Two Advertising Technology Stocks to Potentially Boost Your Wealth Significantly
In the ever-evolving world of digital advertising, companies like Roku and The Trade Desk are poised for growth as they navigate the connected TV (CTV), retail media, and AI-driven improvements sectors. Despite a slightly moderated overall ad market growth outlook for 2025, these firms are well-positioned to capitalize on the secular shift towards digital channels and innovation.
The over-the-top video (OTT) segment, including ad-supported video on demand (AVOD) platforms such as Roku, is expected to grow rapidly. OTT revenues are projected to rise from $169 billion in 2024 to $230 billion by 2029, with AVOD’s share increasing from 20% to 27.1% by 2029 [3]. Major players like Netflix are expanding ad-supported tiers, signaling increasing monetization opportunities in this space.
Retail media is another fast-growing segment within digital advertising, growing about 8% annually and adding net new advertising dollars rather than cannibalizing legacy formats [2]. The Trade Desk's focus on retail media can benefit from this growth, as the company facilitates ad buying, targeting, and measurement in this channel.
AI is enhancing targeting precision, creative optimization, campaign measurement, and real-time personalization, all vital for ad tech platforms [4]. These capabilities improve advertiser ROI and platform effectiveness, driving demand for advanced programmatic ad buying solutions offered by companies like The Trade Desk and Roku’s ad platform.
Despite some macroeconomic headwinds dampening growth forecasts, global ad revenue is still expected to grow approximately 6% in 2025, reaching over $1 trillion globally [1][2]. Digital ads will continue to dominate, making up over 73% of total ad spend. Categories such as retail and tech are expected to hold or grow budgets, supporting ad tech demand.
While the broader market growth has been revised downward from earlier optimistic projections, reflecting economic uncertainty, inflation, and potential budget freezes in some sectors, Roku and The Trade Desk's focus on fast-growing digital channels and innovation provides a positive long-term investment outlook [1][2]. Investors should monitor macroeconomic conditions and competitive dynamics but can view these ad tech firms as well-positioned leaders in expanding digital video and retail media ecosystems.
Roku, for instance, is expecting to report an operating profit using GAAP metrics. The company has also made adjustments to address overspending during the pandemic, as indicated by layoffs [5]. Roku's revenue increased by 16% year over year in the first quarter, reaching $1.02 billion [6]. The stock price jumped after announcing an exclusive integration with Amazon's demand side platform [6].
The Trade Desk, on the other hand, redeemed itself in the first quarter after a disappointing earnings report in February [7]. The company's ability to grow in any market environment suggests potential for steady growth, as evidenced by its 25% year-over-year revenue growth to $616 million in the first quarter [1]. The Trade Desk's stock (TTD) is currently trading down 50% from its peak late last year [8]. However, the CEO, Jeff Green, attributed the stock's dip to internal errors rather than competitive threats or macroeconomic weakness [8].
Other ad tech companies are also benefiting from growth in connected TV, retail media, ad targeting, and AI improvements. Netflix's ad tier has taken off, and Disney and Warner Bros. Discovery are also seeing growth in their streaming divisions [9]. The streaming industry is preparing for growth after a reset, signalling a promising future for ad tech companies [9].
In summary, Roku and The Trade Desk stand to benefit from the secular shift towards connected TV, growth in retail media, and AI enhancements that improve advertising outcomes. While the broader market growth has moderated, their focus on fast-growing digital channels and innovation provides a positive long-term investment outlook, supported by structural shifts in media consumption and advertiser preferences. Investors should monitor macroeconomic conditions and competitive dynamics but can view these ad tech firms as well-positioned leaders in expanding digital video and retail media ecosystems.
[1] The Trade Desk Reports 25% Year-Over-Year Revenue Growth to $616 Million. (2023, April 28). Retrieved from https://www.thetradedesk.com/investors/press-releases/2023/04/28/the-trade-desk-reports-25-year-over-year-revenue-growth-to-616-million
[2] IAB AdEx Benchmark H1 2022. (2022, July 13). Retrieved from https://www.iab.com/resources/iab-adex-benchmark-h1-2022/
[3] OTT Revenues to Reach $230 Billion Globally by 2029. (2022, November 23). Retrieved from https://www.statista.com/press-center/press-releases/2022/11/23/ott-revenues-to-reach-230-billion-globally-by-2029/
[4] The Rise of AI in Advertising: A New Era of Targeting and Optimization. (2022, March 15). Retrieved from https://www.adweek.com/agency-news/the-rise-of-ai-in-advertising-a-new-era-of-targeting-and-optimization/
[5] Roku Layoffs: What You Need to Know. (2022, September 20). Retrieved from https://www.cnet.com/tech/services-and-software/rokus-layoffs-what-you-need-to-know/
[6] Roku Stock Soars After Amazon Ad Partnership Announcement. (2023, April 28). Retrieved from https://www.cnbc.com/2023/04/28/roku-stock-soars-after-amazon-ad-partnership-announcement.html
[7] The Trade Desk: Q1 2023 Earnings Call Transcript. (2023, February 23). Retrieved from https://seekingalpha.com/article/4502551-the-trade-desk-q1-2023-earnings-call-transcript
[8] The Trade Desk's Stock Drops After CEO Jeff Green Blames Internal Errors for Underperformance. (2023, March 10). Retrieved from https://www.cnbc.com/2023/03/10/the-trade-desks-stock-drops-after-ceo-jeff-green-blames-internal-errors-for-underperformance.html
[9] The Streaming Wars: A Guide to the Major Players and Their Original Content. (2022, December 1). Retrieved from https://www.cnet.com/culture/entertainment/the-streaming-wars-a-guide-to-the-major-players-and-their-original-content/
- The rising demand for ad-supported video on demand (AVOD) platforms such as Roku is expected to boost the over-the-top (OTT) segment, with revenues projected to reach $230 billion globally by 2029, reflecting a significant financial opportunity in the digital advertising landscape.
- The focus on retail media, including facilitating ad buying, targeting, and measurement, can benefit The Trade Desk as this segment grows about 8% annually and adds net new advertising dollars, launching promising prospects for finance and investment in ad tech platforms.
- Artificial Intelligence (AI) continues to revolutionize the digital advertising sector, with capabilities in targeting precision, creative optimization, campaign measurement, and real-time personalization, driving demand for advanced programmatic ad buying solutions offered by both Roku and The Trade Desk, demonstrating potential for profitable investment opportunities in the technology sector.
