Demand side platforms (DSPs) are at risk because, like many economic relationships and business transactions, the supply side can set the market and control the market.
I know Jeff Green has said demand-side is way more profitable than supply-side. I did some googling to research this (“jeff green demand side supply side”). And the third search result brought me right back to Saul’s message board! That was kind of amazing.
The post that came up was written back in May, by BobbyBe. Very good stuff.
https://discussion.fool.com/roku-and-the-trade-desk-34209440.asp…
The content owner/publisher (COPs)and supply side platforms (SSPs) are interested in maximizing ad revenue and therefore will work with as many DSPs and third-party platforms (3PPs) as possible to create a competitive marketplace whereby the SSP can maximize price and ad revenue in a competitive marketplace for the COPs. There is no loyalty to any single DSP or 3PP, such as TTD, in this marketplace.
The interesting thing is that Roku is on the supply side. Roku, basically, is a “walled garden” like Facebook and Google. Green believes that all the walled gardens will fall. I’m not sure if that’s true. But the important thing to understand is that we have several walled gardens that are supply side platforms. You want to advertise on Google? You have to go to Google. You want to advertise on Facebook? You have to go to Facebook. You want to advertise on Roku? You have to go to Roku.
So who goes there? People who know they want to advertise on Facebook, or Roku, or Google.
The Trade Desk is a demand-side platform. What if you are agnostic on the question of where your ad will appear? What if you want to know the best possible place to run your ad? What if you are open and want to explore possibilities? Then you’d go to The Trade Desk.
Telaria is a supply-side platform. Like TTD, they are cut off (I think) from the walled gardens of Google, Facebook, Roku. But the rest of the vast internet might conceivably end up on their platform. So if you know specifically that you want your ad to appear on the Motley Fool, you might go to Telaria and see if they have any Motley Fool space for sell, and you might bid on it. Or you might just go to the Motley Fool directly and see what they charge.
That’s okay, I guess, although the margins are tiny for Telaria.
What makes TTD a far more exciting investment is that its technology helps advertisers (the demand side) find the best place for their ad campaigns. You might think you want to buy space on the Motley Fool. But maybe there are way better places for your advertising dollar. You won’t discover that info on Telaria, but you will at TTD.
Somebody please correct me if my understanding is wrong!