SSPs seem unfazed by OpenPath – at least on the surface.
Supply-path optimization (SPO) is one of three key growth strategies for PubMatic this year, Rajeev Goel, PubMatic’s CEO and co-founder, told investors during the company’s Q4 earnings call on Monday. So when it comes to SPO solutions like OpenPath, PubMatic is focusing on where the opportunity lies for SSPs.
Omnichannel and audience addressability are the other two top priorities.
Between 2020 and 2021, PubMatic grew its number of SPO partners by 44%.
“Over a quarter of activity on our platform is now via SPO agreements, up from approximately 10% at the beginning of 2020,” Goel said.
Going forward, PubMatic expects to see continued growth through expansion of its SPO partnerships and consolidation on the buy side and sell side.
“There’s still some of the smaller, sell-side platforms to be consolidated out of the ecosystem,” Goel said. “On the buy side, buyers are consolidating down to fewer and fewer sell-side platforms because of their desire for automation, efficiency, transparency and high-quality inventory.”
But won’t OpenPath throw a wrench in the works? The Trade Desk released OpenPath in mid-February as a way for its DSP to bid directly on a publisher’s inventory.
Goel said he doesn’t see publishers ditching their SSPs for OpenPath, which he called “pretty limited in nature” and “likely competitive with the agencies.”
“Unless publishers plan to build [yield management] solutions in house, which we know from experience is very challenging, even for large publishers,” he said, “we think publishers will still need additional technology to power their inventory.”
Omnichannel and addressability
Regarding its omnichannel expansion plans, PubMatic pointed to growth in the CTV market and additional investments in video monetization.
Since launching its CTV business in Q3 2020, PubMatic now has 167 publisher partners programmatically monetizing their CTV inventory. PubMatic’s CTV revenue grew six times in Q4 2021 compared to the same time last year.
In terms of addressability solutions, Goel called out PubMatic’s partnership with LiveRamp to implement the latter’s Authenticated Traffic Solution (ATS) as part of Identity Hub (PubMatic’s identity resolution offering).
Through the integration, “publishers were able to more than double CPMs and triple fill rates in cookieless browsers like Safari and Firefox,” Goel said.
But signal loss is also happening across mobile apps. Although Google hasn’t formally announced a timeline for the phaseout of its Android Advertising ID, the writing is on the wall with the recent release of the Android Privacy Sandbox.
Goel said, however, Google’s plans for its device ID will likely only have “minimal if any” impact on PubMatic’s business, because ad dollars historically shift to channels where buyers find success in high ROI.
“Because we’re an omnichannel platform, we’re able to fulfill ad buyers’ needs with other channels, such as CTV or mobile web,” he said. “We saw this dynamic on our platform when Apple eliminated IDFA with no impact.”
The financials
PubMatic pulled in $226.9 million in revenue for the full year of 2021, which represented a 53% year-over-year organic growth rate. The company reported organic revenue of $75.6 million during Q4 2021, up 34% year over year.
In December, when PubMatic went public, it estimated its market share was somewhere between 2% and 3%. Based on updated industry data, PubMatic now estimates its market share is a bit higher at 3% to 4% – and it’s got big ambitions on that front.
Over the long term, PubMatic is aiming to grow its share of the market to 20% plus.
