Programmatic ads - a sector perspective

I discovered this forum in mid-2019 and for the past 2 years, I have realized enormous benefit from it, both in terms of knowledge and profit. I want to attempt to give back here:

Let me preface this by saying that I have done a great deal of investing in the broad SaaS sector stocks often discussed here. I got exposed to my first SaaS company back in roughly 2007 or 2008, a young start up that was ahead of its time. Many of you know of the technology adaption curve so I won’t spend much time on this. Suffice to say that the late 2010’s and early 2020’s are clearly the steep part of the S curve for SaaS. 2007-08 was the early adaptor phase and nothing big became of that company. However, SaaS is not the only technology seeing this portion of the adoption ramp at this time. My portfolio has other investments in FinTech, Solar Technology, and Programmatic Advertising that are at similar places in their adoption curves.

In fact the best performing stocks in my portfolio YTD in 2021 are not SaaS stocks. They are Magnite -(MGNI), a company in programmatic advertising that is up 72% YTD and SunPower (SPWR) which is up 25% YTD, even after today’s tech sector thrashing. In fact, I sold partial positions in both of these companies when they were up over 100% YTD (and were multi-baggers already for me) just a couple weeks ago.

I want to talk about Programmatic Advertising today. I have alot of history with this technology and that has helped me find companies that leverage it successfully. I’ll mention the specific companies first:

The Trade Desk (TTD), purchased in June 2017 at $53 now trades at $791. It closed above $900 on Friday and is well below it’s ATH of $960.

Magnite (MGNI), purchased in Nov 2020 at $15 now trades at $53 and recently hit an ATH of $64. Their recently announced acquisition (last week) looks like it will be hugely accretive to revenue and profitablity and I raised my price target significantly as a result.

Viant (DSP), a recent (February 10th) IPO that popped 90% at it’s open. I bought over the next couple days between $48-53. It dropped 10% to $58 in today’s market, but seems to have gotten in all back after hours and is posting a $64 price at this writing.

Those are my favorite players, now for the mini-primer:

Advertising has been making money for those at the forefront for decades. In the 1950s-1990s the big players were mostly on Madison Avenue in NYC. The series “Madmen” glamourized (and ridiculed) the era. It was where all the rich NYC playboy types came from before investment banking became the place to be in the 1980s. As the 21st century began, print media lost to internet, but the advertising practices didn’t really change at first.

In the early 2000s, I was on the BOD and was an investor in a company that provided corporate research, background, and information online. At first we sold the information on a piecemeal basis and after a few years, achieved a few million dollars in annual revenue. But in 2008, we decided to give the information away for free and move to an advertising model to generate revenue. We built a sales force that sold adds and our customer list was impressive. Major customers included Visa, AmEx, Chase Bank, HP, Dell, Marriott, Starwood, Hertz, FedEx, UPS…lots of big names. In a few short years, we went from millions of dollars revenue to tens of millions of dollars in annual revenue and realized a private equity market cap of over $200M. We thought we were headed towards becoming a unicorn, which back then was a company that realized a private equity market cap of over $1 billion. That was 2012.

Unfortunately, something else was happening. Actually two things, and Google was doing both of them. First, they were harvesting the information on our web site (and others) and making some of it available in their search result page on the right hand side. That had the effect of reducing our visitors which at its peak totaled over 30 million uniques per month. It’s a big part of the reason why they are considered to have monopolistic practices in some circles, and not what I want to focus on today. But here’s a recent article that discusses the matter, if you are interested:…

The other thing Google did was invent programmatic advertising. Up until this time, when a company wanted to advertise on a web site, they had to negotiate contract terms with the site. How many months? How many impressions? Do you want to pay for eyeballs or click throughs? What’s the cost per eyeball/click thru? What’s the maximum spend (per day or week or month)? It all had to be negotiated up front. And once you signed the contract, you were usually committed for the duration. And then, it was up to you, the advertiser, to figure out how effective your ads were on one site compared to others. And as cell phones became popular, the breakdown of ad rates on mobile vs desktop became another complication to contend with.

