact of Vidazoo on gross margins in the quarter, and how you're thinking about kind of the benefit to that in next year or this year 2022. Just on acquisitions, obviously you're seeing a lot of cash. Given the decline in public market assets and presumably, you know, the impact, there has been a decline as well in private market values, is it taking longer to kind of close the next acquisition or round of acquisitions that you're looking at? Thanks.
Thank you, Jason. Based on, you know, this is not a surprise, you know, we did the due diligence before closing the deal, so it's already embedded in the model, that deals with Vidazoo. They are earning with margin that is similar to the other business units, so there is no negative or much positive. I can say that the fact that now we have another asset, and we're able to use the hub and to contribute more together, definitely help us to improve our current margin as a whole. The standalone business before getting into Perion, they run with, let's say, the same level as us, a bit lower.
Together with us, and part of the reason that we can see that the quarterly margin is better is definitely the combination of Vidazoo into Perion. We see the same trend for 2022, and our assumption for the guidance for 2022 is more or less the same level of margin, about 40%. This is about the first question. We have, again, Doron can talk about the M&A as well, but there is a list of companies on the list, definitely. You know, the fact that the multiple moving down help us to have more opportunities actually and to have maybe others that was not part of the list before.
I think this is, you know, we have, you know, model that is unique. We have the cash, we have something that is also appetite for Target because there is synergy that we can do together, or they can do by themselves. They can now do together with us and do better to be able to achieve the goals for the next two or three years together with Perion. I think that the other way around, there is a lot of opportunity, but this is a process that we're managing and maybe Doron can also elaborate more on that.
No need.
Right.
Thank you. Our next question today is coming from Andrew Marok. Your line is now live.
Guys, thank you for taking my questions this morning. I had two. One, I wanted to talk about the uptake of the high impact CTV formats. I guess you showed the Advil example, which I think was really helpful. What other kind of broader feedback are you getting from clients using the formats, and what do you think are some of the gating factors to broader adoption? Then second, on the 2022 guidance. It's sort of providing a $50 million incremental budget and iHub is driving about $6 million in cost savings. I guess if you can help us with any incremental investments that you're thinking of for why EBITDA margin is maybe flattish to slightly down year-over-year. Thank you.
Yeah. I think it all has to do with one thing, and the high impact is all about consumer engagement. There is a huge effort from advertiser to get the maximum engagement. If it's the live, you know, CTV that you get their attention because the game is on. It's the interactive because you're able to gauge their engagement with the unit. Of course, the fact that there is a go-to action, and we talked about it in the examples. This is our focus. The focus is engagement, and we know what's the engagement level on standard ads, and we know what's the engagement on high impact ads. Yes, high impact ads are way more expensive for the advertiser.
Does it matter when you translate it into ROAS, into return on ad spend? This is the only thing that we're doing. The way we're looking with, from a customer standpoint, we are showing the ROAS calculator that we have, and we said the cost is really doesn't matter. What is really matter is what is the return. We are trying to get as much away from the flood of standard advertising. That's the only way for us to get healthy margin. It's only way for us to increase the average deal size. It's the only way for us to retain these customers. It's definitely require us to invest more and more technology.
You know, all those kinds of things is new, you know, to 2021, and there is growing investment that we're doing on 2022 to keep and make the gap on what we're capable of doing on high impact units better than. I mentioned one thing, you know. I took a note for the next call to show you what personalization level we're able to do with customer like Albertsons and others. We're taking it to the level that they're not able to get combining it, of course, with the inventory factor. That's the edge. This is what we're thinking, you know, our niche within this huge universe of advertising and advertising spend.
Up to this point, it's definitely creating a great brand recognition and drive more and more budget into this business. As far as your question, I mentioned that we are devoting more and more resources, engineering resources. I must tell you that in order to, you know, establish or connecting all units into a central intelligent hub was a huge effort on our side. A huge technology effort, we had to establish a whole AI team that is going to do it. The amount of dollars that we paying to Amazon just to store and analyze and crunch this data is piling every day.
