Moving MNTNs

We’ve got a real IPO candidate, folks. We read the MNTN S-1 so you don’t have to.

Moving MNTNs

Disclaimer: I am on the board of directors of Vibe.co, a competitor to MNTN.

This is pretty exciting. While the current crop of public ad tech companies are getting absolutely shellacked in the recent bear-ish market, we’ve for a newcomer looking to IPO. It’s MNTN — formerly known SteelHouse — with Blake Lively’s husband, Ryan Reynolds, as CMO. This is what the Marketecture newsletter was made for! Let’s go.

We read the S-1 so you don’t have to

The S-1 is out, read it if you’d like. There’s also a different S-1 for a SPAC with the ticket symbol MNTN, so don’t get confused.

This isn’t a financial newsletter, but here are the business basics:

Not too shabby! Growing 27.9% YoY and getting more profitable. On revenue, a couple of interesting points to think about:

They record net revenue, in the same way The Trade Desk does, and don’t disclose the gross spend amount, lest customers suss the take rate. Like StackAdapt (which we covered in DSP Segmentation ), MNTN largely sells to smaller advertisers who are unlikely to have the desire or realistic option to run trading themselves, and thus are not very take rate sensitive. MNTN is essentially promising ROAS, not low prices. As a result, take rate is likely very high, maybe 50% or more. This would put MNTN’s gross spend at $450 million/year, not small but also not in the same ballpark as many of the tier 2 DSPs like Yahoo, Beeswax, Basis, Simpli.fi, StackAdapt, etc.

On the balance sheet the company records gross receivables and payables since they owe these amounts to exchanges. Payables were $63 million at the end of 2024. If you assume they pay net 60, that implies around $400 million in gross spend. (once again, I must remind you this is not a financial newsletter).

Supply side

One dominant factor in the CTV business is the relationship with publishers and broadcasters. Quality CTV is largely not available on the open web, so any vendor that does business in the CTV market needs to spend time and money building relationships with the suppliers in order to avoid paying too much for a bunch of junk.

The S-1 has an interesting statement about this, below:

I find this interesting because MNTN is essentially saying they are not subject to some of the common channel conflicts that are present in CTV, where inventory is restricted, or placed at above-market floor prices to avoid sales channel conflicts with linear. These, according to MNTN, are new advertisers, so the revenue is incremental. What is left unsaid here, is that the algo probably heavily weights to remnant and less desirable inventory, which is probably fine with everyone involved.

Attribution

I think at this point we all know that QR codes in CTV ads are great, but are not going to be anywhere near the dominant form of conversion or attribution, so something else using data magic is required.

When I interviewed MNTN’s CEO ($$) back in 2022 he told me that the attribution was essentially pixel-based view through using IP addresses as the backbone, with maybe some cross-device baked in. This still seems to be the case, see the quote below:

The obvious weakness of this approach (which is largely true for all of these CTV buying platforms) is that correlation ≠ causation. Which belies the point, above, about potentially lower quality inventory driving higher margins.

Competition

Aside from the boilerplate “We operate in an intensely competitive market” risk factor, the document is fairly devoid of realistic mentions of competition. There are no mentions of Google, Meta, Amazon, The Trade Desk, TVScientific, Vibe, etc. There are mentions of expanding inventory from Amazon Prime, but no discussion of why that inventory is not available for purchase by MNTN’s customers. No mention of YouTube.

In their defense, I bet most of their customer acquisition is not competitive. The challenge isn’t to move an advertiser off another buying system, it is to convince the advertiser that CTV is worth budgeting for at all. These new advertisers are what’s driving growth in all the competitors in this nascent space.

Lightning round

Here’s some stuff in the S-1 of interest in no particular order:

• “92% of our customers have never advertised on TV before”

• 2,225 CTV customers, up from 1,426 in 2023. Back of the envelope — if gross media is $450 million, that’s ~$200,000 in media spend per customer. Seems high for SMB, so probably there’s a power law curve and some of these “SMBs” are spending well over a million/year.

• The S-1 lists political advertising regulation as a potential risk factor, but does not give any indication of how much politics boosted 2024 results (my guess is a LOT).

• The projected serviceable addressable market (SAM) is $60 to $120 billion.

• Ryan Reynolds name is not in the document, and neither is Hugh Jackman.

Reading list

• TTD earnings miss – two weeks later (down 39% YTD)

• DV to acquire Rockerbox for $85m in cash (link)

• Infosum trolls with “Ramp down” OOH ads around Liveramp’s Rampup event in SF (link)

• Lauren and team get uninvited to Rampup (link)

• Two short sellers have come for Applovin (link) and (link)

• Perplexity teasing a new browser called Comet (link)

• Microsoft is testing a free, ad-based version of Office in certain countries (link)

• Amazon is testing video ads in Rufus, its AI shopping assistant (link)

• Amazon testing new program for pubs - paying them for sending traffic via commerce content posts (a step above being an affiliate) (link)