The Trade Desk Ventura: When Efficiency Calls
An analysis of The Trade Desk's strategy to create a CTV operating system
Trey Titone
November 21, 2024
The Trade Desk finally confirmed it is working on a CTV operating system following rumors and leaks that preceded the official announcement. The operating system, called Ventura, allegedly will solve some lofty goals:
"Ventura represents a major advance in streaming TV operating systems as it solves key issues with prevailing market systems today, including frustrating user experiences, inefficient advertising supply chains, and content conflicts-of-interest."
I wrote about why I think The Trade Desk would build a TV operating system back when the rumor dropped in September — and my thoughts in that article still hold today. However, I have learned some new details after listening to an interview with The Trade Desk's Founder & CEO, Jeff Green, about Ventura.
Jeff Green joined The Current podcast (owned by The Trade Desk) to discuss Ventura. Given the obvious conflict of interest in The Trade Desk's owned and operated podcast essentially interviewing itself, I didn't expect any juicy new details. Surprisingly, Jeff Green shared some practical insight into why they chose to build a new CTV operating system.
I will share the most insightful quotes from the podcast and my takeaways. I timestamped each quote so you can jump to the relevant part of the interview to hear Green's complete answers.
You will notice that the conversation surfaces some recurring themes, so some quotes appear out of order as I attempt to craft a linear narrative. It begins with the problem TTD identified and then focuses on the different players in a given CTV transaction: Publishers, Advertisers, Consumers, and OEMs.
The (supply) path to Ventura
It's no secret that The Trade Desk has been on a crusade to shorten the supply path between publishers and advertisers across all platforms with their OpenPath initiative. Shortening the supply path ensures that there are no unnecessary markups on inventory from middleware and that TTD knows there aren't any modifications to the floor price or content metadata of an ad opportunity before it hits its platform.
Green immediately jumps into the inefficiencies of CTV supply paths today:
(19:56) "We are uniquely positioned to improve the supply chain of television, of CTV. And as a result of fixing the supply chain and the way money flows, actually improve the TV experience to make certain that the future of television is different."
(20:26) "When you control the way the money flows in a better way, or you influence it in a better way, then it creates an opportunity to improve the overall system, and this is our opportunity to change the overall system."
A big problem of implementing OpenPath on CTV is that it requires direct integration into the ad servers CTV publishers use. Contrast this with display, where The Trade Desk can seamlessly bypass an SSP and integrate into Google Ad Manager via a Prebid adapter without Google's blessing.
The Trade Desk believes Ventura will help it more directly access supply. Whether this is via technical or contractual means needs to be clarified, and Green fails to go into more detail on this subject. I took some stabs at what this could look like in my prior article on this subject.
If you improve the supply chain, TTD thinks benefits permeate the operating system and trickle down to the participants in all transactions. Green goes on to introduce the problem faced by OEMs:
(20:49) "OEM margins are going to zero. There's a broken business model in the hardware development of television. And most of them are getting into advertising as a result."
There's a reason why the price of TVs seems to stay flat in a world of ongoing inflation — it's because manufacturers subsidize the cost of the panel with the future hopes of earning advertising revenue from revenue or inventory shares and licensing data.
The Trade Desk points out the broken hardware business model of TV manufacturing, where price competition has compressed margins to near zero, and advertising is the only remaining desirable business model.
Lowpass initially reported that TTD offered "much more advantageous revenue sharing deals than its established competition.” So TTD can take advantage of OEMs' full-throttle embrace of advertising and offer a more lucrative advertising arrangement than existing operating systems.
The Publisher Opportunity
But Green also thinks this is a massive opportunity for publishers, or at least that is the best narrative to go with to gain their buy-in to publish apps on the Ventura platform:
(23:00) "I don't think there is anybody that benefits more from a more effective supply chain than the content owners."
He talks about how Peacock, Paramount, and Disney are all obsessed with profitability. "They got to keep growing but they got to be profitable." He goes on to say:
(24:05) "You have to improve your sell-through rate and you have to improve CPMs. And if you add too many ads to the break, you are going to lose subscribers."
