Q2 2024 Earnings Summary
- The Trade Desk is well-positioned to capitalize on the growth of Connected TV (CTV) advertising, as it has formed partnerships with major premium content providers like Netflix, Disney, Roku, and others. This access to premium CTV inventory allows TTD to offer advertisers high-quality, data-driven programmatic advertising opportunities, enhancing ROI and attracting more ad spend to its platform.
- The introduction of The Trade Desk's new platform, Kokai, is enhancing advertiser ROI and performance metrics, making TTD more attractive to marketers. Kokai enables advertisers to put their data to work more effectively, leading to better campaign results and higher ad spend on TTD's platform.
- Regulatory challenges faced by Google are creating opportunities for The Trade Desk to gain market share, as Google deprioritizes its network business and faces legal scrutiny. This potentially weakens a major competitor, allowing TTD to further solidify its position in the open Internet advertising market.
- Increased supply of CTV ad inventory may lead to lower CPMs, potentially impacting The Trade Desk's revenue growth. As CEO Jeff Green stated, "We've seen a little bit more of a surge of inventory than we've seen in the past. And so as a result, that requires some restabilizing or rebalancing of CPMs and what gets bought and what doesn't."
- Delay in substantial contributions from partnerships with major streaming platforms like Netflix may impact near-term growth expectations. Jeff Green mentioned, "I think we'll start seeing that ramp up a little bit this year. But really, it's in the next few years that I think we'll see it ramp up and really start to contribute to us and to them, but we'll spend the rest of this year sort of proving it out."
- The delay in Google's deprecation of third-party cookies may reduce the urgency for publishers to adopt The Trade Desk's UID2 solution, potentially slowing growth in this area. As Jeff Green stated, "I believe that's part of the reason why they have created some delay, but that also is a bit of a [indiscernible] because it could give publishers a sense that they can slow down and take their time, which is not a good idea..."
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Netflix Partnership and Future Growth
Q: Update on Netflix partnership; impact by 2025?
A: Jeff is very excited about the partnership with Netflix, highlighting a long-standing relationship with their leadership. They have begun testing but haven't scaled yet. Jeff expects to see some ramp-up this year, with significant contributions starting next year and into 2025. He believes the partnership will be important for both companies' futures. -
Impact of Google's Regulatory Issues
Q: Are CMOs turning to TTD amid Google's legal troubles?
A: Jeff notes the regulatory environment has changed significantly, with the Department of Justice winning a suit against Google on search and another ad tech trial upcoming. Google's network business is shrinking, indicating a deprioritization of the open Internet. As Google focuses on other areas, this creates an opportunity for TTD. Jeff believes they are in a stronger position as CMOs seek alternatives, and TTD will continue to win regardless of the trial's outcome. -
Competition with Amazon in CTV
Q: How is Amazon's entry into CTV affecting TTD?
A: Jeff explains that TTD is not a destination or sell-side platform but represents buyers. He contrasts TTD's open Internet approach with Amazon's walled garden strategy, which doesn't work well in the fragmented CTV space. TTD's objectivity and ability to help advertisers buy across multiple platforms positions it strongly against competitors like Amazon, who have conflicts of interest due to owning content and competing products. -
Adoption of Biddable Programmatic in CTV
Q: Are CTV sellers adopting biddable programmatic tools?
A: Jeff confirms a greater desire from both buyers and sellers to lean into biddable programmatic. Traditional TV buying was done via upfronts and handshakes, but biddable allows for better data utilization and higher CPMs. As advertisers question paying high CPMs without better results, both sides are pushing towards biddable, and the trend is definitely moving in that direction. -
UID2 Strategy Post-Cookie Deprecation
Q: How does cookie deprecation affect UID2 strategy?
A: Jeff states that cookies were never the best technology for personalization and privacy. TTD didn't build UID2 as a replacement for cookies but as an identity framework that works regardless of Google's or Apple's actions. UID2 is becoming ubiquitous, especially in CTV and audio where users log in. Therefore, TTD's strategies remain unchanged despite cookie deprecation. -
Mid-Term Impact of Premium Inventory
Q: How will more premium inventory affect revenue growth?
A: Jeff believes TTD is in its strongest position ever, with more premium CTV content becoming available. As advertisers can choose between premium content and user-generated content, they'll favor premium. Over the next 2–3 years, he expects the most effective advertising ecosystem to emerge, with better content and more effective data-driven advertising, positively impacting TTD's revenue growth. -
Advertiser ROI and TTD's Growing Share
Q: Is higher ROI driving TTD's market share gains?
A: Jeff confirms that improved ROI and return on ad spend are factors. The timing of releasing Kokai, their new product, couldn't have been better. Additionally, access to premium content and skepticism towards walled gardens' metrics are leading advertisers to increase their consideration of TTD, contributing to their market share growth. -
Retail Media Demand and Partnerships
Q: Thoughts on retail media demand and partnerships?
A: Jeff sees significant opportunity to drive spend in retail media, which, along with CTV, poses a threat to walled gardens. Retail media changes the measurement game by linking ads to actual purchases, providing irrefutable results. TTD's partnerships with Walgreens, Walmart, and Target exemplify this opportunity, though they've only scratched the surface. -
TTD's Outperformance in Current Ad Environment
Q: Why is TTD outperforming others in digital ads?
A: Jeff attributes TTD's outperformance to their focus on representing buyers, not being a destination or sell-side platform. CMOs face pressure to deliver growth amid uncertainty, and TTD helps them make data-driven, rational decisions in a buyer's market. This positions TTD strongly in the current digital advertising environment.