The Trade Desk’s battle with Google is likely to grow in 2021

Andreas Milano

Ad tech giant The Trade Desk is taking greater control over how many advertisers buy digital ads.

The firm, which primarily sells ad agencies and some brands software that automates ad buying, is battling for market share with Google and Amazon over the tech tools that advertisers use.

And it’s likely to become an even bigger digital ad player this year as marketers adapt to the death of third-party cookies that are used to target ads and rise of retail media, where retailers like Walmart and Target sell ad space on their digital properties.

Two recent moves show how The Trade Desk’s clout is growing:

  • The Trade Desk won Walmart as a client in a big move to build a new adtech tool that competes with Amazon.
  • The firm’s work to spearhead an alternative to third-party cookies is gaining steam as Apple and Google clamp down on third-party cookies and other advertising trackers.

The Trade Desk powers ad-buying tools that help marketers buy digital advertising. Online ad spend is expected to hit $171 billion this year, according to eMarketer.

The Trade Desk is the biggest independent ad tech company by market value, though it is still dwarfed by Google and Amazon. The Trade Desk’s market cap is $37.4 billion while recently public PubMatic’s market cap is $2.2 billion. To compare, Google parent company Alphabet and Amazon have $1.3 trillion and $1.7 trillion market caps, respectively. 

Its stock has soared more than 2,899% since its IPO in 2016 and 200% over the past year. Its rise on the public markets has been credited as a factor in other ad tech companies including PubMatic, Taboola, and Viant recently filing to IPO. 

“The Trade Desk is at a size where it’s not a gnat to swat away,” said Jay Friedman, president and partner of ad agency Goodway Group.

Its recent moves and strong financial performance suggest The Trade Desk is pulling even further ahead from the pack of independent adtech players. Other competitors include AT&T’s Xandr, MediaMath, Verizon’s demand-side platform, and Comcast-owned FreeWheel.

The Trade Desk did not comment on the record for this article.

The Trade Desk is competing with Google for clients

The Trade Desk won a big client in Walmart recently, building a tool for the retailer that lets ad buyers buy programmatic ads using Walmart’s shopper data. The move is part of an ambitious push by Walmart to grow its advertising revenue.

The Trade Desk has worked with smaller ad tech companies like SteelHouse to build branded adtech tools, but Walmart represents The Trade Desk’s first big deal of this type with a non-agency or adtech client.

It’s likely that The Trade Desk competed directly with Google to win the business, said an ad tech executive who spoke on the condition of anonymity. The Trade Desk is also known for deep relationships with the big advertising holding companies that Walmart’s ad sales team is targeting.

“It’s symbolic that The Trade Desk is winning a business like that versus Google,” said the exec. “They know where their bread is buttered.”

Still, Google’s ad business goes far beyond ad-buying tools. Google pitches advertisers and publishers tools to sell and measures ads as well as an ad server to target ads. Google also makes most of its advertising revenue from its giant search ads business.

Goodway Group’s Friedman noted that The Trade Desk is a customer of Google and buys ad inventory from Google, so it’s unclear how big of a threat Google considers The Trade Desk.

“If I’m Sundar [Pichai], do I spend a lot of time thinking about The Trade Desk? No. Not nearly as much time as The Trade Desk leadership spends thinking about Google,” he said. 

Google is subject to a number of antitrust lawsuits around the world — including probes into its dominance of the online ad market— and has previously said that its ad business is not a monopoly. The company declined to comment for this story.

Amazon is emerging as a new competitor to The Trade Desk

The Trade Desk’s deal with Walmart signals how the adtech company is competing with another ad giant: Amazon.

As people watch more TV over streaming platforms, Amazon and The Trade Desk are both trying to become leaders in the $11 billion connected TV advertising space.

Amazon owns streaming devices and properties like Fire TV and IMDb TV, which could give it a leg up over The Trade Desk, which has no content to sell ads against. Amazon has also structured its advertising business like a so-called walled garden that limits advertisers’ access to data, said the adtech exec.

The Trade Desk’s opportunity versus Amazon is to be an independent ad buyer that helps advertisers buy programmatic connected TV across different streaming services including Hulu and Amazon Fire. The Trade Desk also has direct deals with media companies like Disney that help advertisers reach big audiences across ESPN and ABC.

But a recent report from Advertiser Perceptions found that Amazon also was advertisers’ most preferred demand-side platform, followed by Google and The Trade Desk.

In 2019, Amazon signed deals with The Trade Desk and Dataxu to sell some ads in publishers’ Fire TV apps. The deals are winding down, suggesting that Amazon has ambitions to take more control of its own ad sales.

“The Trade Desk’s bets are that they want to dominate programmatic advertising — they have done that but they also want to dominate connected TV going forward,” said the adtech exec. “Amazon might be a bigger competitor to The Trade Desk than Google there.”

Amazon declined to comment on the record. 

The Trade Desk is trying to get ahead of Google’s privacy challenges

Apple and Google’s moves to limit third-party cookies have sent advertisers looking for alternative ways to target and measure ads. 

The Trade Desk is one of a handful of adtech companies building alternatives to third-party cookies. Its effort, called Unified ID 2.0, provides hashed, encrypted email addresses and is seeking adoption by ad tech companies and agencies. Criteo and Nielsen are already on board. Unlike other ad tech companies like LiveRamp, Unified ID 2.0 is free to publishers and advertisers.

Google is also creating more privacy-focused alternatives to third-party cookies that The Trade Desk and other adtech firms can use, but skeptics say that Google stands to benefit from its decision because it will still have access to data from users logged into properties like Gmail and YouTube.

In theory, The Trade Desk’s identity initiative could make advertisers less dependent on Google, and being free could help its chances for adoption. The Trade Desk plans to spin off Unified ID 2.0 to a trade organization later this year.

Still, it’s not clear how global privacy regulators will view Unified ID 2.0 and how effectively it will operate once Apple’s strict new app privacy changes come into force in early spring.

Most importantly, the adtech exec said, it’s not clear how privacy-geared initiatives will be viewed by people who don’t want to be targeted by ads that use personal data.

“Part of the reason we’re in this position is that people don’t like these advertising tactics,” the exec said. “The risk long-term could be using The Trade Desk to replace the cookie.”

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