As The Trade Desk Goes

Written by Brook Schaaf

The Trade Desk (TTD) is generally considered the leading independent DSP in ad tech. A demand-side platform, in case you’re not familiar with the term, is a software system that allows advertisers (the demand) to buy ads through ad exchanges on the open web (the supply). It’s a key part of the infrastructure of open-web programmatic advertising, worth about $48 billion in the U.S. in 2024, according to Quo Vadis (note the absence of affiliate on the chart).

 TTD reported revenue of $694 million in Q2 this year, up 19% year-over-year, only to see its stock plummet 39%. The CEO referenced tariffs, but this seems like a red herring. Trade publication AdExchanger dug into more likely reasons on a recent podcast. 

The star of the show was guest Laura Martin of investment firm Needham & Company, who spake as the very oracle of Wall Street. Here are three key quotes from Martin and thoughts on what they mean for open-web programmatic and for affiliate marketing.

• On reach and scale:

“Our point of view is that advertisers must, must reach consumers everywhere they are. So, unless you think the open web is going away, which I do not, then Trade Desk is the only company large enough to handle the largest advertisers in the world. Right. So it does 12 billion dollars a year on its platform.” 

• On Wall Street skepticism toward ad tech:

[To the statement that “Even when companies are posting good numbers, it seems like Wall Street has never really truly loved ad tech.”] “That’s very true. And I think part of it is we are very, I’m going to call it data-driven. And these ad tech companies are black boxes… they [the walled gardens] have a closed loop attribution. So they can argue they have performance metrics tied to their ad buys. And that is not true of the open internet in large part. So that attribution, even if it’s grading your own homework, does feel more performance-based, which is better, and they have two million advertisers because they’re doing small and medium businesses.” 

• On small and medium businesses:

“The Total Addressable Market is totally untapped in small and medium businesses, so they’re totally willing to pay anything as long as you can prove return on ad spend. And what we’re hearing is that Facebook is really reached, like when you spend a dollar of advertising, you get back $1.50 of sales.”

Overall, tariffs got short shrift as an explanation for the stock drop compared to the uncertainty of the “black box.” As Martin put it, “not only is it [open-web programmatic] cyclical, it’s also seasonal and if something goes wrong, there’s no ability to tell [why].” In other words, it’s around the predictability of revenues, even though she is expressly not an open-web doomer. 

Here are my takeaways and lessons for affiliate marketing: 

• Martin seems to take at face value that open-web programmatic advertising delivers real impressions to real users, a prospect long-time readers will know I find most dubious. Not that some aren’t valuable, but that many are not targeted, unseen, fake, etc. This holds true for CTV and various other forms of impression-based advertising (See Fou yourself.).
  
• Martin is aware of the problem of walled gardens “grading their own homework,” but accepts it as still satisfactory for the millions of small business advertisers that feel their ads are “performance-based.” And desirable because the revenue is predictable. 
  
• Even on this self-graded system, the expense of Facebook and other walled garden ads is so high that conventional wisdom directs dollars elsewhere. The current winners of this seem to be CTV and retail media networks. 

Affiliate could be a better application of these dollars. We have the return on advertising spend. We have the performance marketing component. What we lack is the reach and the ease of a Trade Desk. Still, I’d wager the channel can deliver far more value if measured fairly. 

 As host Anthony Vagas summed it up, “As the Trade Desk goes, so goes the rest of ad tech.” It may be that ad tech can’t help this, especially in the zero-click era, but affiliate marketing has a chance to go a different way.