We couldn't be in this situation, and I also want to look more into the SORT, the impact that we bring to the market with the SORT and the flywheel that it will generate. I'm very happy. It took us a good 2 years to be in this position. Now, as I mentioned, we start to see the fruits and we are just encouraged to invest more and more and turn it into a really effective mode, technology mode, for our company.
Thank you. Our next question today is coming from Laura Martin. Your line is now live.
Hi there.
Hey, Laura.
Hi. Maybe a couple. Following up on Jason's question, it sounds like you might be taking on physical inventory now. Can you speak to that and whether what that does to your working capital and cash needs in 2022? Second, can you talk about what percent of your total Q4 CTV ad revenue were these high impact ad units? Third, data. You keep sort of harping on data. Can we sell that revenue stream? Can we create a revenue stream out of data? Those are my three. Thank you.
Very good. One correction. By all means, we're not in the inventory business. We're not having this inventory. The only thing that we're having is that we're opening a very useful tunnel that allows us on the fly to understand if there is, for instance, for this Advil, whatever capsule is, if there is an inventory, because you are about, as a consumer, to click and buy. This screen, and I will. It's important for me to share it. Hold on for a second. Let's see. It took us so much to be in this stage, I want to show off, okay. This is the Advil scene. You don't need the second one.
The point here is while you are here and you are doing all this as a consumer, you are doing all this journey and finally, you are here. This is the money time. The question is that we were very much like looking at, is what would happen if you click here, let's say you use the QR code that is here, and you are okay, you wanna buy, and there is no inventory. That's very much the point. What we want is to refresh this ad, or actually this SKU that you have here, with alternative look-alike. For instance, this is, let's say, a big size, which you will get, I don't know what, the same price you'll get two. Because the most precious thing for Advil is to get this consumer to a point that they wanna buy.
From that point, they must end it with a transaction. We are not holding the inventory, we just refresh the ad unit with the most relevant alternative substitute SKU that will end it with a transaction. That's clear?
Yeah. Why do you care? Do you only get paid if somebody actually buys the box?
Thanks for the question. No, we're not, we are not getting paid on the 73,000. You know why we care? Because I can tell you that $800,000 of Advil campaign is now turning to $1.8 million, only because they are happy with the results. We care a lot because this additional $908,000 was very much taken from someone else. That's our business. It's a zero-sum game. If we are able to show them that their loss is way higher, and we're not putting our hands in their pocket. In other words, we're not asking for any dollars, if this will be for the next campaign, more than 100,000, we're getting more budget. That's it. That's why we care.
Perfect. What about selling data as a new revenue stream and what percent?
That's great. Great question. We are now developing the SORT 2.0, which we call it internally SaaS. It's not the SaaS that you know, but this is SORT as a service. We're getting tons of leads from publisher that would like to adopt SORT as their privacy technology on their site. The idea that we have is taking it from internal to external and offer it as a service. This is definitely something that we will talk more about in the upcoming calls.
Okay. My last one was high impact CTV units as a percent of total CTV revenue in Q4.
High impact CTV. For us, we are not. I can tell about something which is close to 70%+ of high impact CTV. That's the main thing that we've done.
Thank you. Next question is coming from Mark Kelley. Your line is now live.
Hey, great. Thank you very much. I appreciate you taking my question. I'd love to go back to the Advil example. I know we've talked about it a bit, but I'm just curious, how does the Walmart as the preferred retailer in that scenario factor into the conversation that you have with Advil? And then I guess, would it be possible to, instead of showing the consumer alternative products, if Advil is out of stock, would it be possible to shift to like a Target or something like that and still have you buy the exact product you clicked on? So I guess in this exact example
It's a great question. I must tell you that there is. We know, we do not know the details. There is a you know relationship between Advil and Walmart. For that point, we are able to do a lot in terms of you know switching, let's say, to Target. We are on this perspective, the advertiser is very much binding us to say what is in Walmart inventory. I believe that they participate in the dollars that has to do with this campaign. It's, we're not, this is behind the scenes. We know. We are interacting with Advil. We really don't know how the supply chain is working there.
