The Trade Desk grew by 27% year-over-year in Q3, with revenue now totaling $628 million and net profits up from $39 million to $94 million in the same period.
Snooze. What’s new?
Well, without breaking out new revenue metrics, The Trade Desk divulged some interesting tidbits about their business. For instance, while the company doesn’t disclose CTV revenue, CEO Jeff Green said CTV is now the largest media channel for TTD.
CTV has flipped the equation on web display and mobile. Similarly, a year ago, Criteo finally reported retargeting revenue as less than half of its total. The Trade Desk is touting its long-held ambition to have more CTV than banner ads. Currently, video ads, which encompass CTV, are close to 50% of TTD’s overall business. Soon, TTD will be primarily a video ad buyer.
“It’s hard not to be bullish about CTV when it’s both our largest channel and our fastest growing,” Green said.
And while CTV and retail media have been staples of every Trade Desk quarterly report for years on end, Green also put the focus on a few new opportunities, now that CTV has matured into the business, not just a rhetorical goal.
Audio and Sports
Green said he’s big on two new campaign types, which are fairly small in programmatic right now but hold unique promise to advertisers.
The main one is digital audio.
“I’m convinced, if the biggest players move correctly, they can capture one of the biggest opportunities in advertising and media today, which is the delta between time spent in the audio channel and the amount of ad budgets heading to that channel,” Green said.
Just as CTV was in 2020, audio inventory is scarce and not growing that quickly, but consumption is high and growing fast. Advertisers would like to catch up with consumers, but there isn’t so much audio inventory available that can be targeted and served programmatically.
The other premium media channel for programmatic to unlock is live sports, Green said.
“I expect over the coming years to see programmatic spot markets and sports become best friends,” Green said.
Live sports are counterintuitive for programmatic advertising. Those spots tend to have a very high premium and go to sponsors, rather than an open auction. But, Green said, “because (live sports inventory) is often scarce and often highly sought out by brands, and it changes very quickly, it really is built for programmatic advertising.”
Media companies aren’t able to take advantage of high-interest spots. For instance, when live sports go into overtime or have last-minute excitement in the game, the broadcasters aren’t able to take advantage of what would be very high interest in those spots, so the broadcasters often default to replaying a sponsor’s ad or going to a local TV commercial.
That’s why Green cites the spot market – when advertisers have a chance to buy broadcast spots on the fly, rather than in upfront deals – as an opportunity for programmatic sports ads.
The Google news
Another big opportunity for The Trade Desk will be the decline of Google’s market dominance.
The result of Google’s ad tech antitrust trial is unknown, so nobody can forecast how Google will be forced to change its practices or even divest parts of its business.
“But regardless of what happens, I believe we will win,” Green said.
For one thing, Google has been deprioritizing its third-party ad tech and ad network. Growth for that business isn’t just slowing but has actually turned negative this year.
“If I were in Sundar’s shoes [Alphabet CEO Sundar Pichai, that is], I would deprioritize it, too,” Green added. Google’s high-margin growth in search, YouTube, cloud infrastructure and AI are more compelling than its relatively low-margin ad network.
The Trade Desk has “managed to win in an unfair market” set by Google, he said. But Google is going to level the playing field, “whether that’s from government or just by their own choosing because the risk-reward is not worth it.”
The Trade Desk has outperformed the Google DSP, with year-over-year growth of more than 20% in every quarter going back more than two years, even while Google’s ad tech business declined. And Green said it should only get easier as the DOJ trials unfold.
“I’m very excited to see the outcome, and I think we win no matter what,” he said.
