Chit Chat Stocks - Trade Desk (TTD) and Advertising Technology with Dhaval Kotecha

Episode Date: March 17, 2022

The Trade Desk is a programmatic advertising company and a demand-side platform (DSP). Customers using the Trade Desk's platform can create advertising campaigns across various ad formats and channels. Listen as Brett and Ryan ask Dhaval Kotecha questions about the company, its business model, and valuation. Enjoy the show! This episode is sponsored by Quartr, the new way of doing company research. Access conference calls, presentations, transcripts, and more for FREE on your mobile device. Download Quartr on the App Store here: https://apps.apple.com/us/app/quartr-investor-relations/id1552412128  Download Quartr on the Google Play Store here: https://play.google.com/store/apps/details?id=se.quartr.android Subscribe to 7investing with the code "CCM" and get $10 off: https://7investing.com/subscribe/aff/4/ Want updates on future shows and projects? Follow us on Twitter: https://twitter.com/chitchatmoney Interested in more of Dhaval's work? Follow him on Twitter here: https://twitter.com/dhaval_kotecha?s=20&t=hRYwR8Hy35LOBkBAw0kJHA Contact us: [e-mail]  Timestamps Trade Desk | (2:54) Advertising | (19:15) Disclosure: Chit Chat Money hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Brett Schafer and Ryan Henderson are general partners and portfolio managers at Arch Capital. Arch Capital and its partners may hold securities discussed on this show. Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Money. This is our Thursday deep dive episode where we interview an expert on an individual stock. We ask them a bunch of questions and we try to focus on one company and go through the entire business. Today, we talk with our friend Deval Kotecha about the Trade Desk, and he really is an expert in the space. So it's really good to get his takes on the business. Brett, did you have any highlights from the interview? Yeah, the highlights are just really the insights into why Trade Desk is winning, why advertising spend is going to them, and the explanation of how the technology works. Because this digital advertising industry is a big black box for a lot of people. And I think after you listen to this, at least from my perspective, a lot of things were cleared up.

So for anyone else that's not an expert on the industry, I think a lot of stuff will be cleared up for you too. Okay. And before we get to the interview, we want to talk about our friends at Quarter. They are the investor relations app for all investors. It's anything you want. So conference calls, transcripts. I've been reading a lot of my transcripts on there lately because a lot of the transcription services have been late to getting them up. So go to Quarter if you want almost instant transcripts. But really what most people I think use it for is listening to conference calls on their phone. It's really easy. You can download it on iOS, Android. I don't know how you can get through an earnings season without it at this point. Basically, it has perfect product market

fit, I would think, for our audience. But it's Q-U-A-R-T-R, no E. You can also follow them on Twitter at quarter underscore app. Go ahead, check them out, download them. But without further ado, let's get to the interview. Welcome to Chit Chat Money. On this show, hosts Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investing. As a quick reminder, Chit Chat Money is a CCM Media Group podcast. Ryan and Brett are also general partners at Arch Capital, and Arch Capital may have positions

in the securities discussed in this podcast. Anything discussed on Chit Chat Money by Ryan or Brett or any other podcast guest is not formal advice or recommendation. Now, please enjoy this episode. Okay, today we are welcomed by Deval Kotecha. I believe this is your third time on the show. Deval is an individual investor and he works in the ad tech space. So whenever we need a little expertise on advertising that we don't understand, we usually

go to him. But today we're talking about the trade desk and I'll let you kind of get into what they do. But could you also explain, I guess, just DSPs or demand side platforms for anyone who doesn't know just in general? So can you just give the basics of the business model? Absolutely. And it's a pleasure to be here, Ryan and Brett. So, yeah, like I would want to kind of go over the ecosystem first and like talk about the players. You have publishers. Basically, they are the ones who create the content, and that's the content that people go and watch or browse.

They have those ad spaces that they need to fill in, and what they do is they integrate with a supply-side partner. That's something called Magnite, Pubmatic. Those are the companies who are the supply-side platforms. and those supply-side platforms are responsible to host an auction and they are sending those requests to demand-side platforms and the demand-side platforms are your trade desks, right? So the demand-side platforms actually are working with an advertiser and those advertisers are the ones who are wanting to place those ads onto the user's device.

