Digital Advertising’s New Future with PubMatic CEO Rajeev Goel
November 18, 2021 – By Simon Erickson
The digital ad industry is one that moves pretty damn fast.
In just a decade’s time, we’ve seen direct advertisement sales transition to real-time online bidding auctions. We’ve seen ads served on desktops transition to ads served on mobile devices. We’ve seen linear television ad budgets shift to internet-connected TVs. We’ve seen walled gardens built up to massive heights…and then consumer privacy concerns threaten to topple them back down.
To compete in this pedal-to-the-metal industry, you’d better be an innovative company who’s willing to drive fast.
Yet several of these changes are likely here to stay, and they are beginning to impact even the largest companies of the world’s $370 billion digital ad market. Alphabet (Nasdaq: GOOGL) and the company formerly known as Facebook (Nasdaq: FB) are getting pushback for the ways they have tracked or mined user behavior and information. Consumer privacy is a topic that’s instigating some rather heated debates, prompting Apple (Nasdaq: APPL) to transition away from its Identifier for Advertisers (IDFA) and allow its users to opt out of seeing personalized ads on its iPhone devices.
We’re also seeing some changing consumer behaviors. Cord-cutting becomes more pronounced every year, and content creators are hustling to create new over-the-top streaming channels. The advertisements placed on these channels can target individuals rather than broader audiences, meaning the conversion effectiveness and pricing can be significantly higher. The video ad rates associated with reaching this captive TV audience can be 50 times greater than the display ads placed on websites accessed by desktop computers.
So how should investors make sense of these important developments in this fast-changing industry? Are the walled gardens like Alphabet and Facebook now toast? What impact will privacy actually have on AdTech companies? And will Connected TV eventually disrupt this entire industry?
To help us answer those questions, we’ve brought in an expert opinion. Rajeev Goel is the co-founder and CEO of PubMatic (Nasdaq: PUBM). PubMatic is a publicly-traded company who serves as a sell-side platform for programmatic advertising. It helps publishers — who create websites, podcasts, mobile apps, or streaming TV stations — to monetize their content by placing targeted advertisements. Rajeev has been at the helm of PubMatic for 15 years, and he is very excited about the digital ad industry’s upcoming changes.
In this exclusive interview, Rajeev spoke with 7investing CEO Simon Erickson about what’s in store for the digital ad industry’s future. He describes the potential approaches that might replace the third-party cookie as a way of identifying users and placing ads, and also what Apple’s iOS 14.5 important update means for the industry.
Rajeev also describes what was driving his company’s (rather incredible) third quarter results and how PubMatic has been able to achieve 157% a net dollar-based retention rate with its existing customers. He also shares his thoughts about upcoming industry consolidation, how he is approaching the Connected TV opportunity, and a few things investors should specifically be keeping a closer eye on.
Publicly-traded companies mentioned in this interview include Apple, Alphabet, Facebook, and PubMatic. 7investing’s advisors or its guests may have positions in the companies mentioned.
00:00 – Introduction and overview of programmatic advertising
03:29- Digital advertising after the deprecation of the third-party cookie
06:36 – The impact of Apple’s iOS 14.5 update
10:52 – PubMatic’s Q3 2021 results and its differentiated customer focus
14:05 – Connected TV as a lucrative market opportunity
27:55 – A few things investors should be watching
Simon Erickson 00:00
Hello, everyone, and welcome to today’s edition of our 7investing Podcast. I’m 7investing founder and CEO Simon Erickson. And I’m excited today to talk about digital advertising. This is a massive market, it’s $370 billion globally, and it’s growing at double digit rates. And you’re already familiar with the largest players in this space Alphabet (NASDAQ: GOOG/L) and Facebook (NASDAQ: FB). But more and more publishers who are the companies who own the websites or the audio podcasts, or the software applications are working directly with advertisers through programmatic auctions to place ads on their site.
I’m really excited to welcome my guest today, Rajeev Goel is the co founder and CEO of PubMatic (NASDAQ: PUBM). PubMatic is a publicly traded company that’s participating in this space. Their ticker is $PUBM. Hey, Rajeev, I’m really excited to chat with you again here on the 7investing podcast.
