Commentary

Ad-Tech Execs Weigh In On The Trade Desk's IPO

This week marked a turning point for The Trade Desk as it became a publicly traded company.

Ad-tech executives are buzzing about it. Of course, many would like the conditions to be right and ripe for their companies to have the next IPO. More than likely, thought, that honor will go to AppNexus.

Here’s what a few ad-tech executives shared with RTBlog about this week’s development:

"It is great to see the response on public markets to The Trade Desk [TTD] IPO. TTD has done a great job of showing growth, keeping the company lean, and remaining focused," said Jay Stevens, Adform's chief revenue officer, and former general manager, international at Rubicon Project. “Having been through the IPO process once before, this is merely the first step on the path and not the end goal. It remains important for the company to continue to beat and raise each quarter's goals.

"The TTD IPO demonstrates the appetite in the market for successful ad-tech companies. With this investment from public markets, TTD is now in a position to be inquisitive and it adds fuel to the market consolidation, which is already beginning to take shape [Denstu/Merkel, Vector/Sizmek].”

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Sloan Gaon, CEO, PulsePoint, had this to say: “The Trade Desk has played a significant role in shaping the advertising landscape. It has drawn from what the financial exchanges have done over time with electronic trading, and applied it to the ad marketplace. While most companies in the industry just focus on marketplace issues as an ‘ad’ problem, The Trade Desk has addressed these issues and presented unified solutions.”

Gaon cites TTD’s ability to build one of the largest demand-side platforms, its nimble tech stack “that has been able to take advantage of the changes in the marketplace quickly,” and a sales team "that has been able to tackle both Open RTB and PMP [private marketplace] deals.”

Gaon maintains that TTD’s IPO may warm Wall Street back up to the ad-tech space. “Given the cold shoulder Wall Street has given the ad-tech industry, only the strongest companies will be able to elicit excitement from investors who have been burnt more often than not from ad-tech IPOs,” Gaon said.

Jay Friedman, chief operating officer, Goodway Group, says TTD has an advantage with its APIs, which allow agencies and service providers to build and control their own algorithms and analytics. “The company’s enterprise solution is a clear leader in the market, and The Trade Desk is among the strongest candidates to win the advertising automation race,” Friedman said.

With respect to more IPO action in the ad-tech space, Friedman said: “Every IPO in any sector is a bellwether for what’s next, because if the IPO goes well, other companies  want to quickly follow suit. If it goes poorly, no one wants to go next. While I think it’s a bit premature to jump to conclusions about TTD's IPO, I do think the company’s incredibly savvy. They priced it for a pop to demonstrate they’re real, and they got that. [TTD] has gone to market as a software platform just like other platforms in other sectors. Its position appears to be that it’s a software platform that happens to enable smart ad buying, not that it’s an ad-tech player that happened to build software.”

Friedman maintains other IPOs in the sector were “too forced.” He says investors were nervous they couldn’t get an exit and felt an IPO was the only way. This “punished a number of companies." Friedman also cited the fact that TTD had plenty of cash and is profitable. “This was unlike nearly any other ad-tech IPO, and unlike many software IPOs.”

Investors, Friedman said, “want tech that’s easy to use but also answers the ‘why’ in the tech. One of the biggest ways for The Trade Desk to sustain its success is to further develop and differentiate its API to power other platforms.”

Adam Berke, AdRoll's president and CMO, was philosophical: “With ad tech’s history of both highs and lows in the public markets, analysts and investors are becoming more attuned to the required attributes of a successful and resilient ad-tech company. In addition to a strong business model with predictable revenue, you need to deliver real technology that solves a key pain point for your customers.”

Berke said TTD shows an example of where “marketers want to take control of their programmatic advertising and be able to pull the various levers. Self-service isn’t only for SMBs anymore. Agencies now also want to be ‘hands-on keyboard’ so they can deliver value for their clients. It’s great to see the market rewarding self-service models.” Hands-on, Berke explained, offers more direct control so that customers can optimize and make changes themselves.

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