There was some interesting math in what The Trade Desk presented to investors, analysts and the press in last week's third-quarter earnings release. No, not its actual earnings, which continue to be healthy despite some tepid international growth, but in the dimensions it uses to describe the ad experience the average consumer is exposed to daily.
The "hypothetical illustrative example of what an average consumer might experience during an average day" is The Trade Desk's estimates based on public sources and "management estimates, but it offers a very different view of the world most people on Madison Avenue likely think of when creating and executing their media plans.
According to The Trade Desk, the average consumer experiences 1,622 ads daily, 98% of which are digital, and only about 2% of which are "traditional" media such as TV, radio, magazines, etc.
It's hard to fathom what sources The Trade Desk used to derive this view of the average consumer daily ad experience, but even more remarkable is how it allocates its hypothetical, illustrative ad budgets to reach those consumers.
In The Trade Desk's example, about two-thirds of the spending goes to search (even though only 0.0025% of the ads the average consumer experiences go to search clicks).
Another 30% goes toward desktop and mobile ads, with the remainder going to TV/video and audio.
If The Trade Desk's hypothesis is correct, the rest of the ad world must be very wrong. Which is probably why it included the slides in its pitch to analysts and investors, because it signals tremendous upside growth for digital in general, and programmatic media-buying in particular.
The Trade Desk has done a remarkable job of consolidating the demand-side of the programmatic media marketplace in recent years, becoming the go-to DSP for many of the biggest agencies and their clients, and analysts continue to rate the publicly traded ad tech company with a healthy stock ratings, though they adjusted their target prices for The Trade Desk's share value growth down a bit due to lackluster international growth.
Interestingly, the most promising area of growth for the programmatic trader is television. Specifically, connected TV advertising, which many believe will ultimately be traded programmatically.
"It feels like CTV is taking off," Pivotal Research Group analyst Michael Levine wrote in a note to investors las week, adding, however, that it "is more challenging to forecast."
That said, The Trade Desk reported a 145% increase in connected TV ad revenues, and a 160% growth in audio ad revenues growth during the third quarter of 2019.
Source: A hypothetical illustrative example of what an average consumer might experience during an average day and are based upon information from The Trade Desk, public sources, and management estimates.