Rajeev Goel 00:48
Hey, Simon, great to be back with you again.
Simon Erickson 00:51
Rajeev, let me let me start at the 10,000 foot level here, because you and I actually spoke earlier this year, we spoke back in June. And I’d encourage everybody to look over that conversation kind of lays out kind of the table of what programmatic advertising means, what a supply side or sell side platform is.
But I’d really like to pick up where we left off from that conversation. Because you are moving in a very, very fast paced industry, there’s a lot going on, and just the last five months or so that we spoke, let me start at the 10,000 foot as somebody who lives this every day, what do you think are the biggest changes taking place in digital advertising today?
Rajeev Goel 01:26
Well, we have a couple of, I would say macro level changes that are happening. First is people are spending a lot more time on the internet than they did prior to the pandemic. So I think all of your, all of your listeners can reflect on their own time over the last 18 months. And just think about how much more digital media consumption is there. How many more things that we used to do in the offline world? Are we doing online, right things like banking, buying groceries, right? Seeing your doctor, all of these types of things.
So there’s a really an elevated level of digital consumption. And we don’t think that’s going to change, right, after 18 months of what everybody’s been through, I think that those behaviors are going to stick. So that I would say is first and foremost, there’s just a lot more demand for our types of products and services.
I think the second macro trend is that the nature of advertising in the digital environment is shifting to much more video oriented advertising. So we’re all consuming more streaming TV, more streaming content, we’re watching more videos, right? short clips, long clips, all of that. And so that’s a real, that’s a really strong brand advertising opportunity because when you’re watching a video, obviously, it’s very natural to put a 10 second ad, you know, at the beginning of that, or at the end of that, and brand advertisers, you know, really enjoy that opportunity.
I think the third key trend is around consumer information and privacy regulations, right? And so there’s a huge shift underway around the technology that’s used to deliver relevant ads to consumers. And the good news is that consumers now have a lot more voice and a lot more choice into how their information is being used to deliver relevant ads to them.
And they didn’t have that they didn’t have a voice in that process before. And I think consumers have gotten a lot smarter in the last couple of years about the fact that their information is being used. And so that’s really creating a lot of change in the ecosystem around how do we how do we generate relevant ads.
Simon Erickson 03:29
Let me double click on that Rajeev. That’s a topic I’d love to chat more about, because we keep talking about the deprecation of the third party cookie. And everybody’s got kind of new ideas on how to identify people on the internet in a less invasive way. We’ve talked about Google has got federated learning of cohorts is one option. We’ve talked a lot about universal ID 2.0 that the trade desk has out there seems like there’s not a generally accepted approach for how to track behavior on the internet. But what are your thoughts about kind of the identity aspect of the bigger equation out there?
Rajeev Goel 03:59
Yeah, so you’re exactly right. And the technologies you mentioned are some of the the key technologies that the industry is transitioning towards, perhaps, right. And the key there is that we’re still figuring it out, right? And so what what is happening is these anonymized methods of tracking individuals, again, where the individual had no voice and how their information was being used, those are going away.
So that’s the deprecation of the cookie that you mentioned. In the last couple of months. Apple (NASDAQ: AAPL) also got rid of what’s called the ID for advertising or IDFA. So you saw that, you know, affect the number of companies. And as that transition happens away from those types of targeting mechanisms, there’s a whole variety new portfolio of different mechanisms that the industry is very much figuring out.
And we’ve been innovating in this area for a couple of years now. We have a couple of products identity hub and audience encore. I won’t get into the weeds, you know what exactly those things do. But we are partners with folks like trade desk, other great companies like live ramp, new star, Google with their federated learning cohorts. So we’re we’re at the forefront of innovation in this area.
And I think that’s one of the key breakouts in our earnings release from earlier this week where we demonstrated 54% year over year revenue growth. And a key part of that is we kind of grew right through that Apple IDFA change, we were able to demonstrate that because of our innovation, that the publishers that we work with are generating more revenue than ever before, thanks to deploying some of those solutions that I mentioned earlier.
