While it wasn’t unexpected, The Trade Desk’s announcement yesterday that it is launching its own CTV operating system called ‘Ventura’ certainly raised some eyebrows.
For a start, while there are obvious tie-ins with programmatic advertising (since smart TV operating systems have privileged access to CTV impressions and valuable viewership data), it’s still a fairly radical departure from The Trade Desk’s core business. The ad tech company’s traditional user base is agency buyers – with a TV OS, it will have to create a product that appeals to the general population of CTV users, as well as publishers and hardware manufacturers.
It also raises questions about whether it’s a move towards the sell-side of the industry (following the launch of OpenPath, a product which sees The Trade Desk work directly with publishers), and whether it will bring The Trade Desk into direct competition with the likes of Roku, LG, and Samsung, each of which run smart TV operating systems and sell ad space.
No TTD+
The Trade Desk’s CEO Jeff Green maintains that Ventura is primarily designed to foster more efficient and transparent supply paths, which in turn will benefit those who he still classifies as The Trade Desk’s sole target market – the buy-side.
As mentioned, running its own CTV OS will give The Trade Desk more direct access to impressions run through that platform, as well as broader viewership data, essentially shortening the supply chain. Speaking with The Trade Desk’s owned- outlet The Current, Green added that since The Trade Desk doesn’t own any CTV inventory itself (unlike other OS owners, many of which now run their own FAST or AVOD services), it won’t be biased towards any inventory, creating a more efficient marketplace overall.
It is for this reason that Green appears to believe The Trade Desk won’t be competing with the likes of Roku (which is also a significant partner of The Trade Desk) – it won’t run a FAST or AVOD service, while it also won’t create any of its own hardware.
Ana Milicevic, principal and co-founder of Sparrow Advisers, says Green’s logic around the buy-side benefits of The Trade Desk owning a CTV OS are sound in theory.
“Conceptually, Ventura has the opportunity to make life immediately and visibly better for CTV buyers, who are dealing with fragmented inventory and unclear measurement, as well as for consumers, who one would hope would be beneficiaries of an overall better streaming TV advertising experience (for example, through less repetition/better frequency capping),” she said.
Not a lane switch?
Milicevic added that while the “‘stay in your lane’ buy-side vs sell-side notion” which some industry commentators adhere to is outdated, Ventura isn’t a sell-side play anyway. “The Trade Desk is acting to serve the needs of their best customers – brand buyers with larger advertising budgets – and if that means re-wiring (I believe Samantha Jacobson used the term ‘re-plumbing’ a while back) how demand interacts with supply, I think that’s a sign of a healthy, evolving marketplace.”
Mo Allibhai, a senior analyst at Forrester covering advertising technology, agreed that the insights into consumer habits which a CTV OS provides will strengthen The Trade Desk’s buy-side offering. “The ultimate insight a CTV device can provide back to advertisers is overall frequency, to be able to deduplicate efforts across multiple channels to avoid wasting ad dollars while simultaneously fatiguing the audience,” he said.
Regardless, other CTV OS owners might baulk at the idea that The Trade Desk isn’t competing with them. Ultimately, any smart TV running Ventura isn’t running Roku’s, LG’s, Samsung’s, Google’s, Amazon’s, VIDAA’s, Titan’s or TiVo’s OS. This is especially a problem for companies that license out their OS to third-party device manufacturers (including Roku).
And while The Trade Desk seemingly isn’t planning to spin up its own FAST or AVOD service, that doesn’t mean it’s not stepping into the sell-side. Many OS manufacturers secure a chunk of streaming ad inventory from the third-party CTV apps they host as part of their distribution agreements. The Trade Desk could do this while still claiming not to have bias, if it has the rights to inventory across all the services it hosts. But doing so would be a pretty undeniable step move into the sell-side.
TV OS owners also sell a lot of inventory outside of streaming content itself. Native ads within the OS interface, which give CTV apps prime positioning, are sold by all the major CTV OS owners. Of course Roku may choose not to do this (Green says that The Trade Desk “[doesn’t] necessarily want to or need to make money on the operating system itself”), but then it will have to figure out how to make the economics work in a way which benefits the hardware makers it needs to partner with.
No small task
This, of course, is the other key question: whether Venture will be popular enough with device makers and consumers to have a significant impact on the market anyway. So far The Trade Desk has announced Sonos as its only hardware partner.
Paul Gray, research director for consumer electronics at Omdia, pointed out that Roku isn’t the only company making a play in this space.
“This is part of a bigger pattern of more entrants in the Smart TV platform world alongside Titan, VIDAA and several others,” he said. “The opportunities are expanding as TV brands shift their business models towards recurring revenues. At the same time, retailers are trying to answer Amazon with retail media – first as a revenue channel in itself, but also as a way to move their own advertising from CPM towards Cost Per Click or even simply a revenue commission on successful sale outcomes.”
Forrester’s Mo Allibhai says that to win more partners, Roku will have to offer a superior user interface. “It’s no secret that current CTV operating systems are slow and convoluted, with content often nested several clicks deep into the experience, or TV sets that cease to function due to a remote server outage somewhere across the planet (like the great Roku outage of May ’24),” he said. “If The Trade Desk can deliver a smoother experience for consumers along with more relevant ads, they will win with the more user centric, premium brands like Sony.”
As mentioned, economics will also be key. “Whether they’re trying to drive higher CPMs on their own streaming services, or collect revenue share from endemic partners for content suggestions on the home screen, if Ventura OS doesn’t offer sellers more yield, it is a non-starter,” said Allibhai.
Omdia’s Paul Gray believes the US will be the primary battle ground for The Trade Desk, since the advertising opportunities are greater there, while the UK, Germany, and Italy will offer interesting prospects in Europe. But it won’t be an easy fight, and things could well get political.
“The competitive intensity is increasing, as a result we will see it become a race for scale – it’s installed base that matters,” said Gray. “Fairly soon we will see which platforms fail to grow fast enough. At the same time, retailers are increasingly taking the whip hand and may demand a favoured platform be supported. This puts brands in an awkward position with channel conflicts. Some may try to sell direct to consumers.”
Allibhai agreed that the road won’t be easy. “This is no small task,” he said. “Longer term, enabling new content discovery and providing robust customization tools for developers will ensure stickiness with OEMs and their streaming app partners. The existing space for seller tools is quite robust, so TTD’s appetite for sustained investment in this area will ultimately determine their success over the long haul.”
