The Trade Desk’s (TTD) take rate has been one of the most sensitive topics in programmatic advertising for the past decade.
From 2017 to the present, its take rate has hovered between 19% to 21%, a number The Trade Desk reports annually.
Shortly after The Trade Desk’s IPO, founder and CEO Jeff Green told AdExchanger that TTD’s take rate would stand between 15%-20% “for as far as we can see into the future.” So far, he’s been right.
Meanwhile, pretty much every other part of the supply chain has seen its take rates compress.
SSP take rates have been squeezed and squeezed. Advertisers declared tech vendor fees “the ad tech tax.” And many holdco agencies suffering in their own business still paid high fees to their vendor, The Trade Desk, which had suddenly become the bigger company.
But as rival DSPs attempt to gain market share, especially in CTV advertising, they’re wooing buyers by pitching lower take rates and lower data fees. The group offering better deals ranges from the Amazon Ads DSP and Comcast to startups like the Pontiac DSP.
The Trade Desk affirmed its take rate has no plans of going down. “Our take rate has been consistently around 20% of spend on our platform, and there is no plan to change that,” a spokesperson told AdExchanger, even as CTV grows its share of ads on the platform.
For everyone else, it’s knives out, as they slash the demand side’s margin and pile on the incumbent during a moment of rare vulnerability.
Why the fuss now?
If The Trade Desk’s take rate controversy goes back nine years, then why is the topic so important right now?
Partly, it’s that The Trade Desk’s most recent earnings report was the one time per year when it discloses its take rate, so that number (a cool 20.3% in 2024) is fresh in people’s minds. [Note: TTD doesn’t actually report its take rate, but once a year provides gross platform spend, which is the necessary data point to devise the take rate.]
Also, The Trade Desk had its first truly bad fumble in terms of quarterly earnings since its IPO. So this is like a Formula 1 race where everyone’s trying to make up time while the leader takes a long pit stop.
There are also structural changes happening in programmatic media right now that open the door a smidge to DSP challengers. For one thing, CTV ads have cheaper cloud computing costs. Streaming-focused DSPs can then pass on their data storage cost savings. And it’s not just startup challengers. Amazon Advertising and Comcast Ads are two ad tech giants that are also dramatically reducing demand-side fees.
The O&O advantage
Amazon is known for its low prices – and that includes take rates.
The Amazon DSP has trimmed its DSP fee and is offering relatively low rates for streaming and CTV ads, said Kate Greubel, VP of self-serve media at the ecommerce agency Flywheel, which is owned by Omnicom. Amazon has emphasized its vast audience reach and first-party data.
Greubel also said there has been a trend even in the past year or less of advertisers beginning to A/B test their third-party DSPs, namely Amazon and The Trade Desk, to see which provides a balance of better rates and inventory quality.
A Trade Desk spokesperson noted to AdExchanger that the price of zero-fee DSPs and super-cheap inventory from a big platform is generally recouped elsewhere, like in data fees. And Amazon sellers complain that Amazon DSP’s free media, which is a marketing incentive it offers to off-site advertisers who commit to annual budgets, might not be worth the cost even at $0.
But Amazon can cut its streaming ad and DSP rates because it’s the actual media owner for Fire TV, Prime Video, Twitch, Amazon’s on-site search listings and more. Its ad business does not come down to the DSP fee, whereas that take rate is life and death for independent ad tech.
One advertiser, who recently beta-tested Amazon’s Complete TV and asked to speak anonymously to avoid ruffling feathers at Amazon, confirmed that the fees were lower.
The DSP fees and inventory itself were fantastic, according to the ad buyer. The programmatic guaranteed deals offered 0% DSP fees on any Amazon media and 1% fees on an assortment of streaming publishers.
However, the campaign controls and post-campaign analytics are funneled through Amazon Marketing Cloud, a data collaboration toolkit built by the Amazon Ads business on AWS. The cloud-based audience analytics and data fees do cut back on the total savings, the advertiser said.
Despite these caveats, the cost to reach a certain total audience was still far cheaper than a similar media plan bought on The Trade Desk, the advertiser said.
The CTV-built DSPs
There haven’t been many new DSPs on the market in the past five to 10 years “because it’s crazy-expensive,” said Keith Gooberman, co-founder and CEO of Programmatic Mechanics and Pontiac DSP, which is one of those new players to launch during that time. Instead of trying to do everything, the DSP focuses almost exclusively on CTV and online video. The DSP is part of a larger group of CTV-focused DSPs establishing themselves, such as Viant, Azerion and Comcast’s Universal Ads.
Gooberman contrasted this approach with the incumbent independent competitor The Trade Desk. For practically every impression TTD bids on, it scans hundreds of data providers and millions of audience segments, triangulates the right amount to bid, the right data to use for that impression and how much it should all be worth. The Trade Desk’s approach has impressive tech and features, he said, but requires a vast outlay in terms of servers and bandwidth.