Simon Erickson 05:40
So even though there’s a lot of uncertainty about the technology itself is PubMatic, as a sell side platform that represents the publishers are you going to be able to just adapt with whichever way the industry goes in this?
Rajeev Goel 05:50
Yeah, that’s exactly what we’re planning for is not only to adapt, but actually to lead the industry. And we think there are great opportunities to do exactly that, you know, digital advertising is a is a very dynamic industry. It’s constantly evolving. And we’re at the forefront of evolving, you know, both on the consumer privacy front, but also how to deliver a more relevant ad to the consumer.
And we see actually great opportunity as things like the cookie and the IDFA go away, to actually create a better foundation that respects consumer privacy and delivers more relevant ads. And I think as we do that, what we see in our, in our own businesses that that utilization of our infrastructure actually goes up, which drives more revenue and more profitability, while our publishers generate more revenue in the process.
Simon Erickson 06:36
I do want to chat about that infrastructure a little later on. So to be continued on that conversation, but you mentioned Apple, right, we’ve got the iOS 14.5 update, where users can actually opt out on iPhone devices or any mobile devices from seeing personalized ads. This is kind of a transition right away from the IDFA, like you mentioned, but are you are you seeing in the first couple of months that that’s been out there that people are opting out? Or what’s the bigger impact of the moves that Apple are taking right now to protect user privacy?
Rajeev Goel 07:05
Yeah, so what will we have seen is generally there’s there’s been reports across the industry that about 20% of people opt in to receiving targeted ads, relevant ads via via Apps in the Apple ecosystem. Now, in our business, we are working with the largest publishers in the world, the most premium publishers, so these are publishers like eBay, or Zynga, or News Corp.
And so consumers tend to trust those brands at a much higher level. And so we see opt in rates that are almost double that industry standard. And so what that means is that, you know, ad dollars ad budgets, those haven’t shrunk, right, those ad budgets are only growing as consumers spend more time online. So those budgets are going after, and chasing a smaller pool of ad impressions in the Apple iOS environment, where people have opted in for relevant ads.
And so because we have a disproportionate share of those opted in ad impressions, we’re able to generate more revenue for our publishers. The other thing that we’ve seen is that, you know, Apple is not the only mobile app platform in the world, right, of course, there’s Android. And then when you get outside of the US, you know, there’s many other devices manufacturers with significant scale. And so what we’re seeing is that there’s been a big shift for advertisers into those other app environments.
Android monetization, for instance, is on the way is on the way up as a result, right. So So advertisers are simply able to say, hey, iOS is one of 10 digital channels that I advertise in. I’ve got other app environments, I’ve got mobile web, I’ve got CTV, I’ve got desktop display inventory. So I have a wide choice of where I put my ad budgets. And so those budgets aren’t shrinking. You know, think about it as water flowing downhill, if you put a rock in its way, you know, the waters still going to get downhill a little just find a different path.
Simon Erickson 09:00
And the large publishers you’re working with, like the CBS, you know, obviously, reporting the news. Zynga, creating games, for the 20% of people that are opting in to see ads. Is there some kind of benefit that those publishers are giving the people that do opt in, is there some kind of special content or something exclusive? If you do, I can say I’m okay with this.
Rajeev Goel 09:19
Yeah, I think in many cases, publishers are developing, you know, use cases or, you know, scenarios or journeys for consumers through those apps, where they do get a benefit, right, and it could be in a game, maybe it remembers the level that you left off at or, you know, points or something that you won, or in a utility app, it remembers your settings.
And then the other benefit for the consumer is there is going to be an ad in that app, right? That’s how that’s the funding equation of an app. Right? The consumer gets free content in exchange. For the app developer developing that app the consumer is going to see an ad. The benefit is that the consumer gets a more relevant ad actually find the thing that’s most annoying is when I get an ad that has nothing to do with something that I’m interested in, right?
