The Trade Desk
Jeff Green, CEO of The Trade Desk.
- The Trade Desk is one of the biggest public ad-tech companies and an increasing threat to Google as it faces antitrust concerns about running an
advertising business for both publishers and advertisers. - CEO Jeff Green talked to Business Insider about how he grew The Trade Desk into a company with 2019 expected revenue of $653 million and why his firm has the best chance of chipping into Google's programmatic business.
- He's also trying to set the ad industry standard for ad targeting with a new product.
- But he faces competition from companies like LiveRamp, Digitrust and the Advertising ID Consortium that are racing to develop similar products.
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Few people have watched the digital advertising industry change more than Jeff Green.
While doom and gloom loom over ad-tech with talk of consolidation and venture-capital funding drying up, The Trade Desk is using its size and independence from walled gardens like Google to thrive and set the agenda for the digital ad industry.
After starting then selling online ad exchange AdECN to Microsoft in 2007, Green in 2009 co-founded The Trade Desk with Dave Pickles (now CTO), which sells agencies software that automates digital ad buying. Under Green, its CEO and chairman, The Trade Desk has become one the biggest players in ad-tech with 1,200 employees in 23 offices in cities from its headquarters in Ventura, Calif., to Shanghai.
It's a rare successful public company in a category that Green acknowledges is typically investors' "most-hated" group.
Public ad-tech companies have a well-documented rocky history that has seen Rocket Fuel spiral from a $2 billion valuation to a $125.5 million sale to Sizmek, and Millennial
"I knew that I had to change the perception that all of those companies created. The company was growing fast, was profitable and had high-client retention," Green told Business Insider. "I had to counter that with everyone telling me, 'You're in the most hated-category ever - what's wrong with you?'"
Advertisers are keen to see a company challenge Google in digital advertising. According to eMarketer, Facebook and Google will collectively account for 59.3% of digital ad budgets this year. Meanwhile, the number of independent ad-tech companies continues to shrink, making it harder for ad-tech firms to push back against Google.
The Trade Desk expects to make $653 million this year, up 37% from $477 million in 2018. As of this week, The Trade Desk has a $8.6 billion market cap, and its stock hit its 52-week high at $289.51 in July on news that it had inked a deal to sell OTT ads in some Amazon Fire apps.
While The Trade Desk's size is tiny relative to Google - Google's parent company Alphabet had a $836 billion market cap this week - Green has no qualms about calling Facebook and Google his biggest competitors. For years, he's been among a small handful of execs who are vocal on big issues that the ad-tech industry is grappling with like transparency and privacy. His calls to take down Google have escalated as Google faces antitrust concerns from regulators.
"There's a spirit of e pluribus unum in what we're doing," he said.
Green sees the global digital ad market approaching $1 trillion in seven years, up from $725 billion this year, per research firm IDC, and says he's best positioned to benefit.
"We're more eligible to win the next dollar than any other company," he said.
The Trade Desk rose by warming up to agencies
The Trade Desk's strategy to cut into Google has been to cozy up to agencies that funnel millions of money in ad campaigns through the company's platform. Several agencies said while other ad-tech firms are notorious for hard-sell tactics, The Trade Desk took a consultative, relationship-based approach to them that's akin to media sellers.
"Jeff is an incredibly smart, savvy guy who has a great read on the industry," said one agency executive at a large holding company, who would only speak on background. "The Trade Desk is where it's at because they've had a consistent strategy, meaning that you've always been able to trust what Jeff is saying - you're not getting one thing in the room and another outside of the room."
Three months ago, another ad exec, Luke Lambert, OMD's managing director and head of programmatic, had dinner with Green. That kind of access to top leadership is what differentiates The Trade Desk from bigger ad players like Google and Verizon Media, he said.
"Everyone has a sales team, but the difference with Jeff is that he's accessible," Lambert said. "I'm not sitting down with Google's head of media, let alone CEOs."
And when The Trade Desk expanded into China earlier this year, a country notoriously difficult for advertising companies to crack, Green temporarily moved to Hong Kong.
