• by Tobi Elkin  @tobielkin, August 28, 2017

The Trade Desk is something of a rarity in the roiling waters of ad tech/martech these days: It’s profitable. The demand-side platform (DSP), which enables ad buyers to purchase ads programmatically, has been a public company for a year.

Apart from working across platforms — video, audio, mobile, and native — the company is placing its bets on connected TV (CTV) and over-the-top TV (OTT) as it looks to expand its horizons and bring programmatic efficiencies to these growing media platforms.

Digital News Daily (DND) spoke with Brian Stempeck, The Trade Desk’s chief client officer, who oversees global agency and partnership relationships, about the prospects for CTV and OTT.

Digital News Daily: Why is The Trade Desk interested in CTV and OTT? What’s the opportunity there?

Brian Stempeck: When you look at consumer adoption, three in four Americans have an OTT or CTV device today. We’re long past the early adopter phase. We’re in the late mainstream phase now. There’s a shift from broadcast to CTV and OTT,  but the marketing and media dollars have not followed.

It takes time for marketers time to catch up to where consumers are and where they’re going, and it takes time for ad spend to catch up.

DND: What is The Trade Desk’s involvement with CTV and OTT to date?

Stempeck: We’re been buying CTV inventory on The Trade Desk platform for about two years. But it’s now scaling. The CTV landscape is pretty fragmented — some consumers use Apple TV, some Xbox, and some have Samsung Smart TVs, or Roku.

A DSP is good at aggregating inventory from thousands of sites. We aggregate inventory today from all the major apps and OTT devices. We buy inventory on Roku and Hulu, and Sony Crackle, for example. To achieve scale, you can’t just buy on one device. We buy ad inventory on all the major apps and devices.

DND: Plus, there’s a data advantage with CTV and OTT.

Stempeck: Once you have the scale of inventory to buy, you can give ad buyers more choices and audience data, which is something they want. An advertiser can use that audience data to buy third-party data from Nielsen or Oracle to help find new customers. So instead of buying against a broad demographic, this opportunity offers audience targeting.

When buyers can target the audience they want to reach, they’re willing to pay higher CPMs. With display ads, the average CPM might be $2, whereas advertisersmight bid $8 to $10 for display when they know the audience. They might be buying fewer ads, but the people they’re targeting are 'intenders' and in the market right now for a credit card or whatever the product is. 

We have also seen clients that want to measure the inventory according to standard TV metrics. We offer that. We partnered with Nielsen to understand how many total GRPs run against a CTV campaign.

For example, consumer packaged goods advertisers buy lots of GRPs in broadcast TV, but they may miss a demographic. We can show them how many incremental GRPs they can get using audience targeting on CTV/OTT. They can use first- and third-party data.

DND: What does the company want to offer in the future?

Stempeck: We would like to expand internationally and we want greater scale in using data. We’d like to be able to identify a user on a CTV device — it’s different than how you do it on desktop or mobile.

In the CTV world, there are different standards. Roku has its own ID, other CTV devices  have their own IDs. We need a device ID that is standard across the entire CTV world, which could be developed in conjunction with partners. We need that standard. Without it, the ad experience isn’t great; people see the same ad over and over again. You can fix that by having a single ID across apps and devices.

DND: What are the impediments to more dollars flowing into CTV?

Stempeck: The way TV ads are bought in the upfront. Networks are still selling most of their advertising in the upfront.

DND: What are the main targets for CTV/OTT?

Stempeck: With millennials and GenZ, adoption is super high. If you’re not buying CTV, you’re missing those audiences almost altogether. With 18- to 49-year-olds, there is already massive adoption of streaming TV on a big screen. CTV users skew slightly higher income and have kids in the household. While there is adoption across the board in all age groups, it’s a matter of the share of time spent. And among millennials, it’s about 80% to 90%.

DND: What’s most interesting to you about this arena?

Stempeck:  What’s cool is the rise of all the skinny bundles. There is a huge amount of inventory and it will force change across the industry. DirecTV and Hulu, for example, have skinny bundles — they are delivered over an Ethernet cable so all of this inventory can be addressable. The rise of skinny bundles means there is a huge amount of inventory moving into programmatic channels. And look at Brian Lesser moving from GroupM AT&T. This is a turning point in the CTV world.

Our clients are saying that last year was the year of test campaigns and dabbling, while this year they are starting to see real budgets. They’re most interested in what happens when someone sees an ad on a CTV device and then goes to their laptop and buys something online. The technology is now enabling us to understand that relationship.