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The trade desk reported revenue of $377 million in Q2 this year, up slightly more than a third from the same period in 2021.
The company fell from a profit of $48 million in Q2 2021 to a loss of $19 million this quarter, despite founder and CEO Jeff Green collecting a $66 million stock-based incentive bonus this quarter. The charge increased trading desk general and administrative expenses from $12.5 million in Q2 2021 to $80.9 million this year.
Trading Desk’s stock jumped nearly 15 percent after the close of trading.
There is a green macroeconomic wind. “But there could be macro-headwinds in our face and secular tailwinds masking that,” he said.
The business desk is hammering out similar messages about tailwinds on quarterly earnings calls: highlighting CTV’s business first and foremost with its retail media division and a good measure of Google-bashing.
The company’s investor call on Tuesday added to the trend.
Just connected.
Despite touting CTV’s expansion, the trade desk doesn’t break out CTV’s revenue — or break out revenue by channel or device overall. The company came closest to disclosing its contribution, saying that video ads (which include desktop, mobile and televisions) are in the 40% range of total revenue and that the segment is the “fastest growing percentage of our overall mix.” As CFO Blake Grayson.
Greene is an example of how a film and television entertainment company with a heavy reliance on Disney took advantage of its programming opportunities. Disney became the largest integrated media player with the Unified ID 2.0 identity program, and TradeDesk is a pilot partner for Disney’s data clean room product development.
But the trade desk’s biggest CTV win didn’t directly involve the trade desk.
“I was thrilled to hear that Netflix chose Microsoft,” Green said.
Ad tech circles are small, and Green said he was personally happy to introduce Brian O’Kelly, the current president of advertising at Microsoft, while the current CEO of AppNexus is stepping back. The introduction grew into a major strategic partnership and eventually resulted in Microsoft acquiring the business.
But to the trade desk, which is trying to grow its CTV business, the move signals that Netflix is looking to capture interest from a broader set of companies and offer ads to the open web. Enter the Business Desk.
Xandr focuses on the SSP, and although it has a DSP, Green estimates that it accounts for less than 10% of business desk CTV demand.
Whether Microsoft goes with pre-Vegas favorite Google or another full-stack vendor to win the Netflix franchise would signal that the company is following a walled-garden model. The decision to go with Microsoft is “another sign that savvy companies are recognizing the opportunity of the open Internet compared to the limitations of walled gardens,” he said.
CTV is a big opportunity for the trading desk because “the market is relatively fair,” he said. Although networks offer programmatic stills when selling the juiciest inventory in their prime, no one is a major technology provider at the bottom.
No individual company “has room to be draconian” in CTV, Green said. By contrast, Google’s share of the search, web browser, and ad server market means it’s like a soccer player who whistles dead and makes rules on the fly.
Going to Google
One of the “macro-global trends” most likely to benefit the business desk is regulatory pressure on Google.
As governments and regulators press charges against Google, Green said the trade desk sees tangible benefits in those markets. Agencies drive more of their business to alternatives like DSP.
Google’s policies and actions have made it very difficult for companies (“smaller than the business desk”) to monetize the open web sustainably, Green said. In addition, the United Kingdom’s Antitrust Commissioner has investigated Google, citing that its services are harming competitors by increasing the cost of advertising to businesses, which may lead to higher prices for goods and services being passed on to consumers.
To buy here
Retail media is a recent addition to the Business Desk earnings report.
In Q2, The Trade Desk announced ad buying and identity partnerships with Walgreens, Target and Albertsons, among other retail chains. Not to mention the Commerce Desk DSP setup with Walmart, which recorded its first full quarter launch.
These retailers are investing heavily in their shopper ad platforms because the platforms are driving big business decisions about profitability, such as managing employee hours or adding online orders that have higher profit margins than home delivery. Instead of gathering some low-hanging fruit from site display ads.
Retail media does not generate the same mass concentration as mobile, CTV or display. But retail media partnerships will significantly increase the company’s total addressable market, Green said.
Less and less can be a web address. A much smaller share of mobile ads can be targeted by device or ad ID. Retail media does not bring mass inventory, but it does bring information at the consumer level, otherwise unaddressable media will be replaced by consumer-targeted spaces.
“Early on, retailers were looking at retail media as a way to make more money,” Green said. “Now they see their flywheel as a way to get around faster.”
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