Author Topic: TTD - The Trade Desk  (Read 3139 times)

alwaysdrawing

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Re: TTD - The Trade Desk
« Reply #10 on: August 09, 2018, 08:44:52 PM »
alwaysdrawing, thanks for posting on Trade Desk!

Curious how you see existing and developing moat for Trade Desk?

Interesting discussion of consumer surplus on 2q18 call.


The Trade Desk is the best independent DSP, and is positioned for very strong growth alongside the transition to connected TV.   In this type of market, I see only a handful of winners, and TTD is well positioned to be one of them.  Similar to other tech companies, whoever is the best can reap the rewards of the industry (e.g. Google in search, Facebook as a social network, Amazon for e-commerce) as the factors that drive their growth benefit the industry leader more than any competitors because they have better data and more resources. 

The point of "consumer surplus" on the phone is a good one:  The Trade Desk isn't like most ad tech, just out to squeeze a dollar from the system.  They design their platform so that every dollar of revenue generates MORE than that amount of value for the users of their platform.  That extra value is their moat--as long as they provide more than $1 worth of value for each dollar of spend on their tools, they will continue to gain more business.  That in turn spins the flywheel of them generating more spend, improving their data (to be better than competitors), and continuing to invest in more tools to put them further ahead.  As Jeff Green said on the call, they aren't trying to take profits at this point, and they are focusing on growing and improving their value proposition.

Generally, I think the major risk to TTD is Amazon.  Amazon advertising is the fastest growing part of their business, and I suspect that the Amazon AWS model would be a good one to layer a "tax" on the connected TV or general advertising market.  The walled gardens (Google/YouTube, Facebook, Snapchat, etc) are possible threats, however their conflict of interest inherent in controlling both the ad inventory and the ad marketplace ultimately may face pushback from brands over time, as the data to analyze performance is all kept in house. 

TTD's CEO Jeff Green thinks long term the walls come down on the walled gardens.  I'm not so sure for the majors (Google/Facebook/Amazon), however, TTD is growing very quickly without the walled gardens, and if they do open up, there could be a lollapalooza effect.  Riding the industry wave towards connected TV feels like Buffett and ABC/Capital Cities a generation ago.  The writing is on the wall here, and I think The Trade Desk is positioned to do very, very well going forward.

To anyone looking at TTD for the first time, I suggest reading previous earnings call transcripts--they are extremely helpful in understanding the business and navigating the landscape of ad tech.  It's also unmistakable how big Jeff Green and the Trade Desk team feels that this is a big opportunity.  I agree.