"He figured out more than where media and tech play - he got a good grip on the culture," Lambert said.
The Trade Desk has gone so far as to help agencies with problems beyond ad-tech like helping them retain complaining clients, said Jay Friedman, president of programmatic ad agency Goodway Group.
"I have seen The Trade Desk say, 'Let's try to get that back on track' rather than using it as an opportunity for them," he said.
Green is one of Google's most vocal critics
To be sure, Google still has advantages over The Trade Desk. Not only does it have a demand-side platform (or DSP), it has a supply-side platform that publishers use to sell ads, an ad server and analytic tools, giving it more tools and a pool of ad inventory than The Trade Desk has.
Google parent company Alphabet reported $32.6 billion in ad revenue in its second quarter, primarily from search advertising. The company doesn't break out revenue by ad formats, but Pivotal senior analyst Michael Levine estimated that Google makes $8 billion to $10 billion per year from programmatic advertising.
Regulators are circling Google, though
Google's size and scope across search, video, display and mobile advertising advertising is increasingly attracting regulators' notice, though. Fifty state attorneys are investigating whether Google's ad business stifles competitors. The Department of Justice has also asked Google for more information on past antitrust investigations, according to a Securities and Exchanges Commission filing made public last month.
A big part of Green's platform has been to shine a bright light on those concerns.
"They've always known that Google is public enemy No. 1," said the anonymous agency executive. "As they see a lot of things coming down the pike in terms of privacy, regulation and consolidation, I think they felt a need to ratchet up that narrative even more."
The Trade Desk's issue with Google boils down to the tech giant using its own data and inventory to give it a leg up over ad-tech firms, said Goodway Group's Friedman.
"If Google was not allowed to use any search, Maps or Android data, would the programmatic platform be as successful and how would it compete with The Trade Desk, MediaMath or anyone else?" Friedman said. "If data was not infused into Google's programmatic offering, it would be weaker."
Last month, Google reorganized its ad business, including separating the buy side and sell side arms. Green argued that having both teams report to the same leadership shows Google's potential conflict of interest because it both buys and sells media. Google also has its own ad server and analytics software that marketers use to measure campaigns.
"When they joined their buy-side services with their sell-side services and put the same structure together so they all report to the same people, that was a mistake," Green said. "I don't know if to them that it's worth being in the business."
The Trade Desk even went so far as recently rolling out a big ad campaign that took aim at walled gardens including Google.
The Trade Desk
The Trade Desk's recent ad campaign targeted Google.
A Google spokesperson pointed to a recent blog post defending it against accusations that it is anti-competitive. The spokesperson also noted that The Trade Desk is part of its Authorized Buyer program that allows ad networks, DSPs and trading desks to buy ads through Google's ad exchange without directly working through Google.
"In the past decade, we've built products that foster competition," Sissie Hsiao, VP of product management at Google, wrote in the blog post. "Our tools and platforms make it easy for advertisers and publishers of all sizes to choose whom they want to work with in this open, interconnected ad system. Publishers use our technology to access demand from hundreds of partners, of which Google is just one source. Advertisers use our technology to buy ad space on more than 80 exchanges."
The anonymous agency source argued that advertisers don't share Green's alarm because Google's platform is so easy to work with.
"At the end of the day, our clients understand what that bias looks like - they're probably going to be willing to accept some of those biases if it makes their media 25% more effective," said the source. "Jeff would say that he's got Google and Amazon on the back foot, but I don't know how true that is."
The Trade Desk does dominate Google in some areas
The Trade Desk is using its clout to impact big industry initiatives.
This summer, The Trade Desk and Google clashed over a pending initiative led by the IAB Tech Lab to provide transparency into which vendors can sell digital ads. AdExchanger reported that The Trade Desk has pushed for Google's publisher-side exchange bidding product to be labeled as a "intermediary" along with other ad-tech vendors that are considered bad actors because they take a cut of advertisers' spending.
