The Trade Desk's stock sunk 40% earlier this month with analysts blaming increased competition from Amazon as a reason for the uncertainty, but the company's CEO Jeff Green may have his head in the sand.
On their August earnings call, Green said:
“Amazon is not a competitor and Google really isn't much of a competitor anymore either. We're trying to buy the open internet, leveraging technology that values media objectively. We don't have any media, and we don't grade our own homework.”
However is what he considers the company's UVP actually a disadvantage?
Owned media is an extremely valuable asset! In comparison:
- Amazon owns its shopping marketplaces, Prime Video, and Fire TV, giving it direct ad inventory, plus access to a mountain of first-party shopping data.
- Google owns Search, YouTube, and Chrome, which collectively offer massive user data and in-app / on-platform ad placements.
- Netflix and Disney+ host and serve their own content and ads, while controlling the formats and placements.
In contrast, The Trade Desk doesn’t own any media, which on one hand, allows it to act as a neutral, transparent DSP across the open internet, but on the other hand, means it lacks the exclusive inventory and first-party data advantages that competitors like Amazon, Google, and Netflix enjoy.
One may be more noble and make for a better talking point, but the other may be more stable & profitable.
So while Green may have a point that Amazon an Google aren't direct competitors in the world of “neutral, transparent DSPs” — that world doesn't exist in a silo and is very much in competition with ad networks that own media.
What are your thoughts? Should The Trade Desk pivot away from its idealistic model and seek to acquire some media assets in order to future-proof its business? Is the company at risk of Amazon and Google forging exclusive partnerships with their biggest clients? Is its high margin business ripe for disruption by the king of “your margin is my opportunity?”
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