Most ad tech companies fell flat this quarter (… at best).
Magnite’s quarterly revenue was up 11% year-over-year in Q3, with a large chunk of its growth coming from streaming. CTV revenue amounted to $56 million this quarter, up 29%.
CEO Michael Barrett told investors that Magnite also expects retail media to become a bigger growth driver for its bottom line.
CTV is up for Magnite this quarter. Revenue attributable to CTV grew 29% year-over-year, compared with 19% YoY last quarter. (CTV revenue in Q2 was up 52% YoY, but only 19% on a pro forma basis when taking Magnite’s 2021 acquisitions of SpringServe and SpotX into consideration.)
Still, no one is exempt from the effects of an economic downturn, and Magnite is keeping its guidance more modest going into the fourth quarter.
“Guidance will [be] conservative going into next quarter due to a continued challenged macroeconomic environment and recession risks,” Magnite CFO David Day told investors.
But by focusing on the market’s CTV growth, namely even new AVOD inventory, he said Magnite can “continue to grow from a margin perspective, even in a recession.”
Rigor for retail
Magnite has made no secret of its wholesale pivot to video and CTV, despite display remaining a large part of the revenue picture.
But the focus on retail media is newer for the SSP.
In September, Kroger named Magnite as one of the inaugural CTV ad tech partners for an integration program with Kroger Precision Marketing, the grocer’s retail media biz.
The Kroger partnership will allow advertisers to use the grocer’s first-party data for targeting and attributing campaigns across Magnite’s supply, “with an emphasis on CTV,” Day said.
Previously, Kroger only had a major sales data integration with Roku.
Seal on CTV
The programmatic plans are moot, though, without CTV inroads. Which is why Magnite touted partnerships with LG Ads, Vizio, Disney and GroupM.
Right now, Magnite is especially cashing in on partnerships with smart TV manufacturers.
Last month, Vizio integrated a product from SpringServe, Magnite’s CTV ad server, that supports customizable ad units and personalized content recommendations on smart TV home screens and search libraries.
Vizio and LG Ads also both use Magnite’s SSP, and LG Ads recently licensed its automatic content recognition data to Magnite to use for campaign planning, activation and measurement.
The results of running the initiative this quarter with brands and agencies in terms of spend optimization were “very encouraging,” Barrett said.
But Magnite is staking much of its near-term growth on new ad-supported streaming. It expects to cash in on the relationship it’s been building with Disney as soon as Disney+ launches its ad-supported tier.
And the real monetization opportunity lies in shifting more streaming inventory into biddable programmatic environments, Day said. For instance, he cited Magnite as the programmatic ad sales partner of choice for Fox’s smart TV network on its One FOX app.
Commercialization of AVOD particularly will help Magnite “generate very healthy free cash flow” in 2023, he added.
Wall Street buys it for now. Magnite shares surged 19% in after-hours trading following the earnings report.
Updated: CTV numbers have been amended to reflect the accurate growth rate between quarters.
