• by Wayne Friedman , May 16, 2024

Netflix's programmatic advertising deal with demand-side platform The Trade Desk is estimated to yield major revenue results for the streaming platform and the DSP.

[It] "speaks to the increasing importance of Trade Desk within the AVOD [advertising-supported video on demand] ecosystem,” says Ben Swinburne, media analyst for Morgan Stanley.

Morgan Stanley estimates that 10% share of Netflix advertising dollars for Trade Desk would add around 2% of the DSP’s 2026 revenue. It estimates Netflix will generate over $3 billion in advertising revenue by 2026 for its “Basic With Ads” subscription option.

“The potential for a Netflix/Trade Desk partnership had been a major point of debate among investors,”  writes Swinburne, “as bears believed a streaming platform at Netflix’s scale might attempt to circumvent third party ad tech entirely.”

This news comes after major deals by Trade Desk with other streaming platforms for their advertising inventory -- Walt Disney, NBCUniversal, and Roku -- that could result in major changes for how TV/streaming platforms sell their advertising.

For example, he notes that Walt Disney recently set a goal of selling 75% of its inventory programmatically, which means a potential of 75% of inventory for sale by The Trade Desk.

Swinburne also weighed in on the effects of the deal on Microsoft’s Xandr programmatic operation -- a partnership with Netflix since its ad-option launch in November 2022. 

Morgan Stanley estimates Trade Desk revenue to grow 25% to $2.5 billion in 2024 to total advertising gross billings rising 26% to $12.1 billion. 

Netflix made the announcement of the partnership at its upfront event on Wednesday, along with programmatic ad deals with Google DV360, and Magnite, a supply side advertising platform.

With regard to the Trade Desk deal, Michael Morris, media analyst at Guggenheim Securities, said: “While we expect the Netflix relationship to have a modest near-term financial impact (we forecast 2024 ad revenue of $1.2 billion for the streamer), the partnership reflects a meaningful long-term opportunity and serves as yet another nod of approval, this time from the global SVOD leader.”