SPO, The Great Legacy Ad Tech Battle; Goldman & Everyone Else ❤️ TV Measurement; Elon About To Torch $4.5 Billion Of Ad Revenue
This is the FirstPartyCapital weekly newsletter. It covers news and updates about the FirstPartyCapital fund and its portfolio companies.
SPO: The Great Legacy Ad Tech Battle Royale Of Our Time
FirstPartyCapital hosted a panel this week at New Video Frontiers. The thirty-minute discussion focused on how SPO (Supply Path Optimisation) is impacting legacy ad tech.
The thrust of the conversation inevitably led to one obvious narrative: legacy ad tech is in a do-or-die battle for survival.
TTD’s OpenPath has taken a rusty hacksaw to the traditional supply chain. There has always been a supply and demand side. Vendors (bar Google) generally stuck to their lane.
With the launch of OpenPath, TTD telegraphed to the industry that it’s going direct to publishers, cutting out SSPs in the process.
TTD calls it a clean up; FirstPartyCapital calls it a genius strategic move. Jeff Green is clearly playing three dimensional chess while the rest of legacy ad tech is playing checkers - badly.
What we have here, dear reader, is the start of a bloody battle for supply.
Take rates in this sector are insanely high - and will have to come down. Jeff Green is shrewdly offering publishers demand at a discount.
FirstPartyCapital sees a wave of consolidation coming in this ”messy programmatic middle”. There are too many noses in the tough right now.
Most SSPs will either need to buy an ad server or launch a clean room offering to remain sticky for publishers.
It’ll be interesting to see how this plays out. But do not fret, readers, we won’t be investing in this area. We think on ten year horizons - not six months. Automated media execution is not the future of this industry.
Goldman Loves Ad Tech, As Another TV Measurement Company Gets Big Funding
TV measurement is the hottest part of ad tech right now. In a sizeable deal this week, Goldman Sachs - the ad tech super investor - put $325 million in TV measurement solution, iSpotv.tv.
Over the past 12 months there has been a raft of M&A and big cheque investments, as US ad tech tries to win Nielsen's measurement crown.
How Nielsen fell so badly is worthy of an ad tech university module. Investors (US) clearly see an opportunity in this segment when tied to the - perceived - hyper growth of CTV.
But it’s important to note here that these big investments are very much US focused. These companies will struggle to scale globally.
The reason is pretty simple: the TV market outside the US is so much more complicated. CTV, while important, is but a small part in a fabric of siloed TV inventory sources.
At FirstPartyCapital we are looking at investing in data-driven TV measurement and targeting. We will be presenting some deals in the coming months that attack these international problems.
The non-US TV ad market is worth over $100 billion. Someone needs to invest in its future development. That’s what we continue to do.
Elon Acquires Twitter For The “Town Square” - But Not Too Interested In Its Ads Business
Elon Musk spectacularly acquired Twitter this week - to take it private - in a deal worth $44 billion.
The enigmatic genius tech billionaire outfoxed the Twitter board by tendering an offer no other company could match. To say Twitter is overvalued would not be an exaggeration.
What the great one does next is anyone’s guess. Musk is obsessed with free speech on the platform. It’s likely we will see the Donald back on the platform in the next six months.
Toxicity is returning to Twitter - and advertisers are likely to be unnerved.
But Musk is not bothered by any pushback from advertisers. He is not a fan of advertising as a revenue model.
He should be though, given it represents 90% of Twitter’s revenue. The company did $4.5 billion in ad sales last year.
It’s a big chunk of change, and it’s soon to be all up for grabs. Where is that money going to go? TikTok, Meta and Google are the likely winners here.
Retail media could also be a magnet for this spend, as marketers rethink their performance budgets.
Have a great weekend, readers.