(24:14) "Profitability feels fragile. I would argue that's because the supply chain is relatively inefficient. There is an opportunity if you make that more efficient for content owners to make more and if they make more they can make more content. So the entire ecosystem will benefit but it has to start with advertisers getting more efficacy and being willing to pay more so the content owners can make more money. So there's nobody that benefits more from a more efficient supply chain than content owners."
(21:00) "On the streaming side there are some serious problems in that as the streaming wars have escalated, the cost of content hasn't gone down, but discovery has become much more difficult, and so if you are a new app it is much more difficult for content owners and they need CPMs to go up — they need the ad experience to be good."
Content is expensive to churn out, and companies like Netflix and Disney spend considerable sums to churn out content to keep people watching. The Trade Desk thinks they have the answer to increase CPMs and the quality of ad experiences, which can lead to more revenue to fund content creation endeavors. Later in the podcast, we discover that TTD believes this is achievable by shortening the supply path, imposing more transparency in sharing metadata, and implementing The Trade Desk's identity solution UID2.
Helping consumers discover content
With the last snippet above, we also now hear the introduction of the consumer problem identified by TTD: discovery. Green goes on to point out the clear conflict of interest with the big tech companies owning the operating system and also owning content that they need to promote:
(27:16) "Creating friction to discovery, that sort of friction to make it so that consumers can find the content that they're looking for, has gotten bad, it's gotten worse and that is mostly made worse because people [Amazon, Google, Apple, Roku] are exclusively promoting their own content. They're trying to find ways to make their content surface above other people's content and it's because of the way they make money. They're also trying to make to make this profitable so as a result, we see this as an opportunity for us to make things better for everybody, but the consumer will improve on discovery."
(21:51) "As you look across the [CTV] supply chain I was seeing that number one most of the operating systems that were good, are owned by big tech who are also owning content. In particular, Google as it relates to YouTube and YouTube TV, but also Amazon. [and Roku]"
The Trade Desk owns no content, so there is no conflict of interest at play as an operating system owner. However, these big tech companies are interested in pushing their content onto users, which could hinder the discoverability of all the content within the apps on those platforms.
A perfect example of this is the Apple TV+ app, which Apple makes the default home screen for users of the Apple TV platform. They have a great feature that creates a queue of content that lets you pick up where you left off across all apps on Apple TV (Peacock, Paramount, Disney, etc. — but not Netflix for whatever reason) in a single feed. But above this, you have a giant scrolling hero section displaying trailers only from Apple TV+ shows (like Silo):
More transparency
Next, Green aims at the rampant use of obfuscation tactics in CTV:
(25:14) "The programmatic ecosystem has largely tried to obfuscate at times from buyers what they're buying. Even now, that is still happening all the time."
Publishers can cloak the metadata of any programmatic ad transaction to obscure the supply source or other information.
Publishers do this for different reasons, such as not breaking the law. The Video Privacy Protection Act (VPPA) prevents suppliers from including personally identifiable information and metadata describing the content watched in the same bid request. Additionally, publishers cloak programmatic signals to deter advertisers from cherry-picking their most desirable inventory or shows.
Interestingly, he doesn't call out "publishers" directly here but blames the "programmatic ecosystem." This lack of direct accusation could be insinuating that this is a systemic issue born from misguided old-school sales philosophies and that programmatic advertising inherently runs more efficiently with more transparency.
Revealing more information in the bid stream helps The Trade Desk validate the source and quality of the inventory. More signals also could help TTD have more variables at its disposal to optimize bidding behavior.
But of course, as a platform that serves advertisers, he wants them to know they have the power to push for more transparency:
(25:35) "But the advertisers will always win, and part of the reason they'll win is because there is more supply than there is demand and that does mean that advertisers are in the power position. They just need better choice and they need ways to figure out how to differentiate one thing from another, and so sellers as a result have to get in the business of being better at describing what they're selling."
