Earlier today, I read an article in ADWEEK discussing the potential of Advertising Video On Demand (AVOD) and the subsequent rise of Over-The-Top (OTT) ad spending. For reference, OTT means internet connected content devices above and beyond your cable box.


Note: This article is behind a paywall, but is available on Apple News+ for all subscribers.

In summary:

  • With so many streaming outlets either available, or coming to the market in the immediate future, the individual monthly cost of each of these options will surely outpace the cable bundling model that many of us revolted against in the first place.

  • Thus, instead of charging monthly fees, AVOD providers are opting to give content away for free and sells ads on their service.

  • Last year, OTT ad spending topped $2.7B, which represented a 54% increase over the previous year. This is tiny in comparison to the $70B total TV advertising market.

  • OTT viewing represented 15% of an average consumer’s viewing diet, yet received less than 4% of the ad spend ($2.7B of $70B).

  • Not only will the OTT viewing percentage surely rise from its current levels, many expect the ad spend on those eyeballs to rise even faster and close the gap.

As I read all this, I could not help but think about The Trade Desk. Here are some quotes taken directly from CEO Jeff Green on last quarter’s earnings call:

  • “2018 was the year when Connected TV (CTV) became a must have, as the convergence of TV and the Internet continued to speed up. The convergence of Internet and TV continues to be a once in a lifetime shift in the media.”

  • “Nearly everyone agrees that all of our traditional linear TV will move to CTV. The only question has been how quickly? And the answer now appears to be much sooner than most people thought.”

  • “We increased CTV inventory a substantial SIX times since the beginning of last year. CTV spend increased NINE times year over year.” (me here: remember from above, it is estimated that currently only 4% of all TV ad spending is on OTT)

  • “We invested in CTV early, so that we would be poised to win substantial marketing budgets as the overall ecosystem matured. For content providers, for aggregators and advertisers, our value is compelling.”

  • “In Q4 ’18 we had a record spend in CTV, with over 160 advertisers spending at least $100k each, with a double-digit number of them spending in the millions.”

  • “CTV spend on our platform has had a material impact. It helped drive our revenue acceleration in Q4 and in 2018.”

  • “If we had not invested in CTV years ago, we would not be where we are today. So we will continue to invest ahead like we are doing right now. We want to be there early. We want to invest for the long term, not the next quarter or the quarter after that…We are excited about our prospects in 2019. Everything is in place for continued success this year, next year and over the long term.”

Also, lets not forget that Green firmly believes Netflix, with 130m+ subscribers, will eventually be forced to offer an AVOD option, simply as a means to stay competitive. You can read that article here…https://www.recode.net/2018/11/15/18096344/netflix-ads-subsc…

Long TTD, currently representing 10% of my portfolio.



Hi Brandon,

Nice post. You hit the nail on the head. Green has been ahead of the curve in every instance.

I’m not sure the total TV ad spend of $70B is correct. Seems very low to me. The current ad market is $700B annually. I would think TV ads would take up much more than just 10% of that total.

Having said that, I’m not sure that is of much consequence right now concerning TTD as an investment. They are firing on all cylinders as a business in an area that has been much maligned - programmatic ads.