But around 2012-13, Google made it possible for advertisers to bid on keywords and only have their ads appear on pages that were responses to the key words they cared about. Furthermore, they could submit a bid or price on the keyword that contained the metrics of things like cost per impression and maximum spend. This provided a number of advantages:

  • advertisers could reach a much more targeted audience based on the keywords they bid on
  • companies could dynamically alter their advertising spend on a daily, or even hourly basis if they wanted
  • if a certain keyword became too expensive, they didn’t have to advertise until it was perceived to be “worth it” or they could choose other key words that were meaningful and less expensive
  • the need for advertising sales forces, contract preparation, and review disappeared which saved significant manpower and legal costs
  • AND Google provided tools that made it possible (and easy) for advertisers to monitor and measure the reach an performance of their ads

This basically cooked our company. Stick a fork in us, we were finished. Google had completely changed the advertising landscape as it had existed for DECADES previously. This wasn’t just like placing an ad in Sports Illustrated because you wanted to reach sports enthusiasts. You could target an ad to people who loved football, or a different one for people who horse racing, or a different kind of ad for people who followed the Iditarod. Eventually, Facebook followed suit. Together, they made programmatic advertising much more effective over time by monitoring the cookies of each users internet experience and tailoring ads not only based on what you were looking at (or searching for) on your computer or phone at that moment, but also, what you had recently looked at, where your computer was located or where your phone had traveled to, etc.

This was huge, and like I said, it killed our company, so I will never forget the impact it had. So when I learned several years later about this company (TTD) that was making programmatic advertising available to all advertisers on any site, it was a no-brainer for me to invest in them. It was just so obvious that their success was inevitable as long as they had a capable management team. After a few hours of research there, the answer was a resounding YES.

But the story doesn’t end here. In addition to TTD, there are a number of other companies that are adapting the methodologies and advantages of programmatic advertising to other platforms. Connected TV (CTV) is the most notable new one. 2021 will be the year that more US households don’t have cable TV than do. Typically, the demographics of CTV households are younger and have more disposable income (which advertisers love). The early 2020’s will see huge profits come to programmatic advertising companies. MGNI is at the leading edge of bringing programmatic advertising to CTV providers.
Here’s just one of many articles you might find on the topic:…

And what’s really beautiful is that TTD and MGNI have complementary platforms. They don’t compete. In fact, they recently announced a partnership. TTD operates on the buy-side (a tool for companies that want to place ads) whereas MGNI operates on the sell-side (a tool for companies with content that they want to host ads on).

These companies, this industry as a whole, really didn’t even see too much of a hiccup during the pandemic. If you recall, companies were rolling out tons of new ads, some with masked patrons, some providing encouragement to “get through this”, and some just to keep brand awareness for when the world returned to normal. And then there were many ads with suggestions about what to do with the income you had nowhere else to spend (home improvements, take out food, etc). And CTV grew because we all spent more time at home and didn’t have as many outlets for entertainment. As things get back to normal, ads will ramp again for so many businesses that have been dormant (travel, for example) and for so many forms of entertainment that have been suspended (sports, music events, theatre, fine dining). It will only get better from here.

Long MGNI (#1 holding), TTD (#3 holding), and DSP (small position, for now)


Mitch, good post. PUBM reported yesterday with good numbers. Magnite will be reporting today. If u like the space - u may want to look at Tremor (main listing in UK) - they have both SSP and DSP and were growing in 70s in Q4. I normally don’t like non US listings, but this one is valued cheaply compared to peers traded in the US. Their short report on Q4 is here…

Hope is that they will list in the US this year.

There are few good and detailed threads on TRMR bull case in Twitter.



Great post Mitch, thanks for taking the time to share.

Question for you given your knowledge in this space: there have been several posts recently about Perion (PERI), which is an Israel-based company that seemingly competes with Magnite and Viant.

From your perspective, how does Perion fit into this industry landscape? For example: Are they in direct competition with Magnite etc. or is there some meaningful distinction here?

Thanks for any info!


Question for you given your knowledge in this space: there have been several posts recently about Perion (PERI), which is an Israel-based company that seemingly competes with Magnite and Viant.

From your perspective, how does Perion fit into this industry landscape?

Because of my investment history and previous successes and failures, I have a predisposition to only invest in U.S. based companies. There are too many issues around transparency, regulatory issues (or lack thereof), exchange rates, and foreign government policies that make foreign investing needlessly complex and risky, IMHO. I prefer to keep it simple and it has served me well. The only foreign company in my portfolio now is MELI (MercadoLibre) which I have held since 2017.

Having looked at PERI today, it looks to me like they are really more of an SEO and digital marketing and branding company that may be trying to wear the skins of a programmatic advertising firm because it is sexier and SEO is sooooo 2005.


