The Trade Desk revealed its latest earnings report on Wednesday with Q4 revenue up 24% year-on-year totaling $491 million while its income for the entirety of 2022 exceeded $1.5 billion, up 32%.<\/p>\n
Evidence shows the leading independent demand-side platform is weathering the current economic storm and outperforming its peer set, albeit there are some nuances to consider that portend challenges to come.\u00a0\u00a0\u00a0<\/p>\n
Gross spend on the platform was $7.8 billion last year while forecasted revenue during the coming quarter is \u201cat least $363 million,\u201d according to a company statement<\/a>, a sign that the DSP expects to maintain the good times.\u00a0\u00a0<\/p>\n During the company\u2019s subsequent earnings call, The Trade Desk\u2019s CEO Jeff Green cited published figures from Insider Intelligence hinting at a rebalancing of marketers\u2019 budgets away from walled gardens, and towards \u201cthe open internet.\u201d\u00a0\u00a0\u00a0<\/p>\n Speaking with equities analysts, he cited the report asserting that 2023 is set to be the first year that Meta and Google, a.k.a. \u201cthe duopoly\u201d represented less than half of all (48.4%) digital advertising spend for the first time in almost a decade.<\/p>\n Additionally, Green also characterized CTV as \u201cthe kingpin of the open internet\u201d and how this portion of the media landscape is \u201cfragmented\u201d to the point where it will play into the DSP\u2019s strengths.\u00a0<\/p>\n In particular, The Trade Desk is betting that as streaming services such as Disney+ and NBCUnivesrsal\u2019s Peacock become the primary means for audiences to consume premium content, and that advertisers\u2019 spend will subsequently further drift from the duopolu. \u201c\u200b\u200bCTV is perfectly fragmented but collectively huge,\u201d he is quoted as saying, \u201cIt\u2019s fragmented enough that no one has enough power to be draconian and go it alone.\u201d<\/p>\n The markets clearly approved with The Trade Desk\u2019s stock price leaping by more than 25% on the same day of its earnings disclosure with its market capitalization topping $30 billion.\u00a0<\/p>\n And while analysts were keen to laud The Trade Desk\u2019s performance and execution, some hastened to add how there are some important caveats to consider, namely how walled gardens are here to stay, arguably proliferating.\u00a0\u00a0<\/p>\n In his assessment, Madison and Wall\u2019s Brian Wieser acknowledged that while The Trade Desk\u2019s (comparative) objectivity means some marketers will favor the DSP\u2019s offering to the walled gardens, the scale of Meta and Google remains attractive to media buyers.\u00a0<\/p>\n \u201cIf an individual service or technology provider can demonstrate high ROIs (however defined) in limited volumes, marketers who might only have the resources to spend with one or two media owners are unlikely to shift away from those walled gardens any time soon,\u201d he added.<\/p>\n Further still, while Insider Intelligence data does indeed depict a loosening of Meta and Google\u2019s stranglehold on advertisers\u2019 budgets, recent\u00a0headlines<\/a> around these numbers were restricted to the U.S.\u00a0\u00a0\u00a0<\/p>\n \u201cInsider Intelligence\u2019s data is defined on a net basis, not a gross basis. For the numerator, market control or dominance should only be defined in gross terms,\u201d he wrote.\u00a0<\/p>\n \u201cOn this basis, Meta and Google likely accounted for approximately 70% of the US digital advertising market \u2026 Adding Amazon<\/a>, and the figure almost certainly would exceed 80%, and rather than declining concentration is increasing.\u201d\u00a0<\/p>\n Meanwhile, the assertion that the increase in \u201cCTV ad spend\u201d contains some nuance, according to Wieser, with the former GroupM exec<\/a> counseling investors to contemplate the definition of CTV.\u00a0\u00a0<\/p>\n \u201cFirst, I would not define CTV as including online video in a general form \u2014 instead I think most brands will only think of CTV as referring to premium content, and not include YouTube nor online video advertising that is not associated with premium video content,\u201d he wrote.<\/p>\n And while some<\/em> marketers may adopt a more conservative interpretation of CTV \u2014\u00a0amid \u201cthe waning reach potential of traditional ad-supported television\u201d \u2014 most of the market is not there yet and unlikely to get there any time soon, according to Wieser.\u00a0<\/p>\n Meanwhile, even though legacy broadcasters such as Disney, NBCU, and Paramount have opened inventory access to third-party DSPs<\/a> \u2014 The Trade Desk has partnerships with all of these players \u2014\u00a0some analysts believe the rise of CTV will lead to even more walled gardens.\u00a0<\/p>\n According to analysts at Arete Research, premium, household-name properties account for 70-to-80% of CTV consumption, all of which (such as Amazon Prime or Roku) have their own proprietary ad tech.\u00a0<\/p>\n Others are likely to emulate this trend, according to multiple Digiday sources with such a scenario lending weight to the theory that The Trade Desk would be an ideal candidate to purchase fellow ad tech company Criteo<\/a>.\u00a0<\/p>\n The reason? Uniting two of the leading independent ad tech companies would buttress The Trade Desk\u2019s pitch to Wall Street, which has (largely) rested on its CTV narrative for the past two years but has a notable downtick when it comes to retail media, according to some.\u00a0\u00a0\u00a0<\/p>\n Meanwhile, it\u2019s also important to consider how The Trade Desk negotiates its ever-evolving relationship with its core customer base (media agencies) with some speculating that the publicly traded DSP\u2019s need for growth could lead to tension.\u00a0\u00a0<\/p>\n Earlier this year, multiple sources from the ad industry\u2019s largest holding groups told Digiday the DSP was approaching clients more directly with one source, who declined to be named, characterizing this as a direct threat<\/a>.\u00a0\u00a0<\/p>\n Although, it is worth pointing out that a spokesperson for The Trade Desk told Digiday that \u201crelationships and alignment on the buy-side that we have with our agency clients have never been stronger.\u201d<\/p>\n<\/div>\nSize matters\u00a0<\/strong><\/h2>\n
The rise of CTV = more walled gardens\u00a0<\/strong><\/h2>\n
\u2018Fren-zoned\u2019?\u00a0<\/strong><\/h2>\n