Being the biggest XYZ “you’ve never heard of” is an effective attention-grabber commonly thrown about. Sometimes it’s just, other times, not so much. For US adtech company The Trade Desk the trope fits: Stock valued at USD 2 billion and a USD 10 billion market cap truly are numbers that put it on par with the big boys in Big Tech. But who is The Trade Desk? What do they do exactly? And how have they been able to thrive in one of the most competitive and hated spaces online (adtech), while scores of other companies have failed? To find out, OMR Founder Philipp Westermeyer sat down with Dave Pickles, co-founder of The Trade Desk, in this episode of the OMR Podcast.
“We look at 10 million ads per second and try to pick the right five or ten for every advertiser.”
To hear The Trade Desk co-founder Dave Pickles say it, it’s pretty straight forward what The Trade Desk is: “a platform for buying digital media.” While it’s essential raison d’etre may be easy to grasp, factoring in the fact that The Trade Desk has a 10-billion market cap, is active around the world and exchanges processes millions of ads per second, you quickly understand that we are dealing with an intricate and highly complex adtech operation. “The Trade Desk looks at 10 million ads per second, ranging from display ads, to audio and connected television, to pick out the right five or ten for every advertiser. A hard technical problem: a lot of good fun,” Dave Pickles tells OMR Founder Philipp Westermeyer.
Its sheer scale on its own is astounding. In his keynote at OMR19, Jeff Green, the “other” co-founder of The Trade Desk said the company is “the same size as Pinterest or JetBlue airline and went from USD 600 million to USD 2 billion (editor’s note: that figure has now grown to 10 billion) after its IPO in 2017.” But given that so many adtech companies have failed in recent years, it’s truly remarkable that The Trade Desk not just continues to be around, but thrive. “The first thing I did in this world was build a supply-side tool. The whole time I was building the exchange, I was just geeking on all the possibilities for buyers,” says Dave Pickles.
“Super galvanizing, but kind of offensive”
But after the core exchange was in place, there was a hard realization that what the Trade Desk was working towards was years ahead of buyers. “After integrating buyers onto the exchange, I found out that their methods of bidding were not very sophisticated. They bid 1 dollar on everything,” Pickles recalls. “It was super galvanizing, but kind of offensive that we had done all of this work and all buyers wanted to do was bid 1 dollar.” The opportunity, however, was obvious and the Trade Desk set down the path they continue to be on today. “Over 10 years, we really have not pivoted away from our mission. We built the platform to the future and got enough of it right.”
Jeff Green’s keynote on the Conference Stage at OMR19
10 Billion market cap, 200 million in revenue
Achieving a 1000% increase in stock value after going public and having a 10-billion-dollar market cap are indicative of getting a bit more than just “enough right.” That also applies to the monetization model: “We’ve done everything we can to be as aligned as possible with our customers. Not a lot of complicated deals. We take a percentage of spend and more than earn our keep,” says Pickles. “Through that we have to keep re-earning our worth every campaign, which causes us to continue to innovate and get better.” With several hundred million in global revenue annually, you would think that significant improvement or growth would be unrealistic. Not so for Dave Pickles and The Trade Desk. “We think all of advertising will become digital and programmatic. Connected television is proving that right now. We often say that the total addressable market is 1 trillion dollars,” says Pickles.
To hear more on The Trade Desk’s business model, how it views the challenges of GDPR and political self-policing, as well as what The Trade Desk can do to help publishers, check out this week’s episode of the OMR Podcast with Philipp Westermeyer on Podigee.
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The OMR Podcast with Dave Pickles at a glance:
- What is The Trade Desk? 0:55
- What does The Trade Desk do? 2:02
- How has The Trade Desk managed to survive and thrive, while other similar companies have failed? 2:57
- How does The Trade Desk monetize? 4:30
- What are some of the challenges of working with agencies? 5:36
- Are there brands that The Trade Desk counts as clients? 7:16
- What are the primary differences between the business and tech value chains? 8:17
- Which browsers does The Trade Desk consider important? 10:15
- How have browsers responded to calls for increased security and privacy re: cookies? 11:46
- How did the major browsers respond to GDPR? 13:41
- What is the future outlook for cookies? 15:58
- Why the DSP and adtech market continues to consolidate? 18:56
- How does Dave Pickles hope to help publishers struggling to generate traffic? 20:46
- How advertising dollars break down in the space and the dynamic that break down creates 23:15
- What adtech companies out there have impressed Dave Pickles with their business model? 24:44
- What effects will GDPR have on third-party data companies? 26:43
- How much money exchanges hands via The Trade Desk in Germany? 28:14
- What is a primary growth driver for The Trade Desk? 29:24
- How much in total revenue does The Trade Desk generate annually? 30:08
- Does Dave Pickles feel that the majority of consumers are bothered by a lack of transparency in tech’s handling of personlized data? 31:53
- Who does Dave Pickles see as primarily responsible for regulation? 35:53
- How does The Trade Desk as an adtech company deal with the sudden requirement of having to deal with politics? 38:36
- Where did The Trade Desk’s hiring strategy come from? 39:28
- What is the next big challenge facing The Trade Desk? 41:57
- How much growth can The Trade Desk still hope to achieve? 43:21