Following months heavy on drama, including a high-profile spat with Publicis Groupe, The Trade Desk posted mixed performance in Q1. Revenue was up 12% year over year to $689 billion for the three-month period ended March 31, according to an earnings statement, above expectations.
However, that represents an over 10 percentage-point drop in the rate of growth from the year-ago period, a deceleration partially attributable to advertisers pulling back due to an uncertain macro environment. Trade Desk’s international business is growing at a faster clip than the U.S., but the latter still represents 82% of revenue. Shares tumbled following the report, which also offered cautious Q2 guidance.
Longer term, the demand-side platform sees itself as structurally equipped for major industry shifts, including an influx of advertising in artificial intelligence chatbots. Executives argued that Trade Desk’s focus on open-web advertising provides an advantage over closed ecosystems, or walled gardens, amid the AI boom.
CEO Jeff Green drew parallels between the emergence of chatbot advertising and Netflix’s journey to integrating ads, where pricey subscriptions eventually needed to be balanced out with more profitable lines of business supported by data. OpenAI earlier this week launched an ad server in beta as part of its budding ad push around ChatGPT, and the startup has held talks with Trade Desk around selling ads, The Information previously reported.
“It’s not unreasonable to think that many of the [large-language models] are going to try to get as much ad monetization as possible,” said Green on a Q&A portion of the Q1 earnings call with analysts.
Green also forecasted that more marketers will prioritize open-web advertising as part of their data-driven tactics and begin to treat walled gardens, i.e. Meta and Google, as the “leftovers.” The executive cited two unnamed CMOs who described “chasing cheap reach” as a land mine and “racing to the bottom of the funnel” as “racing to the bottom of your business,” respectively.
“That mindset is what is driving the shift toward more data-driven decisioning,” said Green.
Still, Trade Desk is sitting at a point of uncertainty that could be intensified as external factors like the Iran war throw a chill on the industry. Publicis in March recommended clients stop using Trade Desk after the ad-tech firm allegedly failed a third-party audit, setting off a back-and-forth about media transparency that Green seemed eager to put behind the company, claiming the situation has been “overdramatized” by the press.
“We continue to have a great dialog with Publicis about the next chapter of our partnership. Our negotiations are ongoing,” Green said in response to an analyst question on the dustup. “It’s probably not prudent for me to say more about it in this forum, so I’ll just leave it at that on Publicis.”
Trade Desk has also dealt with a significant executive exodus in recent months. Green on the earnings call confirmed Adweek’s report from Thursday that strategy chief Samantha Jacobson is leaving for OpenAI.
