The world of digital advertising has been dominated by two behemoth walled gardens: Google and Facebook. They don’t allow any access to their data and due to their lack of clarity, “grade their own homework” for full ad performance (audits). Outside of these two apex predators in search and social media, there is a vast sea of digital advertising for publisher websites (like the NYTs), streaming radio, podcasts and now on demand/connected TV (CTV). The shift from linear TV to connected is happening at a fast pace, as people are fed up with cable bundles and want to have the freedom to choose what they watch and pay for. That is creating ad driven inventory and programmatic advertising is the nascent shift where for the first time in history brands and agencies are able to reach a specified target audience at a one-to-one level, at scale. The problem has always been fragmentation within the industry, where you’d have to work with multiple reps and platforms to secure an ad buy.
Jeff Green brilliantly solved this problem by creating The Trade Desk (TTD), a Demand Side Platform, that works with ad agencies and brands to create a single software system that serves the buy side of programmatic advertising. It’s similar to the stock market, where there is a specified type of niche ad inventory out there and agencies/brands will bid on that inventory for the best price. Both sides win: publishers get top monetization for their ad slots and brands/agencies secure prime targeted audiences. The Trade Desk’s software on their platform literally serves as the pipes themselves; it would be equivalent of having proprietary access to the stock market with a Bloomberg Terminal, but even more than that… if the Bloomberg Terminal was literally the stock market itself.
Telaria out of NY and The Rubicon Project in LA saw the need to create a matching omnibus Supply Side Platform for publishers, and they merged to create Magnite last year. They saw the fragmentation problem could be solved and by utilizing their clients’ data (like Disney, Discovery Channel, etc.) allowing the Trade Desk to buy their inventory on the other side of the ad exchange. Magnite and The Trade Desk are independent, but they work together to create this vast growing marketplace for all the digital ad slots in the world outside of Google and Facebook. It’s a sea change and people are just starting to understand the implications. Trade Desk is valued at $40B and Magnite is still in the mid cap range at $7B (after surging more than 500% in the last three months), but not for long. Once the larger investment world understands the ramifications, this is going to catch up with, and then track alongside, The Trade Desk. Why? Because it’s the same exact money flow. Trade Desk works with the agencies/brands and Magnite with the publishers, where Trade Desk sends its business. Controlling the money flow of what will eventually be a $1T digital advertising TAM (total addressable market) creates an unbelievable opportunity for retail investors. Magnite will serve as a clearing house for digital ad inventory by creating a federation between all the publisher partners, so they can safely pool their data and compete against Facebook and Google (who will eventually have to open up their data and play ball, as the agencies/brands will demand it).
“Fate is a hunter. If you’re there when fate strikes – it happens to everybody everyday – you need to act on it.” -Don Levine (creator of GI Joe)