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The Trade Desk Stock Jumps on Partnership With Amazon

By Daniel Sparks – Jul 26, 2019 at 2:01PM

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Here's the lowdown on The Trade Desk's new partnership with Amazon Publisher Services.

Shares of The Trade Desk (TTD 0.43%) surged on Friday, rising more than 9%. The stock's big jump followed Amazon's (AMZN -0.59%) announcement that its Amazon Publisher Services (APS) platform is partnering with demand-side platforms (DSPs) The Trade Desk (TTD 0.43%) and Dataxu TouchPoint.

The partnership gives ad agencies and brands using the two DSPs access to ad inventory available through APS, which consists of ads on ad-supported content on Amazon's Fire TV marketplace. On the flip side, this means publishers using APS now get access to marketers using The Trade Desk's platform.

The announcement is a "gamechanger for connected television," The Trade Desk CEO Jeff Green said in a YouTube video posted by the company on Friday. 

A diagram showing how Amazon Publisher Services platform works with ad buyers.

Image source: Amazon Publisher Services.

Understanding the partnership

"At Amazon Publisher Services (APS), we have been working hard to expand our services to connected TV (CTV) devices," APS wrote. "This includes building a CTV solution specifically designed for fast, efficient and transparent real-time buying on long-form video, as well as working to add demand sources to help publishers increase revenue."

This is where The Trade Desk comes in. As a DSP, The Trade Desk works with advertising agencies and brands by providing them a software platform to optimize their ad spend in the fast-growing programmatic digital ad market.

Amazon says media buyers using The Trade Desk and Dataxu will now "be able to access top-quality inventory" made available through its sell-side platform: Amazon Publisher Services.

Of course, Amazon wants a piece of the pie on the demand side, as well, so advertisers will still be able to buy ads through Amazon's own demand-side platform: Amazon DSP.

The implications

While the deal itself could prove to be material for The Trade Desk, the bigger story here is how a major streaming platform is opening up its ad inventory to the rest of the internet without requiring marketers to go through its native DSP.

"Amazon Publishing Services is supporting the open internet, in contrast to other big tech walled gardens," Green wrote in a memo to employees (via CNBC) about the partnership. "It's a bold move which may drive action from other CTV aggregators." The "walled gardens" Green referred to include tech giants like Facebook and Google.

Connected TV ad spend on The Trade Desk's platform has been a major growth driver for the company. In 2018, connected TV ad spend on its platform soared 900% year over year. In the first quarter of 2019, it was up 300% compared to the year-ago quarter.

Getting access to APS' inventory will likely help The Trade Desk's strong connected-TV momentum continue.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Facebook, and The Trade Desk. The Motley Fool has the following options: short January 2020 $125 calls on The Trade Desk and long January 2020 $60 calls on The Trade Desk. The Motley Fool has a disclosure policy.

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