Magnite has always been an SSP. But lately, it’s only had CTV on its mind.
Its total Q4 revenue for 2021 was up 97% year-over-year, CEO Michael Barrett told investors on Magnite’s Q4 earnings call Wednesday night.
CTV makes up 38% of Magnite’s revenue, up from 19% in 2020. Mobile ads make up 36% and desktop 26%. Those categories totaled 81% of Magnite’s revenue in 2020, before the SpotX acquisition, but only 62% in 2021.
Besides SpotX, Magnite acquired SpringServe in 2021. Together, those acquisitions accounted for 20% of Magnite’s growth in CTV in 2021.
“We reach 80 million households a month, and we [hold about] 20% of the market share measured by ad spend,” Barrett said.
Putting all its eggs in the CTV basket seems to be paying off. According to Barrett, Magnite’s total revenue from serving ads on CTV in 2021 hit $143 million compared to around $34 million just the year before.
Growth has stalled for Magnite’s mobile and desktop business (mostly comprised of the company formerly known as Rubicon Project).
Magnite reported 6% YOY growth for mobile and only 1% for desktop, according to CRO David Day. What stays neglected grows stale.
Magnite’s business now includes a grab bag of different take rates, which vary based on the medium (CTV vs. desktop) and acquisition (among them: Telaria, SpotX and SpringServe).
Magnite categorizes its CTV dollars by three different metrics: ad spend, proprietary exchange and managed services. An analyst on the call estimated the take rates at 4%, 8% and 12%, respectively, and the investor asked Day how close to the mark she was.
“For competitive reasons, we don’t share our take rates publicly,” Day said. “But the ranges you mentioned … as an average, that’s not too far off.”
(For reference, The Trade Desk reported a take rate around 20% when it reported its earnings last week.)
Speaking of The Trade Desk, Magnite thinks another window of opportunity opened up for it last week: OpenPath.
When The Trade Desk rolled out OpenPath last week to more closely bridge advertisers and publishers, it could be read as a power move against Google (the most used ad exchange by far) or an effort to send SSPs into obsolescence. After all, Magnite participates in Google Open Bidding (which Trade Desk turned off), and it doesn’t want advertisers to skip over the SSP hop.
And Magnite is optimistic it won’t be disintermediated.
The Trade Desk doesn’t spend much on open bidding through Magnite currently, but Barrett thinks that’ll change. “The Trade Desk’s shift away from Google Open Bidding is good for the ecosystem – and more demand in the header is good for us,” he said.
While it’s not clear where – or with whom – The Trade Desk will reallocate its spending, Barrett thinks The Trade Desk should shift its focus to Magnite.
“Many SSPs are overly reliant on open bidding and don’t add much value,” Barrett said. “It’ll lead Trade Desk to readjust their ad spend on platforms like Magnite.”
Time to play the wait-and-see game.
Share price or it didn’t happen
Wall Street doesn’t seem to be too sure what to make of this. Magnite’s stock rose about 4% from Wednesday’s close during the start of after-hours trading. And then it dropped by twice as much.
Almost immediately (within the hour), share prices bounced back and leveled themselves out. The stock remained the same as its close throughout after-hours trading, give or take half a percent.
Investors seem satisfied enough … or confused. Time will tell.