I think as a consumer, we want actually the most relevant ads or like content, right? If I’m in market for a car, if I get a car offer, you know, a lease or something else, you know that that’s relevant for the type of car that I’m looking for. That’s actually great information. It’s great content. So I think it’s important for consumers to keep in mind that, you know, when you’re consuming free content, it’s free, because it’s ad supported. And there’s somebody on the other side, like yourself, right, that is developing that content. And the way you pay for it is often through advertising. And that’s okay. And so a more relevant ad, I think, is a positive.
Simon Erickson 10:45
Yeah, sounds really good for the conversion funnel, when you’re actually being better targeted to the people that might want to buy those products. Great point.
Rajeev Goel 10:51
Simon Erickson 10:52
Rajeev, let’s talk a little bit about PubMatic’s most recent quarter that you reported. And full disclosure, I am a PubMatic shareholder. But I thought the results were very, very good. Like you mentioned earlier, your revenue was up 54%, your net dollar based retention rate was 157%. And your adjusted EBITDA margins 42%, which if you knocked it out of the park, and a whole lot of different things, as the leader of this company, though, what in the results of this quarter are you most proud of?
Rajeev Goel 11:18
Yeah, absolutely. Well, you as you said, we had a great, great quarter. And the thing I would highlight is that it wasn’t just one quarter. So in fact, this last quarter was our fourth consecutive quarter of 50% or more year over year revenue growth and 30% plus adjusted EBITDA margins. So you know, as an investor, we often talk about rule of 40. Right, which is the revenue growth rate plus the profit margin. And if, you know, if you’re at a combined metric of 40, that’s great. You know, we’re in the 80, 90, 95 level, you know, for for multiple consecutive quarters.
It’s also the third time this year, we’ve raised our guidance. So we’ve done three earnings reports. And every time we’ve raised our guidance for the year, but now back to your question, what am I most proud of, I think I’m most proud of really two things. One is that 157% net dollar retention metric that you mentioned. And what that means is that a customer who did $1 of business with us a year ago, is now doing $1.57. Right. And so that’s a clear demonstration that our platform is working for our customers. And that’s really important because we have a usage based model, right?
And a usage based model is now more and more known among software investors as really having the highest growth potential. And the reason is that as our customers use our platform more, our revenue is not limited, we participate in that, in that growth. The second thing that I would call out that I’m really most proud of, is actually our hiring metrics. So I think a key part of our success, over the long run is our culture. And key to our culture is that we put the employee experience front and center.
So I’m a firm believer that if people on the PubMatic team wake up every morning, and they’re excited to get to work, get to work maybe in their home, or it could be in a in an office, depending on where they are in the world. But they’re excited to get to work because they’re going to work on interesting problems. They’ve got the tools and resources that they need. They have great colleagues that they can learn from, then we’re going to do great right?
We’re going to build great products, our customers are going to use those products more, and our shareholders and investors will benefit from that. And so, you know, we hired, I think it was a record number of people for us so far this year, around 300 people new coming onto the team. And you know, onboarding people in a pandemic is not easy, right? It’s a lot of remote onboarding, trying to build trust, communication and all of those things. So I’m really proud of the efforts our team has made in that area.
Simon Erickson 13:57
Fantastic job, Rajeev. Win win win all across the board on a lot of those. One of the metrics we haven’t chatted about yet is connected TV growth. This is kind of one of the newer platforms for programmatic advertising, as you’re seeing these linear TV budgets, move programmatic happening through algorithms now.
You guys septupled your CTV revenue in year over year comparisons. I want to double click on that and ask how that’s possible. Are we starting from a small base here? Did you land a really, really large customer? Should we get used to seeing 7x increases year over year? What’s going on with you guys and CTV?
Rajeev Goel 14:29
Yeah, absolutely. So as you said, CTV is a really exciting and new market. We estimate it’s about a $35 billion addressable market in 2025. And you know again as you said, Really, what’s happening is consumers are shifting how they watch you know, TV, how they consume streaming content, right?
We’re going from linear TV to more digital apps, digital streaming, that can happen on a TV hanging on your wall can also happen of course on a on a tablet or a mobile device. And as those consumers are shifting advertisers of course need to shift with them in order to, to engage with consumers in the environments that they’re in. And so we saw this opportunity a couple of years ago.
