Connected TVs like Roku, Chromecast, Fire TV and others were originally used mainly for watching ad-free SVOD services on the big screen. But as the sheer number of ad-supported premium video apps available on CTVs has exploded, consumption has broadened considerably. All of that viewing is creating a growing volume of highly-desirable CTV ad inventory. Monetization of this inventory is starting to show up in public company financials and is likely to continue for the foreseeable future.

Roku is one company that is benefiting as it diversifies from being primarily a device-maker to an enabler of CTV ads and a content aggregator. Roku’s Q1 ’18 results, with Platform revenue (which includes ad revenue) exceeding device sales for the first time, was evidence of CTV ads’ impact on the company. Yet another data point came last week as The Trade Desk, a demand side platform that powers brands’ and agencies’ digital advertising, said Q1 ’18 CTV ad revenue was up 21x vs. Q1’ 17 (although no doubt from a very small base).

The Trade Desk didn’t break out how much of its Q1 revenue of $85.7 million revenue was due to CTV, but its Founder, Chairman and CEO Jeff Green spent a lot of time on the earnings call explaining his bullishness on CTV advertising. His front-line insights are valuable for anyone focused on the broader dynamics of where TV advertising is headed.

Green said “there is nothing more exciting in media than what is happening in Connected TV,” primarily because of its capacity for more precise audience targeting. Green noted that “in traditional linear television, targeting granularity is almost impossible to do because most linear TV is bought and sold nationally.” This is of course one of the challenges that OpenAP is trying to address. Green cited the example of its client Mazda, which built a CTV campaign to successfully reach its target audience.

But it’s not just enhanced targeting that is attractive to prospective CTV advertisers, its enhanced reach. Specifically, Green said that 9 Nielsen studies it commissioned revealed an average of 41% of The Trade Desk’s audience was unique to CTV and beyond the reach of ads on broadcast and cable TV.

This points out one of the most critical upsides of CTV: as viewers (particularly younger ones) have become cord-cutters or cord-nevers, they have leaked out of the ad-supported TV world entirely. This creates a huge challenge for major brand advertisers who have traditionally been reliant on TV ads to reach all age groups. CTV ads allow big brands, like Mazda, to use TV advertising once again for younger audiences, but do so cost effectively.

Throughout the call, Green also noted that data is becoming more central to planning CTV and non-CTV campaigns. Data is of course the critical ingredient to programmatic, which Green sees more and more advertising migrating to.

What emerges is the beginnings of a virtual cycle: More viewers cutting the cord and relying on ad-supported video apps, leading to more viewers outside the reach of linear TV and escalating volume of high-quality CTV inventory. With more inventory available and a persistent appetite to reach this audience specifically, CTV ads and their fulfillment programmatically with data continues to grow.

There’s one more aspect to this dynamic, which is the growth of skinny bundles and their ability to drive OTT-delivered premium video, which means even more CTV inventory for DSPs like The Trade Desk to access. Skinny bundles like YouTube TV, Hulu with Live TV and fuboTV have all publicly discussed their intention to play a role in driving ads in their services, where most viewing is on CTVs.

It’s still early days for CTV ads, but Roku’s and now The Trade Desk’s Q1 performance shows how powerful this trend is already becoming. I see it only gaining momentum going forward.

(Note, at our 8th annual Online Video Ad Summit on June 12th, the session, “Connected TVs’ Ad-Supported Future” will explore all of these topics. The panel includes Rich Calacci (Pluto TV), Jim Keller (Hulu) and Seth Walters (Roku), with Colin Dixon (nScreenMedia) moderating. Save now on early bird discounted tickets and double your chances of winning a 55-inch 4K Roku TV!)