The Trade Desk rings bell on new public chapter

SPIKES ASIA - Demand-side platform provider The Trade Desk ended its first day of trading on the Nasdaq on a strong note, closing the day at US$30.10 per share, up 67 percent on its initial list price of US$18 per share.

Post-IPO, the company’s focus will be on continuing its international expansion and building more products for programmatic buying of TV ads.

Speaking to Campaign Asia-Pacific Wednesday afternoon on the sidelines of the Spikes Asia Festival in Singapore, Trade Desk’s SVP of Asia Pacific, Matt Harty, said the company’s commitment to the region could be described as “extreme”.

Matt Harty at Spikes Asia Wednesday afternoon

“We’ve really taken an Asia-first approach as we take seriously the idea that a very large percentage of the world’s population will be addressed by advertising and that advertising will need support,” he said.

Harty pointed out that the programmatic promise is even more relevant to the region given the complexities of varying language and culture across markets.

“Programmatic makes perfect sense, to be able [to handle] things like alcohol advertising restrictions in Malaysia or the option to advertise tobacco in Indonesia,” he added. “Cultural and legal nuances are beautifully handled by programmatic.”

But despite the potential Asia holds, challenges abound, with Harty pointing out that a number of the markets are still quite nascent, with a few big markets still print-first worlds.

“For a programmatic world to happen, there needs to be more spend on programmatic-enabled channels,” he said. “It could be audio, it could be TV and we definitely know it will be mobile.”

Another challenge is the fact that the are still players in the space that don’t really offer transparency, and in many markets, ad network models still dominate—a situation that is tied to the fact that these markets are still nascent.

Changes need to be made and they are happening, though it will take a bit of patience. Harty noted that shifts will happen due to a changing of the guard, a process that has been happening since the beginning of digital.

“And beyond that, there’s a ‘coin drop’ moment,” he added. “It’s not just about education of the market, it’s also about confidence in the solution. It’s when they run a modest trial, and the results emboldens them to do more until it becomes a main part of their strategy.”

While Harty sees topics such as native, audio and the spectre that is TV topping conversation with clients in the coming year, he also holds out hope that one topic will finally find a graceful exit.

“Clickthrough rates and why they aren’t higher,” he said. “I kick myself and am just as angry at everyone else selling digital ads back in the '90s for putting these ridiculous ideas in people’s heads—deserve every bit of punishment for it.”

But Harty is also a “crazy optimist” and believes the industry is finally moving past bad metrics.

“We’ve certainly learned that there are better metrics, more meaningful metrics,” he said. “And I think everyone else is now coming to see that too.”

Word on the Street

The Trade Desk issued almost 4.7 million shares in its IPO, raising US$84 million.

“We are thrilled to join the Nasdaq stock market as we aim to continue to shape the future of how advertising is bought and sold,” CEO Jeff Green said in a press statement. “We remain committed to enabling every digital advertising impression to result in a win for the brand, the publisher and most importantly, the consumer.”

The positive debut appears to signal renewed confidence in the ad-tech sector, which has seen not only a drop in venture capital investment of late, but also less-than-stellar performance on Wall Street.

US investors invested just US$976 million in ad-tech companies across 127 deals in 2015, down from the US$1.5 billion the previous year, when they made 251 deals, according to data from Pitchbook. Meanwhile, investment has jumped for marketing tech companies.

Publicly listed firms such as RocketFuel, YuMe and TubeMogul have seen sizeable drops in stock prices last year. Verizon acquired mobile ad network Millennial Media for US$250 million, a much smaller price tag from the US$1.87 billion it was worth the day of its IPO in 2012.

The Trade Desk’s positive first day was most likely bolstered by its financials, Green has stated that the company has been profitable since 2012.

In 2015, The Trade Desk said that its revenue rose 156 percent to US$113.8 million and that net income came in at US$15.9 million, according to regulatory filings. In the first six months of 2016, revenue was US$77.6 million.

According to research firm IDC, roughly $640 billion was spent across the globe on advertising in 2015, of which only $14 billion was spent on real-time marketplaces, such as The Trade Desk. The company facilitated advertising spending of $552 million in 2015, giving it a 3 to 4 percent market share in the programmatic ad market.