The Trade Desk is taking on Google for digital ad dollars, and the battle is about to get more complicated
- Digital advertising company The Trade Desk won Walmart as a client this year, a big blow to Google.
- Google’s move to nix ad tracking could impact The Trade Desk as marketers grapple with the phaseout of targeted ads.
- Amazon is also emerging as a bigger competitor to The Trade Desk in streaming TV ads.
- Visit the Business section of Insider for more stories.
Ad tech giant The Trade Desk is taking greater control over how many advertisers buy digital ads.
The firm, which primarily sells ad agencies and some brands software that automates ad buying, is battling for market share with Google and Amazon over the tech tools that advertisers use.
And it’s likely to become an even bigger digital ad player this year as marketers adapt to the death of third-party cookies that are used to target ads and spend more with retailers like Walmart and Target that are selling ad space on their digital properties.
Several recent moves put a spotlight on The Trade Desk’s clout:
- The Trade Desk won Walmart as a client earlier this year as the retailer tries to grow its digital advertising.
- Google announced that it plans to nix ad tracking, opening up new questions about the longevity of third-party cookie workarounds adtech companies have developed as workarounds — including a leading industry initiative that The Trade Desk spearheaded called Unified ID 2.0.
The Trade Desk powers ad-buying tools that help marketers buy digital advertising, which is expected to hit $171 billion this year, according to eMarketer.
The Trade Desk is the biggest independent ad tech company by market value, though it is still dwarfed by Google and Amazon. The Trade Desk’s market cap is $37.4 billion while recently public PubMatic’s market cap is $2.2 billion. To compare, Google parent company Alphabet and Amazon have $1.3 trillion and $1.7 trillion market caps, respectively.
Its stock has soared more than 2,899% since its IPO in 2016 and 200% over the past year. Its rise on the public markets has been credited as a factor in other ad tech companies including PubMatic, Taboola, and Viant recently filing to IPO.
“The Trade Desk is at a size where it’s not a gnat to swat away,” Jay Friedman, president and partner of ad agency Goodway Group, recently told Insider.
Its recent moves and strong financial performance suggest The Trade Desk is pulling even further ahead from the pack of independent adtech players — even as Google clamps down on adtech. The Trade Desk’s competitors include AT&T’s Xandr, MediaMath, Verizon’s demand-side platform, and Comcast-owned FreeWheel.
The Trade Desk did not comment on the record for this article when it originally published February 3.
The Trade Desk is competing with Google for clients
The Trade Desk won a big client in Walmart recently, building a tool for the retailer that lets ad buyers buy programmatic ads using Walmart’s shopper data. The move is part of an ambitious push by Walmart to grow its advertising revenue.
The Trade Desk has worked with smaller ad tech companies like SteelHouse to build branded adtech tools, but Walmart represents The Trade Desk’s first big deal of this type with a non-agency or adtech client.
It’s likely that The Trade Desk competed directly with Google to win the business, said an ad tech executive who previously spoke to Insider on the condition of anonymity. The Trade Desk is also known for deep relationships with the big advertising holding companies that Walmart’s ad sales team is targeting.
“It’s symbolic that The Trade Desk is winning a business like that versus Google,” said the exec. “They know where their bread is buttered.”
Still, Google’s ad business goes far beyond ad-buying tools. Google pitches advertisers and publishers tools to sell and measure ads as well as an ad server to target ads. Google also makes most of its advertising revenue from its giant search ads business.
And Google’s recent announcement that it would stop using tracking for advertising in addition to killing third-party cookies sent waves through Wall Street. The Trade Desk’s stock slid 20% in the two days after the announcement. Other adtech stocks like PubMatic, Viant, Magnite, LiveRamp, and Criteo also fell.
“People shouldn’t have to accept being tracked across the web in order to get the benefits of relevant advertising,” David Temkin, Google’s director of product management of ads privacy and trust, wrote in a blog post announcing the news. “And advertisers don’t need to track individual consumers across the web to get the performance benefits of digital advertising.”
Another view suggested that Google’s news helps The Trade Desk transition away from relying on cookies.