“That’s why you needed to build a battleship to deal with programmatic of the old world,” he said.
Pontiac DSP still has server bills from Amazon Web Services and Aerospike, a cloud infrastructure vendor favored by independent ad tech companies, Gooberman added. But it’s a massive cost savings not to have the cookie-based infrastructure or even to bother collecting and logging the web display bidstream data.
Despite the perception that video would require more bandwidth than images, the focus on CTV actually reduces server and data costs. CTV ads are based on the IP address and stationary households, whereas the costs of display ad data come from the mountains of cookies and matching tables used to identify an individual. Those savings help Pontiac offer a much lower take rate, which it also discloses to customers, Gooberman said.
The CTV DSP approach isn’t unique to Pontiac.
The European media and ad tech conglomerate Azerion last month launched Hawk in the US, which is a “light DSP” with near-zero fees, as described by Matthew Newcomb, Azerion’s regional director for the US, UK and APAC.
“Google and The Trade Desk are probably exceptions. But generally speaking, the challenge that DSPS are facing is because of the cost of processing that information,” Newcomb told AdExchanger.
Azerion is able to cut the typical DSP fee by 80%, he said. Partly, those savings come from scanning fewer impressions and logging fewer cookies, he said. But mostly it’s because Azerion owns some of the inventory for sale and bundles the DSP fee into its sell-side business, since publishers pay to be part of its network.
Universal Ads acknowledges its lower-fee approach is enabled by its Comcast ownership. “Could this be a viable business if it wasn’t part of Comcast? Not really.” That’s what James Borow, VP of product and engineering for Universal Ads, told AdExchanger regarding the new low-fee DSP launched by Comcast in January.
Comcast’s Universal Ads charges no DSP fee, he said, but Comcast wants Universal to bring more DTC and ecommerce brands to TV advertising. Also, the DSP is built on Comcast’s FreeWheel, so publishers and broadcasters in its ad network still pay the SSP fee.
Viant, a one-time display DSP and public company, now touts that it indexes more highly to CTV than any other independent ad tech, currently more than 40% of its business. Viant declined to comment on the story.
But isn’t TTD a CTV DSP, too?
The Trade Desk is aware that its vast amount of data processing is an advantage – but also a cost.
In a LinkedIn post in April, Green noted that TTD observes about 600 million impressions every 30 seconds, equal to the number of Visa transactions per day. Ingesting all that data gives it greater scale and more granular targeting, he said.
“But of course, that has its own problems, too,” Green acknowledged.
Scanning the entire bidstream is how TTD won critical bakeoffs years ago, including pulling the Walmart DSP business from Xandr in 2020. Xandr execs and other DSPs at the time grumbled that the Trade Desk paid to leapfrog the inventory filtering algorithms of SSPs and thus reached more overall people at lower rates.
But the costs of logging data and instantaneously cross-referencing match tables 1.7 trillion times per day (based on Green’s assertion of 600 million impressions per 30 seconds) are hard to bear, especially when video and CTV impressions don’t carry the same cost burden. And nowadays fewer advertisers use cookie-based targeting and attribution to decide their DSP of choice.
The Trade Desk is also trying to increase CTV as an overall share of its media. On its earnings report in February, Green said the video segment (which TTD doesn’t disclose in more detail) is now in the high-40% share of its total. But that includes a lot of online video, mobile video and other assorted video inventory, like digital out-of-home.
Piranhas or mosquitos?
Pure-play programmatic companies like Viant and Pontiac DSP are not exactly cutting into The Trade Desk’s market share, even if they are picking off clients and earning a living for themselves.
It is worth asking: Are these legitimate challengers to TTD?
TTD’s revenue total last year was $2.45 billion to Viant’s $289 million.
When Viant reported earnings in February, it boasted of 30% growth and added a total of about $76 million to its revenue in 2024. That’s a great growth rate, but The Trade Desk added $500 million in 2024.
The Trade Desk also has a big target on its back because it’s practically the only target.
As Gooberman noted, Amazon might compete for CTV dollars, but it doesn’t have the same kind of programmatic advertiser: someone who’s trying to have clearer supply-chain lines with PMP operators like Magnite or Index Exchange. An Amazon advertiser is often using the DSP as an extension of its Amazon search strategy, he said, and those budgets aren’t up for grabs to independent DSPs.
For Pontiac DSP, Gooberman said, there are many advertisers who still want their campaigns filtered through an agnostic buying platform, rather than rely on the self-reported campaigns served by the media owners.
“It’s all The Trade Desk’s talking points,” he said. “Just at a lower cost.”
