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TIVP031: The Trade Desk (TTD): Heir to the Programmatic Advertising Throne? w/ Shawn O’Malley & Daniel Mahnke

·1 hr 24 min·5 clips

The Trade Desk is filling the void left by Google's lawsuits, compounding sales at 50% per year for over a decade.

This episode of The Intrinsic Value Podcast features hosts Shawn O’Malley and Daniel Mahnke analyzing The Trade Desk (TTD) as a potential investment within the programmatic advertising sector. They examine whether the company can capitalize on industry shifts away from dominant "walled gardens" like Google and Meta. The hosts position The Trade Desk as a neutral demand-side platform (DSP) exclusively serving ad buyers on the "open internet." The Trade Desk facilitates automated, data-driven ad purchases across websites, mobile apps, and connected TVs, charging a platform fee of roughly 20% on gross ad spend. Its business model boasts high gross margins of 75-80% and customer retention rates near 95%. A key initiative, Open Path, aims to connect advertisers directly to publishers, potentially cutting out middlemen to improve margins. Another major project is UID2, an open-source identity framework designed to replace third-party cookies for more privacy-conscious audience targeting across the open internet. Adoption of UID2 has gained momentum with partners including Disney, Warner Bros., Spotify, and Roku. The hosts cite a Morningstar report estimating the digital ad market will grow from $700 billion to $1.5 trillion by 2034, with The Trade Desk currently holding about 2% market share. They note that connected TV advertising, a fast-growing segment, already constitutes roughly half of The Trade Desk's sales. The company has compounded revenue at an average rate of 34% annually since its 2016 IPO. A significant industry tailwind involves ongoing antitrust scrutiny of Google's ad tech business, which generates over $30 billion annually; the hosts suggest The Trade Desk could capture a portion of this revenue if regulations disrupt Google's dominance. The shift of streaming platforms like Netflix and Disney+ to ad-supported models is presented as another structural growth driver. The Trade Desk's partnership with Ulta Beauty's UB Media Network is highlighted as an example of its expansion into retail media networks beyond Amazon. The hosts explain that "walled gardens" like Meta and Google control an estimated 60-80% of digital ad spend, but they see a potential trend toward the open internet. They argue Netflix's choice to use The Trade Desk for programmatic ads, rather than building its own walled garden, is a pragmatic admission of the infrastructure and data scale required. The discussion details the complex, fraction-of-a-second auction process between supply-side platforms (SSPs) and DSPs that places ads on websites. The tone is educational and conversational, breaking down a complex industry for an investor audience. The style is analytical, comparing The Trade Desk to competitors and assessing its financial metrics and strategic initiatives. Listeners interested in technology, advertising, and growth investing would find this episode valuable for its detailed business analysis. Those seeking simple investment narratives or who are averse to technical discussions of ad tech infrastructure might find it less engaging.

As heard by us

A clear look at walled gardens, the open internet, and The Trade Desk's role in digital ad spend.

The piece treats The Trade Desk as a bet on where digital advertising is headed, with the split between walled gardens and the open internet doing most of the work.

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Why you'd press play

You want the ad-tech map without having to pretend you love ad-tech maps.

Read the full recommendation in PlayNext →

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