“The fundamentals of all these DSPs are based on the cookie,” Madan Bharadwaj, the chief technology officer of Measured, said of Google’s move. “Now you have to target based on aggregated cohorts rather than cookies, so they have to retool their datasets. LiveRamp has a big question mark. The Trade Desk has a legitimate opportunity for the rebirth of their business.”
Beyond cookies, Goodway Group’s Friedman noted that The Trade Desk is a customer of Google and buys ad inventory from Google, so it’s unclear how big of a threat Google considers The Trade Desk.
“If I’m Sundar [Pichai], do I spend a lot of time thinking about The Trade Desk? No. Not nearly as much time as The Trade Desk leadership spends thinking about Google,” he said.
Google is subject to a number of antitrust lawsuits around the world — including probes into its dominance of the online ad market— and has previously said that its ad business is not a monopoly.
“Google is in the crosshairs on the privacy issue more than any other company in the world, past or present,” Jeff Green, CEO of The Trade Desk, wrote in a blog post about Google’s news. “Google knows more about you than any other company on the internet because of their dominant share in search. Any product you’re researching, and medical condition you worry about — pretty much all of your life’s travails are followed by a (logged in) search query. With big tech under growing privacy scrutiny, this kind of announcement is a strategic move.”
Amazon is emerging as a new competitor to The Trade Desk
The Trade Desk’s deal with Walmart signals how the adtech company is competing with another ad giant: Amazon.
As people watch more TV over streaming platforms, Amazon and The Trade Desk are both trying to become leaders in the $11 billion connected TV advertising space.
Amazon owns streaming devices and properties like Fire TV and IMDb TV, which could give it a leg up over The Trade Desk, which has no content to sell ads against. Amazon has also structured its advertising business like a so-called walled garden that limits advertisers’ access to data, said the adtech exec.
The Trade Desk’s opportunity versus Amazon is to be an independent ad buyer that helps advertisers buy programmatic connected TV across different streaming services including Hulu and Amazon Fire. The Trade Desk also has direct deals with media companies like Disney that help advertisers reach big audiences across ESPN and ABC.
But a recent report from Advertiser Perceptions found that Amazon also was advertisers’ most preferred demand-side platform, followed by Google and The Trade Desk.
In 2019, Amazon signed deals with The Trade Desk and Dataxu to sell some ads in publishers’ Fire TV apps. The deals are winding down, suggesting that Amazon has ambitions to take more control of its own ad sales.
“The Trade Desk’s bets are that they want to dominate programmatic advertising — they have done that but they also want to dominate connected TV going forward,” said the adtech exec. “Amazon might be a bigger competitor to The Trade Desk than Google there.”
Amazon declined to comment on the record.
The Trade Desk is trying to get ahead of Google’s privacy challenges
Apple and Google’s moves to limit third-party cookies have sent advertisers looking for alternative ways to target and measure ads.
The Trade Desk is one of a handful of adtech companies building alternatives to third-party cookies. The effort, called Unified ID 2.0, provides hashed, encrypted email addresses and is seeking adoption by ad tech companies and agencies. Criteo, Nielsen, and AT&T’s Xandr are already on board. Unlike other ad tech companies like LiveRamp, Unified ID 2.0 is free to publishers and advertisers.
In theory, Unified ID 2.0 could make advertisers less dependent on Google, and being free could help its chances for adoption.
The Trade Desk recently handed off Unified ID 2.0 to publisher-focused organization Prebid.org, which is trying to help publishers appeal to scale-hungry advertisers by pooling first-party audience data and standardizing how publishers create audiences.
Google’s recent move to stop tracking renews questions about whether Google will back Unified ID 2.0. Google’s decision could create two separate sets of rules for advertisers to work with.
Google is also creating more privacy-focused alternatives to third-party cookies that The Trade Desk and other adtech firms can use, but skeptics say that Google will still benefit by having access to data from users logged into properties like Gmail and YouTube.
Still, it’s not clear how global privacy regulators will view Unified ID 2.0 and how effectively it will operate once Apple’s strict new app privacy changes come into force in early spring.
Most importantly, the adtech exec said, it’s not clear how privacy-geared initiatives will be viewed by people who don’t want to be targeted by ads that use personal data.
“Part of the reason we’re in this position is that people don’t like these advertising tactics,” the exec said. “The risk long-term could be using The Trade Desk to replace the cookie.”
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