AdExchanger "How The Trade Desk Cracked The DSP Market (Hint: It's All About The Agencies)" - James Hercher
February 24, 2016
The Trade Desk has grown faster than probably any other DSP in recent years, as founder and CEO Jeff Green sought to capitalize on what he saw as strategic errors by rivals.
“We saw that most of the DSPs had created channel conflicts for themselves,” said Green, a reference to some other DSPs’ media company investors or attempts to go around agencies to pitch clients directly. “There was this chance to go to the agencies with the idea that we were going to power them, not compete with them.”
And agencies have responded.
The Trade Desk, a private company, recorded revenues of $202.1 million in 2014, according to Inc. Magazine's annual survey. That's a little less than half of bulkier and older competitor MediaMath's $471.1 million, representing a three-year growth rate of almost 7,000%.
Alejandro Correa, director of operations at Ogilvy & Mather-owned performance marketing shop Neo@Ogilvy, oversaw his firm’s RFP process for new DSP partners a few years back. He said The Trade Desk’s philosophical approach “underlies their whole relationship with us.” Other agency sources have echoed the statement.
Green also found inroads by embracing omnichannel media execution at a time when channel-specific solutions from vendors like Millennial Media, YuMe and Videology had begun to overwhelm buyers.
“The Trade Desk came in at just the right moment to handle this industry adjustment that was happening from traditional display to channels like mobile and video,” said Steve Katelman, EVP of global strategic partnerships at Omnicom, who brought The Trade Desk on as a vendor three years ago.
Turn and TubeMogul in particular were cited by industry sources as having suffered losses corresponding to The Trade Desk's gains.
Green has long counted on a consolidation toward full-stack players as holding companies trim their vendor partners. He's not bashful about whose business he has his eyes on. “People think of us as competing with MediaMath or Turn,” he said, “but they don’t think of us enough as competing with AppNexus and Iponweb on the platform model.”
Green knows something about the platform model.
He was COO at the real-time bidding exchange adECN when Microsoft acquired it in 2007 in a bid to compete with Google/DoubleClick and Yahoo/Right Media. But “adECN died on the vine,” wrote former Microsoft ad tech executive and current MediaMath VP Eric Picard in an AdExchanger column last year.
Green left Microsoft’s adECN in 2009, and within weeks had formed The Trade Desk.
Having established agency inroads, The Trade Desk is looking to other mid-tier players to continue growing. Holding companies still represent a majority of the startup’s revenue, but Green said smaller digital solutions companies building on the platform are growing faster in aggregate.
The Goodway Group, a programmatic managed service provider that competes mainly with regional agencies, builds its tech on The Trade Desk’s infrastructure, said company COO Jay Friedman. He said The Trade Desk demands less in terms of time or resources to build, and is “highly differentiated in how flexible their API is.”
Omnicom's Katelman agreed.
“It’s a more flexible back-end system,” he said. “They have a mature bidder and open APIs with multiple specs that we can plug into. That is a differentiator.”
One independent trading desk CEO who uses both AppNexus’ and The Trade Desk’s platforms said, “AppNexus is built more for exchange specialists with optimization engines who want granular impression-level details. As opposed to The Trade Desk, which is for someone who wants to pull and analyze log file data, something that’s more of a tool for agencies.”
But in a space where technology commoditizes at such a rapid click, one ad tech differentiator doesn’t get the ROI credit it’s due: account management.
“There were DSPs that started earlier and had older databases to maintain, and (The Trade Desk) came in with an agile developer team and full-fledged managed service backing them up,” said Keith Gooberman, CEO at the trading desk Programmatic Mechanics.
“Being responsive and having great service … isn’t necessarily a product, but it’s a tangible advantage,” said Correa of Neo@Ogilvy’s experience with The Trade Desk.
The Trade Desk’s responsiveness and the speed of its product updates meant the digital agency Rise Interactive could eliminate some of the dedicated video and display media DSPs it worked with, consolidating more business with The Trade Desk, according to Steven Tazic, director of investment management.
Often these agency decisions come down to small details – details that The Trade Desk would get right. Friedman recalled account managers at rival DSPs responding to client inquiries by redirecting his staff back to company dev kits or wiki pages. “You don’t get that at The Trade Desk,” he said.
“One of the things people don’t take into account is company culture. A company can have the best product, but if their company culture isn’t a fit, it’s a no-go,” he said. “That’s probably the No. 1 thing that’s kept us and The Trade Desk aligned.”
Maintaining strong relationships with agencies is like hitching your wagon to the fastest team of horses, as Green describes it: “I wouldn’t bet against the agencies and their ability to win business.”
“That’s why, when the dust settles,” he said, “we think The Trade Desk will be one of the few businesses there at end state.”