Economic pressure is hitting the ad tech market hard. And supply-side platforms have the added pressure of proving they offer a unique value to avoid the chopping block.
Magnite is no different.
The SSP reported $156 million in Q4 revenue, up 10% YOY. But that growth rate is flat from last quarter, with slower revenue growth related to connected TV (up 20% YOY compared with 29% last quarter), despite Magnite recentering its entire business around the channel.
Magnite spent more than it made this quarter because it’s throwing money into streaming monetization tech that merges the Magnite and SpotX platform. That product is largely behind the reported $204 million in Q4 operating expenses, said CFO David Day during the company’s earnings call on Wednesday.
It also doesn’t help that ad spend has been slowing down. In tough economic times, “TV budgets are always the first to pause in place of more performance-based media,” such as mobile, which was up 4% this quarter for Magnite, CEO Michael Barrett told investors on Wednesday.
But Magnite is staying “cautiously optimistic” that its CTV growth will improve.
“There is no question that CTV will be our fastest-growing segment through 2023,” Barrett said, noting that Magnite’s streaming tech should protect it from getting swept up by supply-path optimization (SPO).
Sights on CTV
As if the SSP space isn’t competitive enough right now, Magnite is apparently diving headfirst into the streaming wars.
In January, Magnite inked a strategic partnership with the streaming technology company Brightcove, which the SSP will lean on to power the platform-to-be, using Magnite’s SpotX and its ad server, SpringServe.
Aside from its own streaming platform, Magnite also touted other partnerships as indicators of near-term growth in CTV.
The SSP extended its partnership with Disney this quarter and expects to cash in more streaming revenue when the entertainment giant brings Hulu’s ad targeting capabilities onto Disney+ in July.
Last but not least, Magnite also plugged a recent partnership with Horizon Media, designed to consolidate CTV buying for the agency in the spirit of SPO.
Get SPO-wned
In addition to promising long-term revenue growth, Magnite also expects its CTV chops to shield it from buyers’ SPO axe.
For one thing, Magnite has been investing heavily in sell-side CTV technology for a few years, such as its 2021 acquisitions of SpringServe and SpotX. Magnite’s SSP and ad server are also integrated as a package deal, which Magnite considers a competitive value prop for publishers to streamline sales (although it wouldn’t be the only SSP to make that claim this week).
Still, all of Magnite’s investments on the CTV front should help keep it from getting “SPO’d out,” Barrett said.
Here’s to hoping investors will buy it, too. The stock dropped 11% during after-hours trading on Wednesday.
