Platforms that bring buyers and sellers together can be extremely lucrative investments. That's particularly true when they benefit from powerful long-term trends. The Trade Desk (TTD 1.67%) is one such company. The cloud-based advertising platform helps businesses optimize their ad campaigns, which, in turn, brings more revenue to publishers and other ad sellers.
The Trade Desk's platform-based business model delivers fortune-building gains to its investors, and it's likely to continue to do so in the years ahead. Here are three reasons why the digital ad specialist's stock is still a great buy today.
1. The connected-TV megatrend is fueling The Trade Desk's growth
Cord-cutting is reshaping the advertising industry. As eyeballs shift from traditional cable and broadcast TV to streaming services, marketers are redirecting their ad spending to meet their customers where they are.
The Trade Desk helps to enable this global shift from linear to connected TV. The advertising technology platform provides the tools companies need to better target their digital marketing campaigns and increase the returns on their investments. By matching ad buyers with sellers of ad placements across a wide variety of formats, The Trade Desk is set to capture a larger share of a global digital ad market that's projected to top $1 trillion by 2027, up from roughly $700 million in 2023, according to Statista.
Image source: Statista.
The Trade Desk's market share gains are evident. Its revenue jumped 21% year over year to $383 million in the first quarter, even as the overall ad market remained sluggish due to recession fears. Investors can expect The Trade Desk to continue to outperform as more ad dollars shift to digital channels in the coming years.
2. The Trade Desk is setting the standard
With privacy concerns mounting, The Trade Desk strives to be part of the solution. Its Unified ID 2.0 initiative is quickly becoming the industry standard for accurate and secure identity solutions.
UID2 enables advertisers to effectively target their ads and measure performance while preserving the privacy of consumers. It uses encryption and other advanced security techniques to safeguard identifying information (such as email and phone number data) in a way that's widely viewed as superior to advertising cookies.
The Trade Desk has built an impressive list of partners, including Comcast's NBCUniversal, AMC Networks, and Paramount Global. Investors should expect this list to continue to expand as more companies come to understand the benefits that UID2 provides.
3. AI should be another powerful growth driver
The Trade Desk is also using artificial intelligence (AI) to provide more value to its customers. Earlier this month, it debuted its Kokai media buying platform. The system uses AI to help marketers glean valuable insights from millions of ad impressions in real time. Kokai also provides upgraded measurement and forecasting tools delivered via an intuitive user experience. The Trade Desk, in turn, can now make it even easier for its clients to serve more relevant ads to finely targeted audiences -- at the times most likely to result in sales or other desired customer actions.
"The Trade Desk benefits from a rich yet highly complex dataset with very high integrity," CEO Jeff Green said. "With Kokai, we are able to help our clients make sense of that data with AI, and help the marketer make the best decisions at every turn."
Additionally, The Trade Desk's steadily expanding partner network enables adtech companies to seamlessly integrate their offerings into its Kokai platform. The Trade Desk intends for its partner portal to serve as an AI innovation hub for the digital ad industry. Over 400 businesses have already signed up as partners.
With AI set to power the next leg of its expansion, The Trade Desk's stock price should continue to climb to new heights in the years ahead.
