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October 16, 2023
Mark Walker
Chief Executive Officer
Direct Digital Holdings, Inc.
1177 West Loop South ,Suite 1310
Houston, Texas 77027
Re:Direct Digital Holdings, Inc.
Form 10-K for Fiscal Year Ended December 31, 2022
Filed April 17, 2023
File No. 001-41261
Dear Mark Walker:
            We have reviewed your September 18. 2023 response to our comment letter and have the
following comments.
            Please respond to this letter within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe a
comment applies to your facts and circumstances, please tell us why in your response.
            After reviewing your response to this letter, we may have additional comments. Unless
we note otherwise, any references to prior comments are to comments in our August 17, 2023
letter.
Form 10-K for Fiscal Year Ended December 31, 2022
Notes to Consolidated Financial Statements
Note 2 - Basis of Presentation and Summary of Significant Accounting Policies, page 73
1.We note your response to comment 2 with regard to buy-side advertising. You state you
offer “managed advertising campaigns” to advertisers through Huddled Masses and
Orange142. Your Huddled Masses website states you offer web design, marketing/sales
integration, conversion rate optimization, analytics audits, creative/copy development, and
media planning and buying. In addition, your response refers to “consulting
services.” Please clarify whether these offerings are components of “managed advertising
campaigns” or separate offerings. If separate offerings (or available as separate offerings),
it appears that your revenue recognition accounting policy should address measurement
and recognition of each material offering type. Please advise.

 FirstName LastNameMark Walker
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 October 16, 2023 Page 2
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Direct Digital Holdings, Inc.
October 16, 2023
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2.Please tell us whether, and the extent to which, the buy-side business derives revenue
from programmatic purchase of advertising by advertisers not under a “managed
advertising campaign.” In this regard, we note your disclosure on page 73 that you offer
your buy-side service on both a fully managed and self-serve basis. If so, please provide
us with your principal versus agent assessment for these transactions, including your
consideration of the definition of control (ASC 606-10-25-25), how control is obtained
(55-37A), and, if evaluated, the indicators of control (55-39). Please also tell us relevant
contractual terms (rights and obligations) between you and both the end consumer
(advertiser) and the other parties involved in providing the specified goods or services for
these transactions.
3.We note your response to comment 2 with regard to sell-side advertising. You state your
contracts with publishers (i.e., suppliers):

•provide you with “the right to sell” ads “in exchange for a fixed rate for digital ad
units sold.”
•you are required to pay the publisher “a fixed rate” for any ads you sell and “that rate
is unaffected by the price paid by the advertisers.”

The former suggests your consideration does not vary based on the final price set in the
marketplace while the latter suggests it does. In addition, on page 51 of your annual report
you state, “we pay publishers a fee, which is typically a percentage of the value of the ad
impressions monetized through our platform.” Please clarify how your consideration is
determined and whether your use of the term “rate” with regard to the amount you and the
publisher retain means an absolute amount or a rate such as a percent of the auction price.
4.With regard to sell-side business, you state you control the digital ad units before they are
transferred to advertisers because your contracts with publishers “permit [you] to sell the
digital ad units” to advertisers. Please tell us why you believe a right to sell provides you
control based on the definition of control (ASC 606-10-25-25) and the explanation of how
control is obtained (55-37A). Please also tell us whether your right to sell is exclusive for
the publishers you serve.
5.With regard to the sell-side business, you state you are “responsible for fulfilling the
promise to the customer” and you “take responsibility for the acceptability of the digital
ad units.” Please tell us what promise you are fulfilling and explain how specifically you
are primarily responsible for fulfillment. As part of your response, please tell us what your
contracts and other material (such as marketing) say about primary responsibility, whether
you have discretion in selecting the supplier (i.e., publisher) for a requested ad placement,
whether you are primarily responsible for the performance of the publisher, and any other
analysis relevant to the assessment of primary responsibility for fulfillment under 55-
39a. Provide representative sell-side agreements with publishers and advertisers if they
may be helpful in illustrating relevant contract terms.
6.With regard to the sell-side business, you state you “purchase” advertising inventory from

 FirstName LastNameMark Walker
 Comapany NameDirect Digital Holdings, Inc.
 October 16, 2023 Page 3
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Direct Digital Holdings, Inc.
October 16, 2023
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publishers to sell to advertisers. Please clarify whether the “purchase” and “sale” take
place instantaneously at the time someone loads a web or app page and you and other
intermediaries find an advertiser desiring to place an ad for that individual. We note in
your response you state you do not have inventory risk and, on page 61 of your annual
report, that your sell-side platform “allows publishers to sell, in real time, ad impressions
to buyers.” Therefore, please clarify whether you “purchase” the ad inventory or instead
facilitate its sale to the advertiser.
7.With regard to the sell-side business, you state you have discretion to establish minimum
prices. You also state you enter into master service agreements with publishers which,
among other terms, set a fixed rate for content to be sold on Colossus SSP. In this regard,
it appears that the minimum prices may be set by negotiation between you and publishers
and that you can sell ads on behalf of the publisher-customers so long as the minimum
price is obtained. Please confirm our understanding. In addition, because ads are sold
through bids at auction, actual prices appear to be set by the market. If minimum prices
are set by negotiation with publishers and final prices are ultimately set by the market,
please advise why you believe you have discretion in pricing under 55-39c.
8.You disclose on page 11 of your annual report, “We charge a standard fee to our
publishers for providing access to a host of media buyers on a daily basis.” This appears to
differ from transaction-based sell-side revenue generated by specific ad
placements. Please quantify this revenue for us.
9.Please tell us whether, and to what extent, you recognize revenue on transactions
involving both your buy-side and sell-side platforms and, if so, how you recognize
revenue on such transactions (principal versus agent).
            Please contact Amy Geddes at 202-551-3304 or Lyn Shenk at 202-551-3380 if you have
questions regarding comments on the financial statements and related matters.
Sincerely,
Division of Corporation Finance
Office of Trade & Services