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I recently got some interest from followers about writing a thread on ad tech and the stocks in this space
You might have heard of $TTD or $MGNI but there are many others in this space that people have not discovered yet that I believe could be major investment opportunities
You might have heard of $TTD or $MGNI but there are many others in this space that people have not discovered yet that I believe could be major investment opportunities
Ad tech is largely misunderstood by many professional investors. This is from firsthand experience as I have had to explain this space to many of them
I want to make this knowledge available to everyone which is why I wanted to make this thread
I want to make this knowledge available to everyone which is why I wanted to make this thread
However, this space is too big for one thread so I will be making this a multi thread series...
This first part will focus on the programmatic advertising process as it is crucial to understand how stocks like $TTD and $MGNI make money and are able to grow so much
This first part will focus on the programmatic advertising process as it is crucial to understand how stocks like $TTD and $MGNI make money and are able to grow so much
1/ First, a quick background on how the ad market used to work. Advertisers like Coca-Cola and Ford used to go to TV networks like NBC and pay for a set amount of ad spots during commercial breaks of certain programming ahead of time. This is what is called upfronts
2/ Now thanks to technology and the internet, advertising is moving from upfronts to programmatic ad buying across all mediums: connected TV, digital, social, audio, etc.
3/ Think of when you go to a website and you start to see ads on the page. Those ads that you see are unique to you and are loaded on the website within milliseconds
This use of automated technology to place ads is called programmatic advertising
This use of automated technology to place ads is called programmatic advertising
4/ What goes on in the background when you visit a website is a VERY quick auction process called Real-time Bidding (RTB). RTB is the main type of programmatic advertising and is done within milliseconds
5/ The RTB process goes like this:
A user visits a website, a request to fill ad spots on that website is immediately sent to an ad exchange by an SSP, the ad exchange holds an auction where DSPs bid on the ad slots and the highest bidder is awarded the ad slot
A user visits a website, a request to fill ad spots on that website is immediately sent to an ad exchange by an SSP, the ad exchange holds an auction where DSPs bid on the ad slots and the highest bidder is awarded the ad slot
6/ To break that down a little more, there are three main players in the RTB ecosystem: Supply-side platforms (SSPs), Demand-side platforms (DSPs), and Ad Exchanges
7/ SSPs work directly with the website/publisher. The publisher has a certain amount of ad inventory on its website that it would like to fill. The SSP's software aggregates the ad inventory and goes to ad exchanges to find buyers to fill those slots with ads
9/ DSPs work directly with ad agencies and advertisers. Advertisers use DSPs to insert their ads into ad spots programmatically across the internet
11/ Ad Exchanges are exactly what they sound like. Exchanges are where SSPs and DSPs meet to buy and sell ads and ad spots. A lot of the times the SSP and Ad Exchange are the same company
12/ Major ad exchanges include:
13/ Each player in this RTB ecosystem takes a cut of ad dollars in the entire process
I put together a simple graphic to show exactly how it flows through
I put together a simple graphic to show exactly how it flows through
14/ If that whole explanation was still not clear, here is a pretty good video that explains the RTB process
15/ I hope this thread was helpful! It’s key to first understand the programmatic advertising landscape to fully understand companies like $TTD
16/ The next ad tech thread will be more specific about the stocks mentioned here like $TTD, $MGNI, and $CRTO before another one diving into the identity part of ad tech (including a great stock that I think is overlooked) so stay tuned…
17/ Please retweet and follow so I know this is of interest to people! Also, I am trying to get to 500 followers
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