If Google's exchange bidding product is categorized as an intermediary, some ad buyers may stop using it and buy ads from competitors like Prebid, industry experts said.
The Google spokesperson stressed that Google and The Trade Desk are involved in hashing out the IAB Tech Lab's initiative and that details are still being ironed out.
"To be clear, we are very supportive of this effort," the spokesperson said. "We have some concerns that the first version of the SupplyChain standard doesn't go far enough in terms of ensuring full transparency of the inventory involved in a programmatic transaction. For example, some intermediaries that are not financial in nature still have influence over who gets the impression. As part of the working group, we're pushing for more transparency so that advertisers know all of the intermediaries and can make more informed decisions about the inventory they are purchasing."
The CEO of an ad-tech firm that competes with both The Trade Desk and Google's DSPs argued that The Trade Desk's tussle with Google over this issue actually shows Google doesn't have a monopoly on advertising.
"The Trade Desk is a threat and thorn in Google's side, but Google needs competition in this space," the CEO said. "They need to show that there's a lot of competition for their DSP."
Broad advertising changes could threaten The Trade Desk
Pro-privacy changes that Google is making to its Chrome browser may hurt The Trade Desk.
The upshot is that as third-party data becomes more scarce, marketers are increasingly using first-party data and contextual targeting. The Chrome changes could give Google more control over targeting and measurement, including pitching advertisers its own audience segments.
Competing with Google comes at a cost
The Trade Desk's competition with Google also takes a toll on its performance.
A report from investment bank Luma Partners on the state of ad-tech showed The Trade Desk's stock declined 20% during the third quarter, causing a 12% dip for ad-tech companies overall.
Luma Partners
Luma Partners' recent third-quarter report shows that The Trade Desk's stock took a hit.
Pivotal's Levine compared the bumpy quarter to the stocks of companies like Twilio and Shopify that compete with another tech giant, Amazon.
"The criteria is very high multiple, year-to-date returns," he said. "You have shareholders looking at this saying, 'This is Shopify relative to Amazon.'"
The Trade Desk wants the industry to adopt its plan to save cookies
Staying in the game also means The Trade Desk has to stay ahead of changes Google and Apple are making to internet browsers.
The Trade Desk is trying to get all of ad tech to adopt its product called Unified ID that's meant to save cookies, marketers' longstanding ad targeting method that's being threatened in the age of privacy.
Each time an advertiser wins an online auction to load an ad, ad-tech companies sync billions of audience profiles to match cookies, leading to big infrastructure costs. In theory, a common ID could cut down on those costs.
The Trade Desk's Unified ID stores consumers' targeting and privacy preferences across devices. The goal is to make it the standard for how marketers handle cookies attached to IDs that are used for ad targeting.
Green argues that using these IDs should solve the problem of advertisers showing people the same ad over and over and address broader privacy concerns. The Trade Desk's ability to analyze 10 million ads per second gives the company an advantage, he said.
According to The Trade Desk, more than 20 demand-side platforms, 30 supply-side platforms and 30 data-management platforms are using or testing its free ID product.
"One of the big problems of the internet, even today, is that marketers spend billions of dollars to make consumers hate them by not respecting reach and frequency," Green said. "Our ID footprint is bigger than anybody else who is willing to give it away."
Green has his work cut out for him, though. Companies like LiveRamp, Digitrust and the Advertising ID Consortium are racing to develop similar initiatives. There's also the question of whether any one company can cover all the consumers that advertisers need for ad targeting.
And just as Google's size makes it a target, The Trade Desk could find itself facing pushback if it's seen getting too powerful. Marketers are also concerned that The Trade Desk could eventually threaten to spend less with partners that don't use its ID or start charging it as a fee, Adweek reported.
"There's a lot of value in getting us to this spot, but then you're going to see for-profit companies attempt to create leverages and advantages so that their data is more accurate or so that they can do more with their data than their competitors can," said the ad-tech CEO source. "We fundamentally believe that something of this magnitude with this much power needs to be in the hands of a neutral, non-for-profit governing body."
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