However, as stocks list on the New York Stock Exchange and Nasdaq, there are also mounting public concerns around privacy that lurk beneath the surface.

Major platform providers Apple and Google are turning off the data hose that helped ad tech prosper in its nascent days as a response to laws such as General Data Protection Regulations and California Consumer Privacy Act.

As a result, some question if the ongoing boom period is sustainable. After all, the rise of publicly traded ad tech in the 2010s was soon followed by a sharp decline, even before stringent privacy laws arose across the globe.

Near term, Q3 revenues were up across the board. On November 8, the poster child of this cohort, The Trade Desk, achieved a market capitalization comfortably north of $40 billion after reporting revenues of $301 million for the period.

Connected TV has been core to this cohort’s narrative with many using their publicly raised funds to purchase companies to buttress their claims of playing a key role in the burgeoning sector.

For instance, DoubleVerify used its third-quarter disclosure to trumpet its $150 million Openslate purchase, a company it claimed will bolster its brand safety capabilities on CTV. Similarly, a month after its July debut on the Nasdaq, DoubleVerify-competitor Integral Ad Science paid $220 million for Publica, an ad server in the CTV space.

Elgin Thompson, managing director of technology investments at JMP Securities said the success of The Trade Desk and Magnite’s narratives — the latter purchased SpotX for $1 billion to shore up its CTV credentials — were crucial to ad tech’s rapprochement with public investors.

“The Trade Desk has shown that you can look at Google and [its competing DSP] DV 360, take market share, and survive,” Thompson said. “That from a signaling effect was really important.”

Jason Kreyer, senior research analyst at Craig-Hallum Capital Group, said ad tech wants to associate itself with CTV as the shift from linear represents a “generational shift” in the media industry.

Although, he advised caution over taking the claims of CTV-driven growth at face value, advising investors to pay attention to minutia such as take rates (the percentage of each dollar such companies keep after it flows through their platforms) when evaluating stocks.

“In a world that lacks standard CTV definitions (small screen vs. large screen) and references revenue and ad spend interchangeably, understanding these nuances is important,” he said. “The difference between gross and net revenue is important and understanding the trajectory of take rates can help determine where certain organizations fit in the competitive landscape and can help to frame an investment decision.”

Of course, the sword of Damocles that hangs over the digital media sector is …read more

Source:: Digiday

Author: Aaron