U of Digital Newsletter - 11/26/24 (free)

November 20th-November 26th

Below is a roundup of last week’s notable industry news, with summaries and our opinions. The Trade Desk finally made their TV operating system official! But first, a big, surprising industry acquisition grabbed everyone’s attention and the top slot in this week’s edition…

Team Daya Matching Challenge!

Giving Tuesday is next week and U of Digital is matching all contributions to Team Daya up to $10k. Donate here! Team Daya builds primary schools in impoverished communities around the world to help children access education. They will be in Aldea Santo Tomas Xacalta, Guatemala for their next build. Interested in joining them on a build? Contact Head of Recruiting Jaryd Knutsen.

U of Digital Is Hiring!

We're looking for an Account Manager / Project Operations Lead to support the 350+ live workshops we run every year. The role is client-facing with an emphasis on project management and operations. U of Digital is a fully remote company that offers comprehensive benefits, flexible hours, and the opportunity to join a fun team that loves building and is making a real impact on the industry through eduation. Contact us if you are interested or have any leads!

Top Stories 👁️ 

Mediaocean Buying Ad Tech Company Innovid for $500 Million
Source: The Wall Street Journal
November 21st, 2024

Summary: Mediaocean says it will merge Innovid, a video ad server, with Flashtalking, the independent digital ad server Mediaocean acquired in 2021, also for $500M. Mediaocean’s core solution provides media billing, planning, and buying workflow automation tech for marketers and agencies. By marrying Innovid and Flashtalking, Mediaocean plans to build an independent, omnichannel ad platform for ad serving, ad personalization, and measurement spanning digital, social, streaming, and linear. The idea is for Mediaocean to provide an alternative to walled gardens like Google and differentiate by offering a media-neutral, independent partner that will give its customers more control over their data and an unbiased view of their ad spend. 

Innovid also provides brand safety and verification services, bolstered by its 2022 acquisition of attribution and measurement company TVSquared for $160M. As a result, this deal will also give Mediaocean's existing ad verification business a boost.

Innovid went public in 2021 through a merger with a special-purpose acquisition company (SPAC) at a $1.3B valuation. It had a market cap of $240M the day before the acquisition was announced. The deal will likely close in early 2025. In 2021, CVC Capital, TA, and Charlesbank paid $2.1B for a majority stake in privately held Mediaocean.

Deal Grades: 
Innovid: A-
Mediaocean: B+

Opinion: Mediaocean CEO Bill Wise said that Flashtalking and Innovid are the #2 and #3 ad serving businesses behind Google on Marketecture’s Monopoly Report podcast last week. So this is a clear ad serving consolidation play, with Mediaocean believing it can have a crack at Google’s dominant ad serving business. Per Allison O’Schiff of AdExchanger, The Department of Justice estimates that Google controls 87% of the publisher ad server market in the US and 91% globally. While big tech companies have tried and spectacularly failed at this exact play (e.g. Microsoft buying Atlas, Microsoft then selling Atlas to Facebook, Facebook then shutting down Atlas, Amazon buying Sizmek, Amazon then shutting down Sizmek), now might be an ideal time for a specialized company like Mediaocean to have a crack at it again, given Google’s antitrust scrutiny. 

Other reasons we are bullish on this deal for Mediaocean:

• Innovid and Flashtalking have been running independent, ad serving businesses against Google for some time now; it’s their entire business, they are not scared of Google, they are in the ad serving business for the long haul (unlike the Metas and Amazons and Microsofts of the world).

• Their focus on and strength in CTV (growth is significant in CTV, Google stinks at CTV).

• Their tie-in with Mediaocean’s core business of workflow and order management, which goes hand-in-hand with ad serving.

• It also goes hand-in-hand with the other capabilities these two companies bring to the table: dynamic creative, identity resolution, bransd safety, and measurement.

• The independence thing…

Mediaocean will offer a media-independent ad serving and and measurement alternative to Google, which is what you want if you’re a buyer. You don’t want Google, or any media seller, grading their own homework. One could argue that Google owning analytics and meausurement has been one of the keys to their success, and it’s gotten buyers to suboptimally spend many billions on their platform. 

