The Trade Desk’s still-under-wraps connected TV project is all about data and hedging against the potential to lose data signals in the future, according to industry experts. The Trade Desk has been working on an operating system for connected TV devices, Ad Age has confirmed, and the surprise strategy could be a way to understand viewers, and their data, for more effective advertising.

However, The Trade Desk, the demand-side platform that brands and agencies use to manage their digital ad buys, must be careful not to alienate advertisers who want it to remain a neutral player in the ad markets, a position that could be compromised by running an operating system on connected TVs, ad tech leaders told Ad Age.

It appears The Trade Desk wants to carve a new spot for itself in the devices that run connected TV apps, giving it a more strategic position in CTV ad markets. The Trade Desk has been tight-lipped about its TV plan, which was first reported by Lowpass, a newsletter that covers smart TVs. Two advertising and tech leaders confirmed The Trade Desk’s plan with Ad Age on condition of anonymity. The Trade Desk is building the platform on Android’s open-source software, and could launch it next year, one of the sources told Ad Age, on condition of anonymity.

A TV operating system is an interesting move for the DSP, which needs to develop a better moat for its ad business, according to advertising experts.

“The Trade Desk is positioning itself to offer more control and transparency over ad delivery on CTV, aiming to create a more optimized and direct supply chain,” said Frank Sinton, who founded Beachfront, the connected TV sell-side ad server.

The Trade Desk declined to comment for this story.

The Trade Desk plays a large role in programmatic advertising, and marketers use its demand-side platform to buy ads on the open web, on connected TVs, through retail media networks and on other channels. While The Trade Desk is insistent about sticking to the buy side of the market, focused on serving advertisers, it has developed closer ties with web publishers and streaming media giants.

There have been rumblings from critics of The Trade Desk, who claim it has become too cozy with publishers. They point to the fact that The Trade Desk is building ties to the supply side through initiatives such as OpenPath, a program that gives its DSP direct access to top digital inventory through deals with publishers.

Soon, a TV operating system could give The Trade Desk better access to connected TV ad inventory, and more data, such as ACR data, which is information on viewership trends. It also could put The Trade Desk into more competitive waters with partners and ad tech companies on the sell-side of the ad markets, supply-side platforms, Sinton said. 

“This initiative would put The Trade Desk in direct competition with some of TTD’s biggest CTV suppliers such as Roku, Amazon, Vizio, LG and Samsung,” Sinton said. “It also disintermediates the ad tech SSP ecosystem. However, most CTV buyers are heavily relying on TTD for CTV inventory, so there isn’t a lot that the suppliers can do.”

Hard path

Still, breaking into the smart TV space will be difficult, Sinton said. Some have speculated that The Trade Desk could look to acquire a company. Prominent ad tech advisor Terence Kawaja even suggested The Trade Desk buy Roku.

“Frankly, I am surprised The Trade Desk isn’t looking to acquire, building organically this late in the CTV market will be very difficult,” Sinton said.

Connected TV is the fastest-growing segment in The Trade Desk’s business, according to its quarterly financial reports. The Trade Desk’s second-quarter revenue jumped 26% from a year earlier, to $585 million, and the company stated that its connected TV growth was accelerating. All video, which includes connected TV ads, made up more than 40% of its ad mix.

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However difficult it may be to succeed, the fact that The Trade Desk is trying to develop its own operating system is a sign of the direction of connected TVs and the ad markets that support them. There are fears among data-hungry advertisers that CTV could face the same restrictions that have come to the wider internet, with new privacy constraints that limit the sharing of data.

In some ways, The Trade Desk’s move is reminiscent of how Meta has taken multiple steps to get out from under Apple’s control on mobile. Apple has made changes to data-sharing through its iPhone and Mac operating systems, restrictions that affected the flow of digital advertising on apps. Meta even started developing mixed-reality devices in part to control the operating systems and to build a next-generation computing device where Apple did not hold sway.

In connected TV, there already are restrictions, for instance, in Netflix’s new advertising business. The Trade Desk and Google’s Display and Video 360 DSP both recently started buying ad inventory on Netflix. But the streaming giant has a well-known aversion to sharing internet IP addresses as a signal for targeting ads. IP addresses are among the data available to operating systems, according to ad tech experts.

“It’s a fairly critical signal to target effectively, as well, as measure effectively,” said Matt Larson, VP of media and connections strategy at Collective Measures, a media and analytics agency.

Identity and inventory

The top advantage to owning the OS is “identity,” said a top executive from a rival ad tech platform. “By running at the OS level they would gain increased access to data,” the ad tech exec said, on condition of anonymity.

“As the OS, you gain access to the device’s hardware address, network signals, external IP, a direct-to-consumer user account, if they sign up,” the exec said, “and [they’re] able to view every video the user watches on the TV, whether it is through satellite, cable or streamed via Wi-Fi.”

Another potential benefit for The Trade Desk: It would unlock direct access to connected TV ad inventory through control of the operating system, “substantially boosting profitability,” Sinton said. The owners of CTV operating systems get 10% to 30% of the sellable inventory on the apps, Sinton said.

The Trade Desk has likely been so secretive with its TV platform plans because of the potential to ruffle feathers among advertisers, according to Larson.

“The Trade Desk has always hung its hat on its independent status,” Larson said. “[The operating system] makes them more horizontally integrated in the ad tech game where previously they haven’t been.”