So any ads that you see when you are browsing any particular website, those ads are powered by a DSP, like a trade desk. Okay. Okay. I think that makes sense. Brett, do you have any follow-ups to that? Yeah. So I think to make maybe an example, who are like, okay, who are they buying stuff from? Can you give an example of who they're buying stuff from? And then can you give an example of who they're selling something to? Because I think people kind of get it because it's like TV, you know, TV suppliers or something like that, but maybe an example would help. Right.

So again, if you see the Trade Desk, they are integrated with the SSPs on one end, and obviously their customers are the advertisers or agencies, right? So what Trade Desk has is they have these MSAs, which are say master service agreements with these agencies and advertisers. So what the advertisers, say, for example, if Coke or Mazda or any other company who wants to run an ad, say, for example, a 4th of July campaign, right? So they want to run that campaign and deliver those ads on the user's device. Basically, they will go and run those campaigns on TradeDesk platform, right?

And those ads will be delivered on the user's device. So basically, the inventory is coming from the supply-side partners, and those supply-side partners are your Magnite, Pubmatic, Index Exchange, and, say, other exchanges as well, right? So these are the few big ones. But they take the inventory from the supply-side platforms and then kind of deliver the ads to the end-user device. okay and then the end user is podcast ctv um digital ad space on the internet uh is there

any other any other big categories so basically yeah so audio video display um digital out of home as well um so yeah those are the spots and connected tv is obviously a big one so yeah like those are the places where people go to consume the content and obviously those are publishers right so that's where you will see those ads and so google and facebook essentially cut those smaller players out am i understanding that right that they kind of they control both than the sub they're kind of the supply they're the ssp and the dsp if it's ads run through them am i getting that right yes so google facebook those are categorized into the wall gardens versus like Trade Desk, it will be your open internet, right?

So with Google, Facebook, even say Pinterest, Snapchat, all those social media platforms, right? Those are actually the publishers as well. And they are also running the ads, right? So in that scenario, you go to Facebook to consume the content and Facebook is also responsible to deliver the ads on their own platform, right? So that's the difference versus when you talk about Trade Desk, they don't own the entire ecosystem.

They are a part of that ecosystem and they just focus on the buyer side. And that's where the differentiator is, right? They are just, there's no conflict of interest there and they are just helping the buyers kind of help deliver those ads. Okay, that's a great overview. I think, and it's perfect that we are laymen in this, some laymen here, me and Ryan in this industry. So I think everyone listening kind of gets the overview now, but let's get to Trade Desk specifically. There are plenty of programmatic marketing technology companies out there. What makes Trade Desk special and why are advertisers choosing them?

Right. So if I were to pick, say, one key differentiator, right, that would be the platform and technology, right? So again, there are other key differentiators as well, like their relationships with the agencies, which I would consider as a big sort of differentiator. But the platform and the technology is the key here. And if you see the number of exchange integrations that they have right now, that number of integrations they reported in the last 10K was 105. They are getting that inventory, getting the traffic from 105 different supply-side partners. Also, they're integrated with over 200 data partners. Now, the amount of traffic that comes in to that platform, they're processing around 12 million QPS. 12 million QPS is basically 12 million requests per second.

These data partners, like the integrations with that, that kind of allowed to augment and enrich those requests so that their customers are able to kind of better decision on those bid requests. Now, why is that a differentiator? Because you must have heard about these iOS changes, which came very recently. And every company that kind of was like, say, Facebook, Snapchat, they said, okay, they saw an impact due to, say, IDFA changes because the IDFA kind of went away when these changes were implemented by Apple.

Now, with companies like Trade Desk, they don't have to worry about it just because they are processing that 12 million QPS. From that 12 million QPS, the impact was minimal just because the advertisers could choose, say, from the 11 million requests that probably didn't even have an impact due to, say, IDFA, and they could choose something from them and not worry about the 1 million requests that they were getting. Again, these integrations on their platform and their platform able to handle this amount of load has been so good for them, obviously.

