The Trade Desk Hits A Billion-Dollar Run Rate And Explains Why It Ditched Google Open Bidding

The Trade Desk earned $1.2 billion in 2021, a 43% jump from 2020 and the first time the company cleared one billion dollars in revenue in a calendar year.

That $1.2 billion was earned on $6.2 billion in total platform spend – placing The Trade Desk’s take rate a tad shy of 20%.

The Trade Desk started flexing its scale muscles around two years ago, leaving other independent DSPs behind in terms of what it invests in QPS data (queries per second, which become a major cost factor when a company bids on billions of impressions) and pushing back on IAB solutions that gave preferential treatment to Google products.

Now a billion-dollar annual business, The Trade Desk has become an even more assertive player in the media landscape.

One example of The Trade Desk’s newfound boldness came earlier this week, with the launch of OpenPath, a direct-to-publisher bidding solution, and the announcement that the company would no longer purchase through Google’s Open Bidding product.

The Trade Desk isn’t entering the SSP market, CEO Jeff Green told investors on Wednesday. It won’t build yield management and supply-chain optimization products for the supply side.

Green gave some color on the catalyst for OpenPath.

“The advent of header bidding was perhaps the best thing that ever happened to us as a company and to the open internet,” he said on the earnings call.

Open Bidding was Google’s response to header bidding, part of the company’s effort to quash the new technology, including the secret Jedi Blue deal between Google and Facebook that was outlined in allegations unsealed last month in the antitrust case against Google. It certainly makes sense that revelations of Google’s attempts to covertly stamp out the open market dynamics of header bidding, with Google Open Bidding at the heart of that effort, would spur The Trade Desk to ditch an important supply source.

Solimar, not a beach resort

The Trade Desk launched Solimar, its new DSP dashboard and data marketplace product, in July 2020. Solimar too is a sign of self-empowerment for The Trade Desk. For one, it’s an evolution of the data marketplace, with The Trade Desk’s AI using more data at its own discretion.

Rather than an advertiser setting upfront that it uses X contextual data provider and Y data for attribution, The Trade Desk purchases data from across a broad range of data sellers, essentially white-labeling the data under The Trade Desk AI.

The Trade Desk also charges a percent of CPM through this data marketplace model, so it can apply relatively expensive data to relatively cheap media (which normally an advertiser can’t do because it could mean presenting their clients with media plans where the majority of spend went to data).

“For advertisers that have adopted Solimar, the average number of data elements applied to each impression has doubled,” Green said.

Koa, The Trade Desk’s AI optimization product, is another major flex. It uses a tactic called bid shading, which helps the DSP avoid over-bidding on first-price auctions, like when the second-highest bid is significantly lower. Other DSPs use bid shading, but with Koa The Trade Desk pockets a percentage of what it claims it saved the advertiser by not over-bidding.

If agencies and advertisers see the results, they’ll fork over another point or two to The Trade Desk, even when it’s a case of the DSP not spending their money. And Koa adoption on Solimar is 90%, Green said, nearly double that of the legacy platform.

Oh, and The Trade Desk will deprecate the legacy platform entirely by the end of the year, he added.

Green fields

The Trade Desk is pushing in two categories that it hopes will define its business soon enough.

One, of course, is CTV. The category spent its third straight year as the DSP’s biggest growth driver, Green said. The number of advertisers spending $100 million or more on CTV ads in 2021 doubled from the year before.

The other “green field open to us” is retail media, he said.

In Q4, The Trade Desk launched a DSP partnership with Walmart. Within a separate cloud-based function of The Trade Desk’s platform, brands could tie Walmart purchase data to programmatic IDs to create a closed-loop attribution system akin to the Amazon DSP. The Walmart DSP partnership started with about 20 brands, he said, and is still in a testing phase.

The Trade Desk also announced a partnership this week with Walgreens. The retailer built a clean room on The Trade Desk’s platform which connects ad impressions to sales in its pharmacy chain.

The Trade Desk also deepened its relationships with the world’s largest brands in 2021. The top 25 brand spenders on the platform collectively increased their budgets by more than 50% last year – outpacing the 43% overall growth. And that doesn’t count the surge in committed ad dollars by big brands that have set contracts to spend in retail media.

Enjoying this content?

Sign up to be an AdExchanger Member today and get unlimited access to articles like this, plus proprietary data and research, conference discounts, on-demand access to event content, and more!

Join Today!