Could The Trade Desk's Fresh Streaming Operating System pose a Challenge to Roku's Dominance?
The fierce competition in the streaming market is escalating, with numerous consumers opting to jettison their bundles and shifting their focus towards "connected TV" advertising to finance all this content. Even powerhouses like Netflix have adopted an ad-supported subscription model recently.
Consequently, companies that help content creators maximize their ad revenue become increasingly valuable in this content war. This situational advantage has been capitalized upon by The Trade Desk – the largest independent platform for programmatic advertising, catering to advertisers.
In a bold move last week, The Trade Desk aimed to further disrupt the industry.
Ventura OS at the forefront
On November 20, The Trade Desk presented its new streaming operating system, named Ventura, paying homage to its home county.
This move could significantly impact the industry, pitting The Trade Desk against streaming OS providers like Roku and other big tech companies such as Amazon.
According to the press release, Ventura is envisioned as a significant leap for streaming operating systems, promising various enhancements. From the viewer's perspective, Ventura guarantees a smoother, more interactive user experience, allowing for more straightforward and neutral content discovery across various platforms.
Furthermore, Ventura asserts it will provide a more streamlined supply chain in the realm of streaming ads, potentially simplifying the path for advertisers to reach publishers, minimizing fees lumped on by multiple ad tech intermediaries.
The secret to streamlining the system lies in increased precision for each ad, which Ventura promises to deliver by employing the latest OpenPath and Unified ID 2.0 (UID2) technologies – more advanced and privacy-focused methods for ad targeting.
What drives The Trade Desk's ambition?
While The Trade Desk has traditionally served its mandate as a demand-side platform focused on advertisers and agencies, CEO Jeff Greene has vocally condemned other ad tech companies that operate on both sides of the "ad trade," dismissing them as "walled gardens."
Thus, widely branching into operating systems, regarded as the "supply side" of streaming ads, may seem paradoxical for The Trade Desk. However, Greene has disclosed that the company has been secretly developing Ventura for three years, implying a compelling reason behind this strategic decision.
Potential motives for this calculated move include seeking to gain a foothold on the supply side and subsequently capturing a portion of advertisers' revenues. Alternatively, The Trade Desk might envision a better connected TV industry operation that can provide more valuable insights from data, thereby improving prospective ad targeting capabilities for all advertisers.
During his introduction of Ventura, Greene emphasized that the demand-side remained its primary customer and focus. By improving viewership and user tracking with UID 2.0 and other targeting technologies, The Trade Desk may seek to gather more data insights, ultimately elevating ad targeting efficiency for all advertisers.
Greene also highlighted that Ventura will be the only OS without its own streaming channel or content. In a recent interview about Ventura, Greene suggested that the concentration of streaming OS providers in the hands of big tech giants, such as Amazon and Apple, might not be optimal for viewers or advertisers. This implies that other operating systems might steer lucrative advertising to their exclusive content or lead viewers to their preferred streaming channels.
Finally, in a recently held The Trade Desk earnings conference call with analysts, Greene criticized certain ad tech companies for overcharging due to a short-term "extraction" operating philosophy – without mentioning specific names. Therefore, Ventura might potentially eliminate certain supply-side "extractors" from the digital ad supply chain, reducing costs for all.
In conclusion, the purpose behind Ventura seems to encompass several objectives. However, the effectiveness of Ventura in living up to Greene's altruistic goals remains to be seen.
A looming threat to Roku?
Ventura appears to share strong similarities with Roku in terms of its business model. Although Roku has Roku Channel, it doesn't offer the wealth of original content as deep-pocketed tech giants like Amazon.
As predominantly an OS, Roku enjoys numerous third-party integrations with streaming TV OEMs. In the press release, The Trade Desk stated it would solely integrate with third-party hardware manufacturers, announcing no plans for developing its own streaming device.
With regards to competitive advantage, this scenario might pose difficulties for Roku. Since The Trade Desk continues to concentrate on its demand-side platform, the company could undercut Roku's advertiser rates on the supply side. Moreover, Ventura has the potential to supplant Roku in smart TV vendor revenue-sharing arrangements, rendering Roku less popular among these manufacturers.
During a recent interview, Greene revealed that The Trade Desk neither wanted nor needed to make money from the OS. The success of this strategy remains to be seen, but Greene envisions that by enhancing the connected TV experience, eliminating intermediaries, and promoting transparency, consumers and advertisers – The Trade Desk's primary clientele – would benefit significantly. This proposition might be frightening for Roku and its investors.
Although The Trade Desk could face issues in adhering to its "buyer-focused" principles, it seems Ventura could be advantageous for both consumers and advertisers if it truly delivers. Consequently, The Trade Desk could stand to profit significantly from Ventura. Moreover, if Ventura successfully challenges big tech's dominance in the streaming sector and enhances the overall ecosystem, it would yield positive results for all parties, excluding possibly Roku.
In light of The Trade Desk's introduction of Ventura, a new streaming operating system, the company is looking to invest significant resources into the development of this technology. This investment in finance is aimed at disrupting the industry and providing a more streamlined and efficient ad supply chain.
With Ventura, The Trade Desk aims to offer advertisers a more straightforward path to reach publishers, reducing fees associated with multiple ad tech intermediaries. This focus on finance and investment in technology could potentially help The Trade Desk capture a portion of the advertisers' revenues.
