The Trade Desk Stock

The Trade Desk, Inc. (The Trade Desk) offers a self-service, cloud-based ad-buying platform that empowers clients to plan, manage, optimize and measure more expressive data-driven digital advertising campaigns.

The company’s platform allows clients to execute integrated campaigns across ad formats and channels, including video (which includes connected television (CTV)), display, audio, digital-out-of-home, native and social, on a multitude of devices, such as computers, mobile devices, televisions and streaming devices. The company’s platform’s integrations with major inventory, publisher and data partners provide ad buyers reach and decisioning capabilities, and its enterprise application programming interfaces (APIs) enable its clients to customize and expand platform functionality.

The company’s clients are advertising agencies, advertisers and other service providers for agencies or advertisers, with whom it enters into ongoing master services agreements (MSAs). The company generates revenue by charging its clients a platform fee based on a percentage of a client’s total spend on advertising. The company also generates revenue from providing data and other value-added services and platform features.

Digital Advertising Ecosystem

The digital advertising ecosystem is divided into buyers, sellers and marketplaces, which can be further segmented on the basis of whether participants provide services or technology.

The company empowers ad buyers by providing a self-service cloud-based ad-buying platform that enables them to plan, manage, optimize and measure data-driven digital advertising campaigns. The company’s platform allows clients to execute integrated campaigns across various advertising channels and formats, including video (which includes CTV), display, audio, digital-out-of-home, native and social, on a multitude of devices, including computers, mobile devices, televisions and streaming devices.

Platform

At the core of its platform is the company’s bid-factor-based architecture that allows users to define desirable factors and the value associated with those factors. Based on these factors, the company’s platform can compute the value of impressions in real time and bid only for optimal impressions.

The company’s platform is powerful and user friendly:

Easy to Use, Open and Customizable: The company’s platform includes easy-to-use tools and interfaces that help its users focus on managing the key elements of their campaigns. The company’s platform also enables clients to integrate custom features and interfaces for their own use through its APIs.

Expressiveness: The company’s platform allows clients to easily define and manage advertising campaigns with multiple targeting parameters that could result in quadrillions of permutations, which it refers to as expressiveness.

Integrated, Omnichannel and Cross Device: The company’s platform provides integrated access to a wide range of omnichannel inventory and data sources, as well as third-party services, such as ad servers, ad-verification services and survey vendors. The company’s platform’s integration of these sources and services enables its clients to deploy their budgets through a wide variety of channels, media screens and formats, targeted in their desired manner, all through a single platform.

Some of the key features of the company’s platform are:

Auto Optimization: The company provides auto-optimization features that allow buyers to automate their campaigns and support them with computer-generated modeling and decision making. In addition, by giving clients full reporting, budgeting and bidding transparency, clients can take control of targeting variables when desired, and apply algorithmic automation when appropriate.

Advanced Reporting and Analytics Tools: The company provides a comprehensive view of consumers’ interactions with the ads purchased through its platform with robust reporting of performance insights across multiple variables, such as audience characteristics, ad format, site category, website, device, creative type and geography. Better reporting results in better learning, enabling better campaign optimization and outcomes.

Data Management and Measurement Tools: The company’s platform enables clients to optimize campaigns with numerous highly relevant data sets, including from an extensive selection of third-party vendors, in a seamless and easy manner. The company also empowers its clients with an extensive set of measurement capabilities, both through a number of proprietary benchmarking tools and indices, and through integrations with a broad selection of third-party measurement partners.

Artificial Intelligence: Koa, the company’s predictive algorithmic tools, utilizes artificial intelligence to process complex data sets and make recommendations for campaign optimizations. These recommendations help platform users make data-driven decisions without sacrificing control or transparency and empower users to choose which optimizations make the most sense for their campaigns. Koa’s artificial intelligence capabilities are used across various aspects of the platform, including predictive clearing, ad impression relevance scoring, measurement and forecasting, budget optimization and key performance indicator scoring.