We are capable of doing it, let me put it this way, but we are presenting it in this case, specifically.
Okay. All right. That's fair. Then quickly, just on SORT, you know, some of the click-through rates that you presented were interesting and obviously impressive. I guess, do you think you have to advertise to the consumer and make, you know, people who aren't familiar with ad tech and or don't understand the industry, just the typical consumer, just making sure that that logo resonates with people that they, you know, that the general public knows that it's cookieless and privacy safe and all that stuff. I'm bringing this up because I saw that, you know, Criteo, which is not exactly the same thing as what you guys do, but they're supposedly have a Super Bowl ad coming out that kind of does the same thing.
That just makes the consumer more familiar with Criteo and, you know, just, with their privacy-centric approach. I was just curious if you guys had to do something similar, do you think?
You know, at the end of the day, what Criteo is doing from a DR standpoint, direct response and retargeting, we're not in this business. The business is, for that sake, an awareness campaign. With that, I think that we are able to get to great results. Keep in mind, for those who wants to get into the technology a bit, if I personally, you know, want to get your attention, Mark, and I'm using a third-party cookie, and I'm going specifically after you, that's not our business. That's considered to be a DR business. Our business is our ability without using third-party cookies to get the market lightly . That's the idea. It's not about following you.
You will be a victim because, you know, it can be what it's done before on third-party cookies, it might hit you, but the idea is not following specifically, you know, in a specific consumer. I hope I make it clear. That's why we're looking. SORT is very much. I use this slide in the previous presentation. I will be more than happy to take it offline to see how SORT works. It's all about smart groups that we develop. Smart groups, and we have dozens, if not hundreds of smart groups, that is very much allowing us to use a smart group where it is appropriate. In other words, people that have these certain traits are likely to hit on this type of ad, that's the technology that we have instead of using third-party companies.
I hope it's clear in the difference between us and Criteo.
Sure. Yeah. You know what, maybe giving you the Criteo example wasn't on my part. I guess I meant more about like making just the general consumer aware of this sort, this cookieless privacy-centric solution. Like, do you need to advertise to the general public?
We plan doing what we wanna get, and this is a discussion that we have with some selected advertisers that look at consumer privacy as one of their values and one of the things that they will be associated with. One of the things that we'd like to do is very much, you know, use some of those names that are there to be associated with this direction, and doing it as a kind of a co-marketing activity. This is definitely something that we're working on. You're absolutely right.
I think that in order to get an effective flywheel, no wonder I start with, you know, the number one, that if 74% wants to be visible on the screen, they need to make sure that this is the screen and it's not part of the Heineken beer logo. You're absolutely right. We need to get their attention. I don't want to, you know, spend our, you know, money on the Super Bowl. We're not there yet. I think that there are way more effective ways to use our net margin, let me put it this way.
That's perfect. Thank you very much.
You're welcome.
Thank you. Our next question today is coming from Eric Martinuzzi. Your line is now live.
Hey, guys. Congratulations on the quarter and the outlook.
Thank you, Eric.
It's not lost on me that you had already announced a positive Q4 and raised the 2022 outlook on, I think, December eighth. Good to see that, there's still more in the tank here. My first question has to do with seasonality. Now that we've got this, the business kind of shifting more to the advertising side, and I know you gave a full year of 2022, but you did not give Q1, what is the kinda seasonal step down in revenue? Because you've got some moving parts here. There's a remnant of COVID, there's the acquisition of Vidazoo. You've got, more revenue coming from the advertising side. What's the right way to think about Q1 revenue seasonality versus Q4?
Maoz, you wanna take it?
