The Trade Desk reported its eighth consecutive quarter of more than 20% annual revenue growth on Thursday.
Its Q4 revenue jumped from $491 million in 2022 to $606 million last year, and its net profit over the same period increased from $71 million to $97 million. The company’s shares increased almost 20% on Friday.
A solid earnings report is nothing new for TTD. And, while touting the company’s results, CEO Jeff Green homed in on his three favorite topics: CTV, retail media and the Unified ID 2.0 identity initiative.
Something new did come up this time, though.
“I know you’re going to ask me specifically about Privacy Sandbox, because nearly everyone else does,” Green said to investors.
And he didn’t mince words.
“Increased complexity with decreased functionality is hardly a compelling offering,” he said of the Chrome Privacy Sandbox proposals.
Then he went for the jugular: “Privacy Sandbox is an incredibly complex product, understood fully by very few people, which will likely degrade the Chrome experience for publishers and brands, but especially for users.”
A negative impact on ad tech and publisher revenue is one thing. Chrome’s goal is to improve privacy standards on the web, not monetization. But saying the Privacy Sandbox will degrade the user experience is going right for Chrome’s soft spot.
The sandbox call
Green is right about the Privacy Sandbox interest, too.
Similar to how Big Tech investors can’t stop asking questions during earnings calls about AI applications, TTD’s investors are equally obsessed with what the Privacy Sandbox means for ad tech.
But although TTD is beyond bearish about the sandbox, it’s rather bullish on third-party cookie deprecation.
Shweta Khajuria, an analyst at investment bank Evercore, asked for the puts and takes on why TTD considers cookie deprecation a benefit, something the open internet and ad tech in general sees as a headwind.
Green did some back-of-the-napkin math to demonstrate that, of the 15 billion or so impressions TTD observes per second (!), roughly half carry third-party cookies today. The rest are cookieless web impressions (such as Safari or Firefox) or other channels that don’t use cookies, like CTV and streaming audio.
As CPM values increase on cookie-free inventory, budgets will likely follow.
But open web advertisers with authenticated audiences – meaning they’ve collected emails, phone numbers or have logged-in users – are seeing CPMs increase, too, Green said. Which means, he reasons, that more publishers will adopt products like TTD’s UID2 or OpenPath, the company’s direct-to-publisher buying channel.
The news isn’t great for everyone, however. Smaller DSPs and ad tech companies, especially those that make most of their revenue from the open web, will struggle – and publishers, of course, will bear the brunt.
Will they, won’t they?
Still, Chrome is huge, and TTD can’t ignore it.
Vasily Karasyov of Cannonball Research asked whether the company is testing the Privacy Sandbox and plans to use the product, even if begrudgingly, since “there is some confusion” in the industry press.
Green confirmed that TTD will test the Privacy Sandbox. “You don’t get to be a food critic if you’re not willing to taste food,” he said.
For all its criticism, if third-party cookies go away and other ad tech companies get even marginal value in terms of ad personalization or measurement from the Privacy Sandbox, TTD isn’t going to pass that up.
Green also elaborated on a mostly unmentioned fact: Third-party cookie deprecation is not inherently part and parcel of the Privacy Sandbox. Chrome could give up on its proposals while still moving forward with phasing out cookies.
If Google can’t get more digital ad vendors and publishers to understand how the Privacy Sandbox works and also start embracing it, the initiative could fall flat.
Right now, Green joked, “it’s not fully understood by more than 10 people on the planet” – and that’s presuming Google is approaching third-party cookie deprecation in good faith.
“There’s lots of speculation about what Google’s motives are in doing all these things at this exact moment,” Green said. “But that’s a totally different topic.”