They have one more thing, which is their API integration. So again, with Trade Desk API, what an advertiser or any of their clients could do is they could kind of build their own UI on top of the Trade Desk API. They could use the underlying Trade Desk platform to deliver those campaigns, but they could use their own ui right so they could there's so much customization that could be done using the trade desk apis um and again like that's being allowed by that platform and the technology capabilities right so that i think would be a key differentiator here and do so do uh advertisers or agencies basically come to trade desk with a bunch of like criteria for who they're trying to target

and then it's kind of on the trade desk to do it am i getting that right they have a self-service platform so the the self-service platform is something where the clients get an access to the trade desk ui basically and they have a client services team who would help them get kind of comfortable with their platform but once they are very comfortable with navigating the platform where exactly all the things are on their platform then the client would just be able to run the campaigns by themselves they don't need any help from the trade desk client support team there okay makes sense and then what are this there's i guess three products here there's i think it's solomar solomar koa and open path can you go into what each of those are

right so solimar is the upgrade to the platform that they announced uh last year in in summer right so uh the platform actually came with a lot of improvements and again like in the last uh quarterly earnings call they they kind of mentioned the adoption numbers right so they mentioned that 50 of the traffic is now sold by solimar so that's kind of huge just because it only is like six months into like launching a new platform and again that's that's like huge in terms of adoption right and with solima right trade desk also revamped a lot of things and especially like they they created the most advanced measurement marketplace right so measurement is obviously you could measure like how this campaign is performing right and and

Again, when you are building those sort of tools, obviously, you need to be able to have those capabilities where you could put, say, precise campaign goals in that platform. And Solimar is helping the customers do all those things. And obviously, there are other tools like, say, Koa. right that's their ai engine and uh obviously like with koa they talked about say the predictive clearing right so the predictive clearing specifically right uh would be where the clients could kind of go and set their campaigns and they would just have to enable a switch and the platform itself will kind of increase or decrease the bid price on how they are seeing the

campaigns to win right so if the win rate is much higher than they could say okay this is we are winning at a we couldn't try to lower the price so that we could kind of improve um improve the margins here for our clients and obviously they mentioned that they have been able to save like tens of millions of dollars collectively for their clients just by this feature of predictive clearing. That's obviously tremendous. Co-adoption on Solimar at this point is now over 90%, which is nearly 50% higher than the legacy platform that they had.

Obviously, then there's one more thing, which is their new data marketplace. Again, this was something that they talked about in the current quarter, like the Q4 that they reported. and they are shifting from say a pricing model as well right so again with the new data marketplace with solimar what they had was when the users wanted to kind of use the data they had to pay a fixed price and like jeff green he talked about like paying a fixed price would be equivalent to a real estate agent charging someone a fixed price for say buying buying or selling a house basically without looking at the actual price of the house.

From that point, with Solimar, especially with their new data marketplace, what they are trying to do is, instead of the fixed pricing structure, they are going with a variable pricing structure. With the variable pricing structure at this point, what they could do is they could add the fractional pricing as well. With fractional pricing, what people could do is basically they can go in and pick, say, I want to use, say, the weather data. I would want to use the gender data. I would want all these pieces of augmented data. I would want to combine them and then basically

pay on how much data I'm using. I would not want to be charged for, say, individual pieces of data. That also kind of benefits those data management platforms as well who are actually providing that data on the TradeDesk platform. So again, that was something like Solimar has sort of enabled their clients to do. Obviously, OpenPath was a very sort of a new announcement where what TradeDesk did was basically they kind of helped their advertisers directly connect with the publishers. So again, we might think of them bypassing the SSPs here, but at the same time, they're not trying to be an SSP just because with SSPs, they give a lot of features like yield

management and stuff like that, where in this case, the publishers are going to be doing the yield management part of things. And this only applies to, say, the bigger sort of publishers. But again, they retreaded during their call and they retreaded multiple times that they are not trying to go over becoming an ad server or an SSP. They are just strictly trying to connect the publishers directly with the advertisers here. So those are the things that I kind of saw in their earnings calls. Okay. That, no, it's a great overview. Again, it is technically, it's a little complicated, but in general, is the goal for Trade Desk to allow someone to advertise in as many spots as possible, combined with strong analytics, combined with successful advertising, and also with, you know, driving down prices? Is that kind of the four main goals they want to compete with a Facebook or a Google? Yes, absolutely. Like the analysis and the measurement part is the most important thing here because like when you run the campaigns, say on Facebook, then Facebook essentially is grading their own homework, right?