Yes. Yes, of course. As you know, we're looking at the entire year and the businesses that we acquired are, you know, similar to the business we already have in terms of seasonality. We're expecting the same trend, about 20% in Q1, 24% Q2 and Q4, and more than 32% in Q4. This is more or less aligned with, you know, our performance for 2021. It will also be the same in 2022.
My second question has to do with the display. It's wonderful to get more demand from your advertisers and agency, but when I just think about the mechanics of serving display and serving video, CTV, ICTV, there's a huge element of the creative that needs to take place here. Is Undertone doing that creative or are the agencies doing the creative here? How are we getting the raw materials that go into these display campaigns?
The raw material is getting very much from the creative agency. This is the case because of the ICTV that requires to do multiple types of video assets, which is more than, if you can imagine, one video because that's what we offer for our consumer. That's part of our response to the RFP. The way we respond is basically saying, "Okay, we are suggesting, you know, using the ICTV technology." With [NetPay, that's what is required. First and foremost, we need to prove that this is efficient because what is required from the advertiser standpoint is to invest more creative, more data.
They need to buy into the concept that it will be more memorable, buy into the concept that, you know, they will spend more time. Again, it's all, as I mentioned, is translated into loss. We are not very much part of this production.
Understand. Good luck in 2022.
Thank you very much.
Thank you.
Thank you. Our next question today is coming from Jeff Martin. Your line is now live.
Thanks. Good evening, guys.
Hey, Jeff.
Congratulations on a great year.
Thanks. Thanks.
Wanted to get a glimpse into how, you know, customer acquisition strategy may have evolved with, you know, the enhanced, you know, investment that you put into the iHub and the hub-and-spoke model. You know, based on, you know, Q4 results, looks like customer growth is continuing at a good pace. You've got some really interesting technology capabilities to drive significant improvement in performance. You know, how has, you know, your customer acquisition strategy shifted over the past year, and how do you see that continuing to shift as your hub is more robust?
Great. I will use this, you know, engineering slide, as we like to call it. In a way, think about it that, you know, in impression, no matter where the impression source, let's say whatever impression is coming, you know, into the hub, and at the same time, you know, request is coming to the hub, and that's an I and R. Then the point here that you have here is what is the match? That's very much the idea. This is the challenge. The match here is, first of all, needs to very much meet all kinds of targeting and everything like this. But let's look about it only from the economic side. Here it is the optimization element into the hub.
In other words, what is the priority if you met all the other criteria? If all other criteria is being met, the priority always goes to assets that you own. Either you own it or you operate it, because over there, you have a higher gross margin. It's like a waterfall, if you think about it. It's okay, first match, if everything is okay, goes to here, second match goes to here, so on and so forth. We are able to drive more and more impression to request that is coming from our assets. Keep in mind that if it's a video or CTV, we want that those assets will come through our Vidazoo platform.
In other words, that it will play on the Vidazoo player, that it will very much monetize on the Vidazoo platform, because that gives us another edge. Now, what it's all about here is to really reduce one by one the number of intermediator that has to do from serving an impression all the way to its destination. If you are able to reduce the number of those chains in between, let me put it this way, you're saving money, but you provide something else. That's pretty much the point. The point here is that brands and agencies are looking to what extent we are able to deliver to them the transparency and the control when we are serving their ads.
From the moment we received it, all the way where it's being published, everything is being done in a very not just transparent, but from a point of a dashboard, reporting, whatever you, privacy, take any element that you have, no surprises. From that point where we analyze the impression request to the time that we publish it here, no matter if it's your cell phone, your big screen, no matter if it's interactive or not, that's the end-to-end element. Now, if you combine the end-to-end into the efficiency of the hub that's able to optimize it, you're able to get a lot of gain. As I mentioned, we are translating it into a contribution of $6.5 million into the bottom line.
Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Doron for any further closing comments.
Great. Guys, thank you. Thank you so much. I apologize about the glitches that we have, but since we're dealing with you know, creative and high impact and all those kind of things, I think that it's better than to read it from a script. My apology and thanks so much for your participation. Have a great year. Thank you.
Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.