Dive Brief:
- The Trade Desk reported fourth-quarter revenue increased 24% year-over-year to reach $491 million, per an earnings statement release. The ad-tech firm notched $1.58 billion in full-year revenue for 2022, a 32% YoY increase.
- The company also saw increased adoption and success of its Unified ID 2.0 (UID2) identity framework, with campaigns on Disney's UID2-powered audience graph reportedly 12 times more effective in reaching target audiences.
- Founder and CEO Jeff Green attributed continued growth to the increased value of the open internet compared to walled gardens on channels like retail media and connected TV (CTV), especially as ad-supported content options continue to grow at the expense of ad-free ones.
Dive Insight:
The Trade Desk's solid Q4 results came despite a rocky economic climate that saw Google and Meta both report ad revenue declines, leading the duopoly to now make up less than 50% of the digital market for the first time in a decade. That shift has benefited The Trade Desk.
"I remain convinced that in times of uncertainty, as marketers look to do more with less, they are continuing to prioritize precision media on the open internet," CEO Green said on an earnings call. "With The Trade Desk and the open internet, marketers can measure ROI and value with more objectivity, and that means they'll prioritize us over the limitations of walled gardens."
As in previous quarters, The Trade Desk has attributed its growth to the increased adoption of CTV and retail media by marketers seeking premium ad alternatives at scale. CTV continues to be the company's strongest growth driver, especially as ad-free subscription models struggle in a crowded streaming marketplace and lose ground to ad-supported options, both in the form of ad-supported tiers on Netflix and Disney+ and free ad-supported TV platforms like Tubi.
The Trade Desk also reported continued adoption for its UID2 framework that seeks to solve for identity problems amid a tightening privacy landscape, including changes to mobile advertising and the planned deprecation of third-party cookies by Google. At the beginning of Q4 last year, around 15% of the third-party data ecosystem was activating on UID2, a proportion the company expects to jump to around 75% in the first half of 2023 — a major shift in the search for cookieless alternatives.
"We will have effectively solved the identity matching challenge of the entire open internet on a scale well beyond anything cookies have ever accomplished, and all while providing consumers with much greater control over their privacy," Green said on the call.
In the last few years, UID2 has been adopted by publishers including Disney and Paramount; tech providers AWS and Adobe; and many leading brands. Disney, which integrated its Audience Graph with UID2 in 2022, recently announced that Unilever would be the first brand to test the integration. Campaigns run through this integration have been found to be 12 times more effective in reaching target audiences, per the earnings release.
Green also called out the U.S. Department of Justice's recent antitrust suit against Google that accused the tech giant of abusing its power over the digital ad industry. Google cited the growth of several companies, including The Trade Desk, as proof that it is not a monopoly — a claim Green has previously pushed back on.
"This is not us versus Google," Green explained on the earnings call. "It's the value and opportunity of the open internet versus the limitations of walled gardens. We have been winning for years and an unfair market with some systemic obstructions working against us. Imagine what we can do as the market becomes more fair, which we predict it will one way or another."