So if Facebook tells you they delivered 100 impressions for this particular cohort, then you will have to trust them and basically take their word, right? You cannot basically measure as effectively as what you could do it on the trade desk. And obviously, transparency is one of the key things that trade desk talks about. And you will get a lot of transparency when you are operating with the open internet versus with the wall garden. Okay. And one more question here on Solimar. I want to clear something up. Is that what the advertisers are interacting with now? Yes. Yes. And that's what they talked about, right? 50% adoption on Solimar, that means that the advertisers who are using the legacy platform,

50% of them have moved and started using Solimar in the last six months. Okay. All right. I have a bunch of more questions, but before we get to them, we're going to take a quick ad break. This episode is brought to you by La Quinta by Wyndham. Here you are, miles from home and ready to start your vacation. Good thing you're staying at La Quinta by Wyndham. They have free high-speed Wi-Fi to stream all your favorite movies. And in the morning, get fresh waffles with their free bright side breakfast. Or squeeze in a workout at their fitness center.

Either way, you're ready to conquer the day. Tonight, La Quinta. Tomorrow, you triumph. Okay. Welcome back in. Deval and I and Brett were just discussing kind of an interesting example, which is whatever advertisement you as a listener just listened to, that the trade desk was a big part of that value chain. So can you kind of describe the mechanics right there? And then I guess maybe more just your take, what do you think of audio as an opportunity? Right. So again, the ad that you listen to at this point you might be listening to this podcast on spotify or pocketcast or any other player so that player is uh integrated with a supply side partner and that

supply side partner sent that particular request to multiple dsps and those multiple dsps they work with their advertisers and those advertisers basically they said we want to bid on this particular opportunity given they saw what user what type of user you are what demographics you kind of fall into and basically they sent that ad to your device and and that's where you kind of got that ad in real time what do you think of audio as a sort of addressable market for them yeah so audio is is kind of big but at this point i would think connected tv is where everyone's focusing on audio uh if i saw um it was only like 15 percent of the spend for the trade desk um so not a not a huge percentage in terms of um the the segregation of spend within the trade desk but

But I would think there's opportunity there. But again, like most of the advertisers are wanting to kind of deliver those ads on connected TV. Okay. And the CEO, Jeff Green, said that, I believe at one point he said they're going after sort of a trillion dollar addressable market. And it sounds like CTV is a big part of that. Where exactly do you think the majority of that addressable market is going to come from?

And then on the CTV aspect, what do you think, how big do you think that market could be in the coming decade? Right. So again, like there's multiple things to it. So the numbers that I saw and these numbers were still like old numbers, but like $250 billion of TAM is just in linear TV. So that all would kind of shift to, say, connected TV eventually over time, right? So maybe in the next five years, we would see basically everyone kind of move away from linear to connected TV. And again, if you see Magna, they reported a global ad spend in 2021 was approximately like $710 billion, and they're expecting it to grow like 12% every year.

And with that, like if you see 12% every year, it hit like 1 trillion by 2025, right? So that's where the opportunity is. And from the trade desk perspective, CTV definitely is huge just because like we have seen in the last couple of years, like after COVID, like CTV has definitely taken off and the shift in the user's behavior, right? So people move from linear to connected TV. connected tv is basically any content that you receive via the internet rather than the cables right basically um and uh specific to trade desk again like with connected tv they see that the

rise in inventory like constantly they are seeing like the inventory kind of keeps going up um and obviously like ctv has been the largest driver for them in 2021 and they're expecting the same to continue for 2022 as well uh some numbers uh from trade desk like they saw like around 15 000 advertisers spent on ctv using that platform in the last year and uh the number of advertisers with more than 1 million dollars in spend on ctv doubled from 2020 right so that's where like connected tv obviously is a is a huge opportunity but one thing that uh like you you didn't kind of asked me about but want to kind of highlight here is shopper marketing and shopper marketing specifically uh jeff green talks about it like as a hundred billion uh temps uh by itself and

the shopper marketing is something where you must have heard about say walmart kind of uh partnering up with say trade desk to kind of help them build their own dsp and allow people like allow the advertisers basically to kind of um like load their first party data there on the walmart dsp platform so that they could kind of uh help um sell those ads in in a much better way and again like they they kind of talked about one specific example uh which was um like men's and women's razor company, BIC. And they use Walmart DSP, which obviously is powered by Trade Desk.