Informed Media Planning: The company’s platform enables clients to use audience insights and strategic goals to help optimize campaign planning, with the ability to generate, analyze and launch data-driven, programmatic media plans. The company’s tools analyze the actions of existing core audiences with the data it sees across the open Internet to deliver fully transparent, performance-focused and ready-to-activate campaigns.

Private Marketplace Support: For clients who wish to transact directly with individual publishers, the company offers a comprehensive user interface for discovering and transacting via a wide variety of private contracts. Additionally, the company offers a solution for advertisers to access publisher inventory via a direct tag in a publisher’s ad server where there is no other programmatic access to such publisher’s inventory.

The company’s platform enables advertisers and agencies to purchase digital media programmatically on various media exchanges and sell-side platforms; acquire and use third-party data to optimize and measure digital advertising campaigns; integrate and deploy their proprietary first-party data within its platform to optimize campaign efficacy; monitor and manage ongoing digital advertising campaigns on a real-time basis; link digital campaigns to offline sales results or other business objectives; access other services, such as its data management platform and publisher management platform marketplace; and use its user interface and APIs to customize and expand platform functionality.

Technology

The core elements of the company’s technology are:

Scalable Architecture: The company’s platform infrastructure is hosted in data centers around the world. The company’s core bidding architecture is easily adaptable to a variety of inventory formats, allowing its platform to communicate with many different inventory sources.

Predictive Models: The company uses campaign data captured by its platform to build predictive models around user characteristics, such as demographic, purchase intent or interest data. Data from the company’s platform is continually fed back into these models, which enables them to improve over time as the use of its platform increases.

Performance Optimization: During campaign execution, the company’s optimization engine continually scores a variety of attributes of each impression, such as website, industry vertical or geography, for their likelihood to achieve campaign performance goals. The company’s bidding engine then shifts bids and budgets in real time to deliver optimal performance. Additionally, the company’s platform enables clients to set multiple, simultaneous optimization goals for their advertising.

Real-time Analytics: The company’s platform continuously collects data regarding inventory availability. Real-time campaign delivery and spend totals are used to manage campaign budgets and goal caps, as well as campaign reporting. This data is fed back into the company’s optimization engine to improve campaign performance and into machine-learning models for user demographic predictive modeling.

Strategy

The key elements of the company’s strategy are to increase its share of existing clients’ digital advertising spend; grow its client base; expand its omnichannel capabilities; extend its reach in CTV; continue to innovate in technology, data and measurement; further enhance identity solutions, including unified id 2.0.; ensure access to quality inventory, including through OpenPath; and expand its international presence.

Clients

The company’s clients consist of purchasers of programmatic advertising inventory and data. As of December 31, 2023, the company had over 1,100 clients, consisting primarily of advertising agencies or groups within advertising agencies that have independent relationships with it, manage budgets independently of one another, are based in different jurisdictions and are served by unique Trade Desk teams. Many of these advertising agencies are owned by holding companies, where decision making is decentralized such that purchasing decisions are made, and relationships with advertisers are located, at the agency, local branch or division level. If all of the company’s individual client contractual relationships were aggregated at the holding company level, one holding company, Publicis Groupe, would have represented more than 10% of its gross billings in 2023.

The company’s clients typically enter into MSAs with it that give users constant access to its platform. The company’s clients are loyal, as reflected by its client retention rate of over 95% in each of the last ten years. In addition, the company’s clients typically grow their use of its platform and related offerings over time.

Seasonality

Historically, the fourth quarter of the year reflects the company’s highest level of advertising activity and the first quarter (year ended December 31, 2023) reflects the lowest level of such activity.

Competition

The company competes with Google and Adobe.

Development of International Markets

The company has been increasing its focus on markets outside the United States to serve the global needs of its clients.

Regulation

The General Data Protection Regulation (GDPR) and the U.K.’s version of the GDPR (the UK GDPR) (the EU GDPR and UK GDPR are referred to as the GDPR), which both apply to the company.

History

The Trade Desk, Inc. was founded in 2009. The company was incorporated in Delaware in 2009.