Last Friday’s announcement that Magnite is acquiring SpotX from RTL Group for almost $1.2 billion was further evidence of connected TV advertising’s momentum and the combined company’s market opportunity. Considering Magnite’s pro forma financial results with eMarketer’s forecast of CTV ad revenue shows how much potential growth lies ahead for the combined company.

In its release, Magnite said the combined company would have $42 million of pro forma CTV ad revenue ($15.3 million from Magnite and around $27 million from SpotX) in Q4 ’20. Magnite also said the $42 million would have represented around 34% of Q4’s revenue for the combined company. It further said the combined company would have had pro forma revenue for 2020 of $350 million, so applying the same 34% proportion, the combined company would have had approximately $119 million in CTV revenue in 2020.

(It’s also worth noting Magnite said non-CTV video ad revenue was another 33% of the combined company’s pro forma revenue, so the company’s future is very focused on CTV and video.)

To put the $119 million in CTV revenue in context, eMarketer has estimated that total CTV ad revenue in the U.S. in 2020 was $8.11 billion in 2020 with programmatic accounting for around 54% or $4.36 billion of this. eMarketer forecasts CTV ad revenue to grow to $14.1 billion in 2022 with programmatic accounting for 61% or $8.67 billion.

Magnite/SpotX’s revenue comes from platform fees from publishers that use the platforms to help monetize their inventory, whereas the eMarketer estimates are for ad spending, so the two are not directly comparable.

What’s critical is that eMarketer sees strong CTV ad revenue growth ahead and a higher share of it coming from programmatic, which is what Magnite/SpotX specializes in. CTV as a whole has a strong tailwind as more CTV devices are adopted by consumers and more AVOD services launch.

AVOD services and CTV are also benefiting from advertisers’ shifting spending away from linear TV in order to continue reaching younger audiences.  As one example, Tubi has said that its average viewer is 20 years younger than the average linear TV viewer and that 48% of its viewers don’t have pay-TV.

As all of these trends play out, they will accrue to Magnite/SpotX’s benefit.