And we built out a team about two years ago. And we built out a team focused on building new products. And I’ll talk about that product in just a second. And then we brought that product to market last year. And so, you know, we started ramping that up. And we’re up to now 154 publishers in Q3, that are using that product that’s up from 0, you know, a little over a year ago, we started the year at around 118. Publisher. So no, it’s a pretty, pretty quick ramp.
And the reason you see that 7x growth is that our approach is really a unique approach to monetizing that CTV inventory. We’re building the infrastructure for the future. And we think in the future, what’s going to be needed, is really a bid environment, which means instead of manually sold, insertion orders, which is the old way of selling advertising, an auction based approach makes a lot of sense.
And the reason we think an auction based approach makes sense is you think about TV, and you think about connected TV and streaming TV, it’s a pretty different ballgame in that you have a lot more apps and channels and the digital connected TV world. And you have 10s of 1000s, probably eventually hundreds of 1000s of advertisers. Whereas you know, if you if you’ve watched TV lately, it’s the same, you know, several 100 to 1000 advertisers, right?
It’s pharma companies, it’s automotive companies, you know, it’s some some of the biggest brands out there. But the beauty of digital is that actually small and medium businesses, large advertisers, small advertisers, all different types of advertisers can participate. And the only way to I think efficiently run that kind of a environment is through an auction.
And so we’ve built what we think is the really the bid marketplace of the future. And it’s a it’s an evolution, and it’s a transition. So not not everybody is stampeding towards it overnight. But you see in the 7x growth that we’re we are seeing good growth, and we think it’s going to be a significant part of the business in the years ahead.
Simon Erickson 17:13
That is fantastic. Rajeev, could you comment at all about what the the ad rates you’re seeing on CTV our cost per 1000 impressions and how that kind of compares to digital ads or podcasts audio Ads?
Rajeev Goel 17:13
Yeah. So that the in the CTV space, it’s probably the most premium, you know, ad inventory. And so the CPMs can be anywhere from $20 to upwards of $100 $150. Yeah, exactly, per 1000. That’s exactly right. CPM. And so that’s a pretty significant, you know, obviously, pricing.
In contrast, you know, podcast ads are typically in the high single dollars, you know, single digit dollars to maybe teens, and then a traditional display ad, right, so that banner that you’ve seen, you know, when you’re you’re reading the news or something on your laptop, that will typically sell for something like $2. So you can see how valuable that that CTV inventory is, and and part of the reason why I think that’s great for it to have that high value is, the higher the value, the lower the ad load, meaning the less ads a consumer needs to see. Because that way, then a content creator can recoup the investment needed to create the content that consumers want to see.
Simon Erickson 18:32
And makes a lot of sense, your revenue model is usage based, you went right along with your customers because they’re actually placing ads, you guys are taking a percentage of that. Certainly a higher ad rate and CTV is a benefit for both of those.
Rajeev, we’re seeing a lot of competitive activity in CTV everybody wants to go where the money is, for obvious reasons. But we’ve seen a lot of your competitors kind of go out and aggressively acquire other companies to try to get the CTV opportunity to get their market share higher.
We haven’t seen that at least yet with with PubMatic. It seems like you guys are going at this organically so far. Like you mentioned your own product that you developed last year. Do you have any plans of looking to acquire into CTV? Or do you want to continue on the path that you’re on right now?
Rajeev Goel 19:14
Yeah, well we are constantly evaluating the market for m&a opportunities. Could be CTV, or it could be other things. And the way we think about it is, you know, we’re very open to technology opportunities that accelerate our roadmap. And so if there’s something you know, that we’re building, and we think, hey, it’s going to take us two or three years, and we can pull that timeframe forward. We’re very open to that. It could also be something that takes us into a new geographic market where we don’t have presence today.