If u like the space - u may want to look at Tremor (main listing in UK) - they have both SSP and DSP and were growing in 70s in Q4. I normally don’t like non US listings, but this one is valued cheaply compared to peers traded in the US.

Tremor is an interesting and diversified company. If I didn’t have the same predisposition as you to avoid non-US listings (in fact, I pretty much avoid non-US companies), I would have done a deeper dive on them already.

Hi Mitch,

Thanks so much for the really insightful post! I’ve always been interested in learning about CTV ads. I’ve no doubt that the demand of CTV ads will be growing rapidly in the upcoming years, however, I do not know which company in the field will catch the most of supply side. Based on my understanding, the supply of CTV ads will be positively correlated with watch time on the CTV platforms. Won’t the large connected TV providers with large watch time develop their own ads platform? How many CTV providers would rather collaborate with MGNI and share the revenue?

In addition, what is Roku’s position with MGNI? Will Roku directly compete with MGNI on CTV ads?


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It looks that MGNI’s revenue had a huge regression in 2017 / 2018. Revenue was down 44.09% YoY in 2017 and was down 19.84% YoY again in 2018. Do you happen to know what happened to their business? And what made you believe they’re on the good trajectory now?

Thanks again for your post!


In addition, what is Roku’s position with MGNI? Will Roku directly compete with MGNI on CTV ads?

ROKU is kind of a unique company in the way they have evolved. Advertising is an intricate part of their DNA in many dimensions. Take a look at this article:…

Because of the way they evolved, ROKU maintains total control of their ad inventory, so I don’t think of them as a direct competitor just as I don’t view Google as a direct competitor to TTD. They each own and control a portion of the ad space that is theirs to manage, but they don’t go outside their realm to try to expand their scope (and I don’t think their content provider competitors would ever feel comfortable working with them if they tried to).

Won’t the large connected TV providers with large watch time develop their own ads platform? How many CTV providers would rather collaborate with MGNI and share the revenue?

ROKU is kind of unique in their evolution and as you can see from the article above, their dependence on ad revenue is multidimensional. I don’t think other companies will have the skills and know how to pull this off. Just because you are a good content provider doesn’t mean you can be good at everything. I would like to remind you of the monumental failure Disney experienced when they introduced the search engine Go! in the early 2000s.

It’s worth noting that in today’s quarterly investors call, MGNI announced significant expansion of their alliance with Disney into an “omnichannel” relationship. So Disney doesn’t seem inclined to go down this path and I doubt many others will try, and any who may not necessarily succeed.

With regards to your other questions, MGNI was a completely different company in 2017-2018 and that’s why the stock flatlined around $2 for those years. With the Telaria merger last year and the upcoming SpotX acquisiton, they are a completely different entity now. It would be like comparing the Tampa Bay Buccaneers of 2020-21 to the team in 2017 and 2018. (They were 5-11 both years.)


Hi Mitch, really wants to take your veiw on PUBM, Pubmatic. I feel I can only scratch the surface from an industry outsider even after checking the presentation and transcript.

From what I have studied so far, PUBM is also a SSP, comparable to MGNI. From financial performace perspective, PUBM seems better than MGNI, but valuation-wise undervalued. From biz model side, not much differece between the two. Although PUBM didn’t breakdown sales by product, they did claim their 65% of sales coming from mobile, digital video, and OTT streaming to CTV, which is again comparable to MGNI’s proforma CTV mix of 67% after counting in SpotX. In PUBM’s defense, they think digital video market size of 53bn in 2020 is even bigger than CTV’s 20bn, and with higher CAGR of 17% inn digital video v.s. 11% in CTV from 2020-2025. I think what they imply here is PUBM’s product mix is better than MGNI’s CTV buzz?

PUBM’s 4Q20 orgainic revenue is way much better at 64% YoY v.s. MGNI’s ~20% organic growth. Plus PUBM’s GPM is consistenly holding around 70% v.s. MGNI’s average ~60%, and PUBM is profit making with for consecutive years while MGNI’s loss making for most of the time. But on the valuation side, MGNI’s ~2x PUBM’s market cap. Am I missing anything here or PUBM is indeed of great potentail ahead just being undervalued?

I like both companies standing in front of big structural industry changes to their advantage, but also disapponited they are both only guiding only 20% growth (MGNI’s CFO guiding 20% for long term growth rate, and PUBM for 2021).

Really apprecaited if you could shed your view on PUBM!