1 Top Advertising Tech Stock to Buy, 1 to Sell

The digital ad industry continues to gobble up share of the massiveglobal marketindustry. Overall annual advertising spend is expected to reach $1 trillion within the next five years or so (up from about $780 billion this year). Digital advertising is climbing at a faster rate, though, and might account for at least three-quarters of total ad spending (compared to close to two-thirds today).

Despite this fast growth, though, the digital ad marketplace is undergoing rapid change. Publishers and marketers alike are trying to navigate changes Apple has put into place, as well as upcoming changes at Alphabet's Google. Winners and losers are being created this year as a result.

After second-quarter 2022 financial updates, it looks like one emerging winner is PubMatic (NASDAQ: PUBM), while its peer Magnite (NASDAQ: MGNI) is faltering. Here's why I'm buying more PubMatic, but have put Magnite on the chopping block.

PubMatic: Winning big among publishers

PubMatic is a small sell-side advertising platform -- meaning it helps publishers list advertising spots for sale. (For comparison, The Trade Desk is a demand-side platform, which works with marketers that want to buy advertising spots.) PubMatic was built to make ad selling programmatic, or automated, which helps both publishers and marketers get more for their money.

The problem with the sell-side of the digital ad space is that it's crowded with competition (versus the demand-side, which is dominated by end-to-end platforms like Google, and in which The Trade Desk is making big inroads with its programmatic platform for marketers). Publishers also often work with multiple sell-side platforms to try to maximize their ad revenue. In this environment, PubMatic has performed well with its focus on modern programmatic advertising software that can be used for all sorts of formats, from the web to social media to TV.