Trade Desk Touted Google's Next Big Digital Advertising Rival: WSJ

The Trade Desk Inc (NASDAQ: TTD) is being touted as the emerging rival to Alphabet Inc’s (NASDAQ: GOOG) (NASDAQ: GOOGL) Google in the digital-advertising technology arena considering the former’s current momentum, the Wall Street Journal reports.

The Trade Desk, which supports companies for online ads’ purchases across publishers’ websites, is reportedly eating into Google’s market share. Trade Desk has expanded its market share to close to 8% and continues to beat the growth trajectory of market leader Google, with a 40% market share.

Trade Desk continues to challenge Google by investing in online advertising segments like audio and streaming TV, where Google does not have a commanding presence. Trade Desk revenue jumped 26% year-over-year in 2020, reaching $836 million from higher digital media consumption by the pandemic induced homebound Americans as brands migrated from TV to digital advertisement.

The market cap of Trade Desk hit $30 billion as it emerged to be one of the best-performing stocks amidst the pandemic. TTD has gained 132.8% in the last 12 months.

Google’s recent plans of bringing an end to ad sales based on user web browsing could act as a dampener for companies like Trade Desk, which is vying for a relatively smaller segment of the ad market. After all, Google owns the maximum data for targeting ads to consumers. Therefore, Google’s latest move in the garb of privacy protection has the potential to remove competition.

However, Google has also attracted the U.S. and global antitrust investigation along with its tech counterparts.

Google will reportedly support ad targeting concerning first-party data collected by companies from their customers and harped their importance towards privacy protection.

Trade Desk stock lost 13% on Wednesday over concerns regarding the impact of Google’s latest move.

However, it lost just 8% on Thursday over the CEO’s comment regarding the opportunity to build an alternative targeting technology that could place Google in a tough spot.

Jeff Green is credited for transforming Trade Desk into a profitable company by starting it with a venture funding of $7 million, followed by a $120 million IPO in 2016.

Trade Desk focused directly on the buying side, over strong conviction towards client persuasion for conflict reduction.

Trade Desk formed direct relationships with publishers and media companies like Comcast Corp’s (NASDAQ: CMCSA) NBCUniversal, Condé Nast, Fox Corp (NASDAQ: FOX), Wall Street Journal parent News Corp NWSA, Spotify Technology SA (NYSE: SPOT), TikTok and Vox Media, thereby acquiring the right to post their ad space directly on Trade Desk’s systems. All of which cut out the middlemen in ad transactions, satisfying buyers and sellers.

However, Google’s removal of third-party cookies from its Chrome browser could pose a challenge for Trade Desk next year. Cookies are text files used by advertisers and publishers to accumulate data on users’ web activity, thereby targeting ads.

Trade Desk did not endorse Google’s move over its negative implication to competition and open internet.

Trade Desk devised Unified Id to counter the removal of third-party cookies. The company engaged publishers and ad-tech companies to create a new identifier for users known as Unified ID, collected from the user’s email address but scrambled for privacy protection. 

Any company in the network would be able to access a user’s Unified ID profile and contribute data. Unified ID reportedly has profiles for 50 million people.

Price action: TTD shares are down 3.42% at $618.27 on the last check Friday.

Image Courtesy: Wikimedia