Read on Twitter
Some thoughts on Trade Desk, which is up 1,683% since going public in 2016, or 105.49% CAGR. $TTD
The Trade Desk provides a self-service platform for ad buyers. TTD integrates with major inventory, publisher and data partners, providing ad buyers reach and decisioning capabilities.
TTD supports ads on Connected TV (CTV), Video, Mobile, Audio and Display on smart TVs, computers, phones & tablets.
Their clients are ad agencies and other service providers for advertisers. TTD makes $ by charging clients a platform fee based on a % of their total spend.
Their clients are ad agencies and other service providers for advertisers. TTD makes $ by charging clients a platform fee based on a % of their total spend.
The Trade Desk was founded on the hypothesis that virtually all advertising media on the planet would eventually be sold using programmatic data-driven techniques (i.e. the use of software to buy advertising) and TTD positioned itself early for this proliferation of
real-time programmatic media buying across many different channels. The move is still in its early innings.
Media is becoming increasingly digital, so decisions based on consumer and behavioral data are more prevalent. The audience has become fragmented, as more apps, media players and websites present a challenge for advertisers trying to reach a large audience.
And the number of devices used by individual consumers has increased. Both these fragmentations are opportunities for tech companies like TTD to consolidate and simplify media buying options for advertisers and their agencies.
Value add of having massive user data: Data vendors can collect user information across many Internet properties and connected devices, aggregate them and combine with other data sources. This data is then made available within seconds based on specific parameters.
This real-time feedback on consumer reactions to the ads increases the value of programmatic advertising. Inventory owners know more about viewer interests and viewers receive more relevant ads.
Advertisers are thus able to bid on and purchase the advertising inventory they value the most, pay less for advertising inventory they do not value as much and avoid inventory that doesn't interest them – all based on the data TTD provides them.
So essentially, The Trade Desk allows advertisers to programmatically buy ad spots (demand-side platform), utilize data to provide targeted ads to individuals (data management platform) and plan, review and optimize ad campaigns (media, planning and attribution).
Growth strategy:
-increasing their share of existing clients’ digital advertising spend. Many advertisers are moving a greater % of their advertising budget to programmatic channels. This allows them to capture a larger share of the overall advertising spend by existing clients.
-increasing their share of existing clients’ digital advertising spend. Many advertisers are moving a greater % of their advertising budget to programmatic channels. This allows them to capture a larger share of the overall advertising spend by existing clients.
-expanding omnichannel capabilities. They continue to innovate in technology and data. They innovate in tech to improve their platform and enhance their features and functionalities and view data as one of their key competitive advantages.
They’ll continue to invest resources in growing data offerings, both from 3rd party providers as well as proprietary data.
Ad-supported Connected TV could grow from 2B$ to 150B$ over the next 20 years. Mobile and programmatic were winners over the last decade and CTV programmatic will be the winner in the next decade. Connected TV refers to any TV that can be connected to the internet to access
content via tech. (ex: Roku or Fire TV stick). Video/connected TV is an attractive long-term opportunity for TTD too. Viewership is fragmented across different devices and video services are making it harder for advertisers to maximize their audience reach through
typical/traditional ad buys on linear TV. So TTD is an important partner for advertisers who are afraid of missing out on advertising to an entire generation of emerging consumers that don’t consume TV and video content the way prior generations did.
Programmatic ad penetration in CTV is at 13% and expect growth to accelerate into 2031, at roughly 65% penetration.
Ad agencies value TTD’s independent position because it diversifies concentration risk away from FB & Googl, which get the majority of digital ad spend. TTD’s scale is also a contributor to its current and future success. As a result of its scale and wide access to ad slots,
TTD can serve as a one-stop shop for ad agencies. And access to more inventory makes it easier to fulfill ad campaigns and yields better results vs smaller and less integrated peers.
International growth is also a catalyst for growth, as 2/3rds of ad spend is outside the US, and TTD has grown billings internationally at 86% CAGR, showing the scale and partnerships with global ad agencies and advertisers.
It’s possible as well that digital publishers (i.e. FB and Google) open their auction processes that could allow TTD to access new supply. But I think it's a lower probability event.
In sum, the Trade Desk's focus on ad agency satisfaction & media independence make its platform highly attractive to advertisers. The company also has a long runway for growth with advertising going programmatic, connected TV engagement increasing and international growth.
