• by Wayne Friedman , Staff Writer, September 26, 2024

Can connected TV (CTV) really usurped or at least stem the growth of “walled gardens” digital media advertising spend?

Digital platform-based "walled gardens" of data from companies like Google, Meta, Amazon, accounts for about 80% of global digital ad spend and 85% in the U.S. -- roughly $95 billion in 2023, according to Michael Nathanson, media analyst and co-founder of MoffettNathanson Research.

The remaining 15% to 20% goes to "open internet" -- with $35 billion estimated spend -- in the playground where The Trade Desk, the largest independent demand side platform, works.

The DSP has been witnessing soaring revenue growth for multiple quarterly periods, with rising brand media billings through its system for many years now.

During that time it continues to push the notion that this is largely due to the rise -- and the future -- of connected TV platforms and to a lesser extent, digital audio.

Nathanson says The Trade Desk’s vision is now seeing becoming reality. MoffettNathanson estimates the U.S. open internet will grow at least 8% for the next four years.

That’s the good news. The not-so-good news is that the annual growth rate is still below that those "walled garden" platforms.

Does that mean advertisers and marketers are talking out of both sides of the mouths? Publicly, while brands/advertisers talk up "transparency" -- in terms of the data and its foundation -- their actions seemingly go in another direction.  

The uneasy truth is that brands/advertisers also want effectiveness and decent return on media investment. So they will continue to spend accordingly -- even if they can’t get all that they want.

The positive, of course, for CTV platforms -- especially for those legacy TV owner streaming platforms -- is that an 8%-plus growth rate is a good thing in comparison to where their overall ad performance results have been going.

For example, recent analysis from Guggenheim Securities says Paramount Global’s soon-to-be-released third-quarter ad-revenue results are projected to show another eye-opening decline in overall advertising revenue for all its platforms -- down 5%.

Companion affiliate revenue business is estimated to slip further, losing 7%.

Putting all the hope in CTV open internet platforms -- where advertisers can programmatically purchase CTV ad inventory -- may be a rather big jump and a big hope.

As long as the three major digital media platforms keep their stranglehold on business advertising activity -- and general effectiveness -- this will continue to be a mostly closed media-business environment.

Perhaps even easier transparent-minded tools are needed for those using Trade Desk and other similar demand-side platforms -- in the hope walled gardens platform feel the pinch to change.