Bill and Melinda Gates founded The Giving Pledge in 2010, which is a public commitment to devote the majority of one's wealth to philanthropic purposes that further society. Currently, 40 of America's wealthiest citizens have made this promise, with The Trade Desk's (TTD 0.85%) CEO Jeff Green being the latest.
During his pledge, however, Green made it clear that he sees himself staying with The Trade Desk for at least another decade, after which he would commit to venture philanthropy. This should give investors confidence because Green has been an innovative executive over the past decade. With Green at the wheel, I think the company's success could continue.
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What Green has built
Green founded this leading buy-side advertising platform in the U.S. since the company's in 2009. After earning its first revenue of eight cents in 2011, The Trade Desk has rapidly expanded, now earning over $300 million in Q3. Green has brought this company from nothing to the market-leading position, with over $4.2 billion being spent on the platform in 2020.
The company now has customer churn of less than 5%, and Fortune placed it at No. 6 on its list of the 100 Fastest-Growing Companies for 2021. All of this growth has benefited investors handily. Since its IPO, shares have risen over 3,600%, or 100% annually. Green, who has reached billionaire status, owned over 150,000 Class A shares and over 4.4 million Class B shares as of April 2021.
What Green could build
With Green staying at the helm of The Trade Desk for 10 more years, this immense innovation is set to continue. There are two lucrative growth areas that The Trade Desk will focus on next.
First, The Trade Desk has created UID2.0, or UID2, which is rapidly becoming the industry standard replacement for cookies. Both Apple and Google have committed to eliminating cookies, which provide valuable information that adtech companies like The Trade Desk use to help advertisers target their intended audiences, making their services more effective.
The Trade Desk's cookie alternative, UID2, obtains consumer data while maintaining the privacy and security of the consumer. It's an industrywide approach that is interoperable with numerous platforms involved in anonymous identity management and creation. This project is open-source and nonproprietary -- meaning that the Trade Desk does not make money from UID2. It does, however, obtain the broad swaths of data that come into UID2, enabling it to have more accurate and valuable anonymized consumer data. Another benefit it can leverage is that The Trade Desk is creating dozens of relationships with publishers, sell-side adtech companies, and advertisers. The company could build out these relationships to further its market leadership.
The other growth lever for The Trade Desk is the connected TV (CTV) market. CTV advertising is becoming increasingly popular and pricey for advertisers because it is so valuable. The Trade Desk has a huge reach that includes over 120 million U.S. CTV devices, making it a logical choice for advertisers. The CTV market is expected to grow 11% annually to $35 billion by 2025. With its market leadership and wide reach, I couldn't think of a better buy-side adtech platform that could capitalize on this opportunity than The Trade Desk.
While The Trade Desk is the far and away market leader, there are competitors. Companies like Meciaocean and Quantcast are much smaller start-ups, but The Trade Desk also faces competition from in-house platforms from Meta Platforms (FB) Google, and Amazon (AMZN -1.14%). The Trade Desk's edge in this space, however, is that it holds a considerable lead, while still being as agile and innovative as its smaller competitors.
A bullish sign for the stock
The Trade Desk still has tons of growth left, and with Green as CEO -- given his past success -- I have immense confidence that he will lead the company to capitalize on these opportunities. The company estimates that global ad spending in 2019 was $725 billion, yet only $4.2 billion ran through the Trade Desk. This shows just how much bigger the Trade Desk could get it it can further its position as the market leader of the buy-side adtech space.
Green has built The Trade Desk to become the market leader and a company with an immensely wide reach, which makes it easier for the company to succeed into the next decade. Although shares are valued at a pricey 48 times sales, I think Green could enable this company to grow immensely over the next decade, making an investment today more than worth it 10 years from now.
