The Trade Desk appears to defy digital ad gravity

Ad tech leader, The Trade Desk, reported strong full year results this week, defying much of the slowdown news across the recent results announcements in digital advertising – so what’s going on?

The numbers

In a difficult year, and difficult period in which Meta saw ad revenues decline from a high point in Q4 2021, with Google also struggling to match its end of 2021 numbers, The Trade Desk tells a different story in its most recent results:

• 32% revenue growth for the full year to reach $1.6bn
• Q4 Net income (profit) grew 159% to reach $71m

Of course, it’s very important to put this in context: even Meta’s ‘worst’ quarter, Q1 22 which saw a steep decline, was a $27bn quarter. That same period saw Google bring in just shy of $40 billion.

Why it matters

Relatively small, but influential: the Trade Desk is not only an important portal to advertising on the open web, but also something of a leader with the growing influence of its Unified ID 2.0, a purportedly privacy-friendly identifier that has won important backers in Amazon’s AWS cloud and Disney+.

CTV gains

But it has definitely placed some of its bets in the right direction, especially when it comes to Connected TV (CTV).

“CTV continued to be our strongest growth driver as more content owners from around the world are moving beyond ad-free subscription models and offering ad-supported options for viewers,” said founder and CEO Jeff Green, on a call with analysts.

Most agencies, advertisers, publishers see Connected TV as a key driver of overall programmatic investment, according to IAB data published late last year. The Trade Desk does most of its business with big brands as they reallocate some linear TV spend to CTV. TTD has managed to ride this wave effectively, enjoying its minimal exposure to small and medium sized advertisers.

However, there’s some doubt over the mass reallocation of funds toward it, and whether its rise will lead to the lowering of the walled gardens, as Brian Wieser writes in his newsletter on the topic.

ATT + Gravity

A crucial observation about the Trade Desk’s business is its relatively low reliance on mobile impressions for its business, which are precisely the kind of impressions that Apple’s Tracking Transparency features have hit hard.

Green notes: “when you hear Facebook, talk about having a big impact, just remember, they’re 70-ish percent mobile, not 10% IDFA [like the Trade Desk].” 

Unified ID 2.0

This has been a significant aspect of TTD’s profile, even if it remains new. But there has been good take up, even if it may be a little behind Green’s suggestion that TTD will “effectively solve the identity matching challenge of the entire open Internet”.

This said, versus a 15% take up among the third-party data ecosystem at the end of last year, the company reports, it now expects take up to reach 75%. However, the battle isn’t truly won, and TTD remains exposed to the third-party cookie, whose deprecation has once again been pushed back to 2023.

Sourced from Yahoo Finance, Seeking Alpha, WARC, Brian Wieser