TTD could make a minimum set of metadata like unobfuscated bundle IDs or content metadata like genre, rating, and category mandatory for all app owners to share in the bid stream to publish their app on Ventura.
A better ad experience
Jeff Green thinks that misaligned incentives have led to a degradation of user experience and that an operating system owned by The Trade Desk can fix this:
(27:52) "If you get somebody like us in the space where we don't necessarily want to or need to make money on the operating system itself, we just want to make certain that we have a fair scaled market. So, if we're willing to do this without making money on the operating system itself, then the ecosystem gets more efficient, and what that means is that consumers will pay less for content.
"So either they pay less by seeing fewer ads and those ads by the way, will also be more relevant because UID2 will be integrated, it makes it super easy for the ads to become more relevant for them so they see fewer of them, and they're more relevant — but also the bar in terms of the cost because of a more efficient supply chain can make it so that they pay less for content, whether they're paying less dollars or less in seeing fewer ads."
"So the consumer gets a much better experience where they have better discovery in part because we don't own any content we're objectively helping them find it and then also by not owning any ads, we reduce the amount of ad load. And then, of course, by making it so that the take rates in the middle are lower."
This snippet hits a few different topics. First, you need to know that operating systems often impose inventory shares on content owners, who have to make available a percentage of inventory to the platform operator to monetize. Green makes it seem like TTD will not impose this share, which would, in turn, allow content owners to reduce their ad load, which means fewer ads and possibly a lower subscription price.
He also then jumps to UID2, TTD's deterministic identity solution. If TTD requires any streaming service on Ventura that collects email to convert that into a UID2, then it allows The Trade Desk to serve more relevant and personalized ads to a user. It also makes it easier to universally frequency cap so the user will see less of the same ad across all platforms and services.
He does come back around to the idea of a "fair market":
(31:23) "If we're willing to pay more, can't we? Just give us a chance to participate in a fair ecosystem — and really what this is is an effort to make certain that there is a fair ecosystem that we can participate in and that we have the right to buy an ad if we're willing to pay more than others. All we want is a fair shake."
This quote is most likely firing shots at Google after their scandalous bidding practices came to light with things like Project Bernanke, where they were caught manipulating auctions to benefit them and hurt other participants. TTD can ensure things like Bernanke never occur if there isn't anybody sitting between them and the supply.
TTD: Destroyer of SSPs?
The pessimistic narrative around shortening the supply path with OpenPath is that TTD wants to cut SSPs out of the equation. Jeff Green wants you to know that he never approached this strategy with that in mind:
(32:53) “So every once in a while, people will say, oh, you're doing that because it benefits The Trade Desk, well yeah, but it also benefits you…some think if I win, somebody else loses, and if they win, I lose — I don't think like that. I just think that there are efficiencies to be gained in the market, where everybody can benefit, and those are the ones that are easiest to chase because people will work with you. They will benefit from it. So this is one of those cases where I think the overall ecosystem can be better. Consumers will have a vibrant, thriving ecosystem, and there's so much at stake —the best of TV, best of movies, but also things like journalism are at stake, and we've gotta make that better and efficient in order to survive."
He does not want us to think he was out to cut anyone out of the equation but that the TTD strategy of shortening the supply path will benefit the overall ecosystem of programmatic advertising and premium content creation. However, the reality is that some SSPs will find themselves shut out in the cold if TTD gets its way.
And that concludes the highlights of the podcast. While it was light on the technical and business details behind Ventura, I appreciated the insightful commentary on The Trade Desk's strategy.
The success of Ventura hinges on whether they deliver on some of the promises above.
Even if TTD has no conflicts of interest in promoting its content, will it deliver impactful features around content discovery?
Will the possible lack of inventory share requirements for content owners result in a lower ad load for users?
Can a focus on more efficient advertising lure OEMs to integrate the Ventura operating system?
Will advertisers find more success delivering ads on Ventura relative to other platforms due to a shorter supply path and deeper integrations with UID2?
We may start learning the answers in 2025 when The Trade Desk says OEMs will begin deploying the operating system.
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