Introduction: Why look at The Trade Desk ?
Some stocks you follow largely because doing so allows you to understand an important part of the emerging economy. The TradeDesk is one of these.
In 2018, when I was leading the Data Analytics practice for a Fortune 200 Insurer, I suggested we might be able to improve results by being more analytically strategic around how we do digital advertising. Many marketing people said, "no, that game is dead, we are reliant on the good graces of Facebook and Google." I asked: then why does The Trade Desk stock chart look the way it does?
Since its IPO in September 2016, TTD stock price has gained 3000% vs S&P 500’s 416%. In the five year period to February 2024, TTD has gained 330% vs S&P 83%. The market has been telling us something about whether or not the walled gardens truly own all of digital advertising.
In an era where digital landscapes are perpetually shifting, the realm of advertising has undergone remarkable transformations. At the forefront of this revolution we find The Trade Desk, a leader altering the digital advertising framework with profound implications for investors and industry observers. Understanding The Trade Desk's methodologies, financial achievements, and pioneering endeavors is not just insightful—it's imperative for those interested in the future of advertising.
The Philosophical Backbone: People First
The Trade Desk's ethos begins with its founder and CEO, Jeff Green. This leader fosters a people-first culture, valuing emotional intelligence and authenticity to drive creativity and innovation. The company's ethos encourages employees to be their genuine selves, creating a safe space that champions vulnerability as a source of entrepreneurialism, and champions a mission to increase the vitality of the open internet.
Stellar Performance Amidst Uncertainty
A testament to its leadership in digital advertising, The Trade Desk achieved remarkable financial results for Q3 and Q4 of 2023. The company not only achieved impressive growth, surpassing industry averages with a noteworthy 25% year-over-year increase in Q4 followed by nearly $10 billion in total spending on its platform, but also laid down an optimistic blueprint for 2024. Amid growing market uncertainties and evolutions such as the deprecation of cookies, The Trade Desk's agile adaptation and strategic foresight signal strong future growth and enhanced market share.
Strategic Pillars: CTV and Retail Media
Two pivotal components underscore The Trade Desk's optimism for continuous growth: Connected TV (CTV) and Retail Media. The company's investment in AI and technological innovations to optimize advertising efficacy—paired with strategic partnerships with giants like Walmart and Target—highlights its adeptness in navigating and capitalizing on the burgeoning CTV market and retail media's efficacy in using first party data to generated ad revenue. These areas do not merely represent growth channels but are emblematic of The Trade Desk's capacity to lead and reshape the advertising landscape.
Pioneering the Future of Programmatic Advertising
Pioneering programmatic advertising at the heart of its operations, The Trade Desk has revolutionized the way advertisers engage with digital spaces. Shifting from antiquated guesswork methodologies to data-driven insights, it leverages technology to empower advertisers to execute targeted campaigns effectively. Moreover, the programmatic advertising paradigm exemplified by platforms like Hulu, and expanded strategically into Asian markets, underscores The Trade Desk's global vision and its commitment to set new industry benchmarks.
Navigating Post-Cookie Challenges
The impending elimination of third-party cookies presents a paradigm shift challenging the industry at large. Yet, through foresighted initiatives like UID2 and EUID, The Trade Desk is not just navigating this landscape but is actively reshaping it. By fostering a more informed and efficient advertising ecosystem, it spearheads the transition towards a post-cookie world with a focus on precision targeting and authentication.
Conclusion: The Trade Desk must be tracked closely
Consumer spending is 70 percent of the US economy. Advertising is a critical aspect of this value chain. The trajectory of digital advertising is clearly intertwined with the innovations and strategies deployed by The Trade Desk. From emphasizing a human-centric business model and demonstrating financial resilience to pioneering programmatic advertising and leading the industry through significant transformations such as cookie deprecation, The Trade Desk has demonstrated leadership that not only navigates present challenges but also anticipates future trends. For investors and enthusiasts of the advertising industry, The Trade Desk's progress offers critical insights into the mechanisms steering the future of advertising: where understanding people, leveraging technology, and embracing change have been well recognized and rewarded by the market. Their share price may be high, but their moves matter.
Sources
Data - Tradingview.com, Interactive Brokers;Earnings Call transcripts - The Motley Fool at fool.com; Podcasts/Youtube - Stratechery, Invest LikeThe Best, The TradeDesk Channel;News articles - various