So there’s, I think, a couple of different vectors of where m&a could could make sense. That being said, you know, I’ll go back to the comments I made about culture. You know, we prize our culture very much. And I think we also are quite strong at technological innovation. If you look at our track record of success, high growth, high profitability. And we’re organically innovating and creating all of the products that are in our portfolio today.
So we have a pretty high bar then for m&a, right? So something’s got to be, you know, I think, really special and really compelling for us to move forward on that basis. But we’re very open to any of those opportunities.
Simon Erickson 20:21
Perfect. And a question that we received, actually from someone following our 7Investing audience on Twitter was asking how do you define your addressable market? What percentage market share do you have? And just to provide a prop for that? I saw a recent comment from you that you said that you thought you were at about two to 3% market share in terms of non walled garden programmatic advertising. At the time of your IPO. Where do you think PubMatic stands in the bigger picture right now?
Rajeev Goel 20:45
Yeah, so we, we define our addressable market as programmatic advertising, that sits outside of the walled gardens, right? And walled gardens are, you know, companies like Google and Facebook and others, and we think that’s about a $40 to $50 billion industry. And that’s growing somewhere in the in the low single, sorry, low double digits, you know, 10 to 15%, year over year, again, this year has been more elevated, you know, probably north of 20%, given some of the the COVID dynamics.
So yeah that’s exactly right. I mean, when when we went public, which was almost a year ago, about 11 months ago, we estimated we had about a two to 3% share of the market. So you know, pretty small, but our goal is to grow our share of the market by 10x, in the years ahead. So we think there’s a long runway of opportunity, a lot of growth ahead of us, as that market continues to grow. So I think if I look five, seven years out, it’s probably a $75 to $90 billion market opportunity. And we think we could be a double digit market share player innot too long.
Simon Erickson 21:53
You’re doing a fantastic job, congratulations on the execution already, even since being a publicly traded company. Now, let’s click on something else that you mentioned earlier, which was about you own your own infrastructure. That’s a different approach than a lot of the other players are doing out there.
You guys have data centers all across the world? Why did you choose to go this path rather than working with an Amazon Web Services? Or a Google that that’s taking care of all the hosting all the infrastructure for you?
Rajeev Goel 22:17
Yeah, absolutely. The conventional thinking, I think certainly in the US and around the world is to use public cloud providers, right, the kind that you just mentioned. But we think that digital advertising is quite unique. And it’s unique in two ways. One is transactions have to be processed in a fraction of a second. So when a consumer is looking at content, they don’t want to wait for the ad to show up that had, you know, needs to be there. And it needs to provide a high quality experience. So real time is is number one.
Number two is there’s a lot of data that’s generated. There’s data about the consumer, as we talked about earlier, there’s data about the website or the app that the consumer is looking at. And then there’s data from the advertisers who’s bidding at what price points, what kind of ad are they trying to show. And so on our platform, we’re processing well over 200 billion ad impressions per day.
We generate about three petabytes of data on a daily basis, from over a trillion advertiser bids each day. So just staggering kinds of numbers. And so we think that by owning our own infrastructure, because of those unique dynamics of real time and data intensive, we’re able to generate better outcomes for our customers. And we’re able to do it far more efficiently.
So in terms of better outcomes, when we own the infrastructure, we own the network, the hardware and the software layer, right. So if you think about what’s in a data center, right, there’s networking equipment to connect you to other parties, buyers, advertisers, the consumer, there’s hardware that the software is going to run on. And then you know, there’s our software that that’s running.
When you’re in public cloud, you only control the software, right, the hardware, and the network is provided by somebody else. So I liken it to you’re fighting a battle, and you’ve got, you know, two legs and a hand tied behind your back, right, if you’re in public cloud, so why wouldn’t you want to also have control over the network, and the hardware layers so that you could speed things up, you can process things more efficiently, you can process more data.
And so we we made this shift about 10 years ago in our business, to own our own infrastructure. And I got to say that obviously paid off very well. And again, you can see it in terms of the quality of the outcomes we provide our customers that’s in our net dollar retention rate 157%. And then you can see the efficiency in terms of our EBITDA margins, as well as our net income and our operating cash flow, right?
