Since the onset of the coronavirus pandemic, advertisers have become more cautious about their budgets. The Trade Desk (NASDAQ:TTD) and its programmatic advertising offerings give marketers more flexibility to start and stop ad campaigns than traditional TV and it has been impacted by the advertising pullback. However, the flexibility it provides might have worked in favor of The Trade Desk as businesses have started to reopen worldwide.

The company's results and management discussion when the company reports quarterly results on Nov. 5 will give investors a look at how advertisers adjusted as businesses started to reopen and perhaps how marketers are planning for the holiday selling season amid the surge of coronavirus cases in hot spots worldwide.

Artist's rendering of dozens of digital images cascading over a cityscape

The Trade Desk helps companies advertise. Image source: Getty Images.

Early signs indicate advertising is rebounding

The Trade Desk is coming off of a challenging second quarter, when it reported revenue of $139.4 million, a 13% decrease from the year before as it felt the brunt of advertisers pulling back spending on the platform. The company said that ad spending, after bottoming in mid-April, started to rebound.

That trend is likely to have continued, as it appears marketers are starting to increase their budgets. In one example, McDonald's CEO said during a July conference call that the company would use the savings from reduced ad spending during the peak of the pandemic and reinvest it in ad spending in the second half of the year.

Still, businesses aren't in the free and clear, as coronavirus cases are surging in several parts of the world and government-ordered business closures are starting to emerge again. If the virus continues on this path, and businesses need to close again, look for advertisers to pull back spending on The Trade Desk.  

In contrast, one tailwind for the company is the transition from linear television viewing to streaming on connected TVs. The No. 1 reason cited for people maintaining cable subscriptions is live sports, but with a record-low viewership of live sports since they returned from hiatus, this could point to an accelerating rate of cord-cutting. That could benefit The Trade Desk, as connected TV spend is its fastest-growing area.

In the most recent quarter, connected TV spending from advertisers on its platform increased by 40%. What's more, the company expects that growth rate to more than double when it reports its third-quarter results on Nov. 5.

What this could mean for investors 

In the long run, the company will benefit as it expands internationally and captures a larger portion of advertising budgets that were previously allocated to linear television. In the near term, however, it will continue to be bogged down by business disruptions caused by the coronavirus. Shareholders will be watching this earnings report for what the company reveals about its third quarter and what it says about its current quarter. Like many other companies, the holiday quarter tends to be The Trade Desk's largest, and any information about how that quarter is shaping up is bound to interest investors. 

The average expectation on Wall Street for its revenue total in the third quarter is $180 million. For earnings per share, it's $0.42. If the company reports numbers above expectations, and guides for an optimistic holiday quarter, look for shares of this tech stock to jump following the earnings release. In addition to any short-term move, signs that point to an accelerating shift from linear TV spending toward connected TV will be bullish for long-term shareholders.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.