Mediaocean’s story makes tons of sense. Now it will have to show that independence actually matters by driving superior results. Otherwise buyers will keep hitting the “easy” button that is Google and Mediaocean, like its predecessors, will have spent tons of money for just a tiny sliver of the ad serving market…

The Trade Desk is building a CTV operating system called Ventura
Source: Axios
November 20th, 2024

Summary: Looks like those (denied) rumors about The Trade Desk building a connected TV operating system were true after all. (H/t to the Lowpass newsletter for breaking the story.) The OS, dubbed “Ventura” in honor of the company’s headquarters in Ventura, California, will begin hitting the market in the second half of next year. It will join other operating systems in the market such as Roku, Amazon's Fire TV, and Google's Android TV, but its key differentiator will be that The Trade Desk doesn’t own any content, which CEO Jeff Green says creates a conflict of interest. Ventura will incorporate its privacy and identity framework Unified ID 2.0 and Supply Path Optimization product OpenPath. The Trade Desk won’t develop any hardware to service its OS. Instead, it will partner with hardware providers, including smart TV manufacturers, and other TV distributors, such as gaming companies or airlines. Sonos, for example, is exploring a partnership with The Trade Desk’s Ventura. 

Green said The Trade Desk doesn’t plan on making money directly from the OS, which it has been building under the radar for three years. Instead, he said the company’s goal is to drive pricing transparency and better measurement to a murky CTV market, which will benefit all companies and consumers. For example, Green said publishers and consumers would gain if OS providers were forced to be more transparent about how they recommend their owned content.

Opinion: We wrote about this when Lowpass first reported the rumour:

CTV devices and OSs have traditionally come at this market from the “let’s get a critical mass of consumers and then monetize through ads” angle. So they built a consumer-facing product first and then tried to stand up an ad business. But the consumer-facing TV OS today has become a commodity. They all look and feel the same. It’s the “easy part”. Which means the only meaningful differentiation for these businesses is now a) how much scale they currently have and b) their ability to monetize their scale through ads. While TTD doesn’t have a), they can do b) better than anyone right out of the gate. TTD is coming at this market from the “let’s get a critical mass of advertising demand and then launch a TV OS” angle.

So once their OS is live, TTD will be able to offer more advertising $$$ upside to manufacturers and publishers, undercut other OSs, and shortcut their way to scale.

It’s a smart strategy for a big company that needs to make big bets in order to drive meaningful growth. For everyone that’s scratching their heads, questioning the strategy, wondering how a DSP will get traction in an uber competitive, consumer-facing TV ecosystem, we present three reasons (in addition to the above) to be optimistic:

1. The CTV OS space is extremely fragmented, there are no dominant players, and it’s full of companies that haven’t figured out ad monetization and / or are walled gardens. See:

   

   It’s setup perfectly for an ad-focused, software-only entrant like TTD. TTD doesn’t need mass market share; they just need a few percentage points to start collecting some data, feeding their ad business, and building leverage. They can get going by offering great ad revenue sharing terms and securing deals with long-tail TV manufacturers. Once they have some market share, they can start going to bigger OEMs and publishers and the strategy can continue to snowball.
   

2. Jeff Green has been arguably the most visionary CEO of this industry; you better believe he has a plan and is making a calculated, smart bet.

3. The independence thing…

Why would TV manufacturers want to use their competitors’ OS if they are presented with an independent alternative that pays them more money?!

Just like how publishers and advertisers grew tired of using Google in ad tech, and how TTD was able to swoop in and capitalize on that as the ‘independent’, it’s now bringing the ‘independence’ shtick to the CTV space (and ironically sacrificing its ad tech independence to do so).

Once again, we’ll have to see how much independence actually matters. In this case, we think it definitely will, especially since there will be real, substantial ad money behind it…

Check out U of Digital’s Shiv Gupta on the AdTechGod Pod talking about the Ventura announcement with other industry leaders!

Paid Subscribers See ALL The Digital Advertising News.

Thank you for reading the U of Digital Newsletter.
Continue reading by upgrading.

That’s It For This Week 👋

The U of Digital Weekly Newsletter is intended for subscribers, but occasional forwarding is okay!

To subscribe visit Uof.Digital/Newsletters or contact us directly for group subscriptions.

And remember, U of Digital helps teams drive better outcomes through structured education on critical topics like programmatic, privacy / identity, CTV, commerce media, AI, and more. Interested in learning more about how we can supercharge your team?