So we’ve got you know, 10 to 20% net income margins. We talked about the the EBITDA margins over 40% last quarter, but over 30% for four quarters in a row now, and we’re generating significant cash. So you can see, you know how it’s a very efficient, efficient play. I think you get better outcomes and you create more efficiency. I mean, that’s really the best of both worlds.
Simon Erickson 25:11
Could you speak a little bit more Rajeev about the the outcomes and the insights that you’re getting out of that I understand the processing part of it, you want the bids, and the auction has to take place as quickly as possible, no doubt about that. But are you learning more about what’s winning the bids for customers, and that’s improving or optimizing over time?
Rajeev Goel 25:27
Yeah, so I’ll give you a couple of examples of it. So in terms of better outcomes, we we have a what’s called a private connection between our equipment in different data centers, and some of the buyers that are bidding into our platform. And when we create that private connection, you can think about it like, it’s like the carpool lane on the highway, right?
So instead of the traffic flowing on the regular road, we have a special lane, that’s only for us. And so that means we can get more bids back for each ad impression. And if you can get more bids, in an auction based environment, basic economic theory is you’re going to have higher liquidity, higher pricing, that means our publishers are going to get more revenue. So that’s one example.
Another example is that on that data processing front, so again, we have petabytes of data that are being created on a daily basis on our platform through all of these impressions that we’re auctioning. And, of course, you can create better outcomes if you’re able to process and analyze more data, right?
And this could be data about what are the bidding patterns for buyers, so you can suggest pricing to them? Who might be interested in a particular ad impression, what type of ad might be most relevant to a particular consumer. So if we’re able to squeeze the processing time down, we have about 150 milliseconds when an ad hits our platform, right?
So think about it as a as a race, we can squeeze the processing time down to a smaller subset of that 150 milliseconds, then we have more time left to analyze the data. Right. And if we have more time to analyze the data, then we can probably get to a better outcome.
Now for competitors are taking more time and processing because they don’t own the network and they don’t own the hardware, they have less time to process the data. So they’re able to do less intelligent things. And so we think, again, that by owning the infrastructure, we’re able to drive better outcomes because we’re able to analyze and process more data for each and every ad impressions on our platform.
Simon Erickson 27:26
Fantastic, Rajeev. Well, we’ve chatted about quite a bit, we talked about the quarterly results, again, look fantastic 150% dollar based retention rates, we talked about kind of a top line growth of digital advertising done about the CTV opportunity.
My last question for you is open ended for investors who are interested in getting access to digital advertiser interested in this space, there are a couple of things that we should be watching anything we didn’t discuss, particularly on this call, but anything else you’re kind of focused on in the next couple of years?
Rajeev Goel 27:55
Yeah, I think the the main thing I would say is that the industry is really consolidating down to fewer larger platforms. I think we see that in in a variety of sub sectors within digital advertising. But as a result of a variety of different trends. So we talked a little bit about privacy regulation earlier. There’s also a shift towards more efficiency broadly, you know, is as fast as digital advertising is growing, the dollars are getting so big for some of the largest advertisers and agencies, that they want to make sure that their operations are very efficient.
And so as a result of a variety of these different trends, what we see is that the industry is consolidating at a rapid rate. And I think the the smart investors out there, as they do their research, it should be pretty straightforward to identify who are the companies? What are the management teams? What are the platforms? Who are the technology innovators, that they think are going to be around, you know, five or ten years from now? And I think that’s a useful way to analyze the market and decide, okay, who should I invest in and who should I bet on?
Simon Erickson 29:01
Well, once again, Rajeev Goel is the co founder and CEO of PubMatic ticker on that is $PUBM a leader in the sell side. It’s a sell side platform in the digital advertising space. Really a fascinating conversation. So great to catch up with you again, Rajeev. Thanks for being a part of our 7Investing podcast today.
Rajeev Goel 29:17
Thanks Simon great to be with you again, really enjoyed it.
Simon Erickson 29:20
And thanks, everybody, for tuning into this episode. Once again, we are here to empower you to invest in your future. We are 7investing!
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