And they achieved a return on ad spend of just under 500%. And then that was from the campaigns that they ran in December of 2021. The industry standard is 270% and they were like well above that benchmark. using that Walmart DSP. So again, if you see Walmart kind of tying up with Trade Desk now,

they also kind of announced Walgreens also kind of started using the Trade Desk DSP. And now I think it's about time where you would see a lot of other retailers kind of tying up with companies like Trade Desk to kind of have their own trade desk powered DSPs, right? Just because if they want to kind of build this DSP by themselves, they cannot move as much fast. And obviously they want to catch up with the competition. So again, the best case here would be to kind of tie up with a DSP

like a trade desk and kind of move much more faster, right? Okay, I have a question on the connected TV spot. So do you think there's any threat that Roku could potentially become sort of like a walled garden just for that space? Or are they too sort of reliant now on demand side platforms like the Trade Desk? So Roku has their own DSP, which is DataZoo. So they already have their own DSP. So Roku has obviously the entire ecosystem built for themselves, right? So they are a walled garden in one sense, but they are not a walled garden in that way because with Roku, you can still have the same measurement capabilities, the same attribution capabilities that you get with the open internet versus what you don't get

with the walled gardens, right? So that's the key differentiator here between say Roku and other walled gardens. How much is spent on TradeDesk right now? Because you have the TAM at say a trillion or it's going to be eventually. Can you give some context to how much money is flowing through TradeDesk platform currently? So with the TradeDesk platform, like I'm just going to open up the numbers. So the trade desk, the amount of spend that they saw this year for 2021 was around $6.2 billion. That's the amount of spend basically that kind of happened on the trade desk platform. And that went up like 47% year over year, 48% to be specific. Trade desk, actually if you see on the revenue side um like 395 million dollars for just q4 and uh for the

entire year they did a 1.1 billion dollar revenue this was the first time that they hit over a billion dollars in revenues for the entire year and just to give a context on like how much that like how much kind of uh they increased their revenues they did like they did um the revenue that they did in 2021 the entire year of 2021 is higher than the revenues they did in 2018 and 2019 combined well yeah i mean they're growing they're growing uh extremely quickly and they put up some durable growth and i mean there it seems like the opportunity is quite large to continue with the $6 billion spend. Now, let's slowly transition. This one's going to be kind of a hybrid question, but we're going to slowly transition to advertising technology in general. So the big news,

like you mentioned, has been the iOS changes and then the announced Android changes, which correct me if I'm wrong, are almost the exact same as the iOS changes. How does that affect the industry? I know we talked about it a bit, but it's so important. I kind of want to talk about it again and how does it affect the trade desk right so uh the ios changes uh were like they were announced um in in the first quarter of 2021 um and with that um what happened was companies like face like with apple changes basically they decided okay we would want an explicit confirmation from the user if their IDFA was supposed to be shared with these advertisers.

By default, it is turned off. And that's where the majority of the people then kind of chose to enable those IDFAs. So now when you don't enable those IDFAs from your device, the advertisers, they lose the capability to target you at a user level right so the deterministic traffic that was earlier coming like flowing through the pipes that suddenly kind of was lost just because these ids were were not able like people stopped kind of sending those ids right so um earlier before Before Apple actually announced those changes, it was around, say, 50-50 of advertisers going to iOS and going to Android.

But after the changes went in, specifically with iOS 14.5, the numbers tilted 70%, 30% in favor of Android because now the advertisers actually were getting the deterministic traffic from Android, but they were not getting deterministic traffic from iOS. So now, like Google, they are trying to go the same route where they are trying to deprecate their Android ID. And they have come up with various different tools that are going to replace, which are called, say, topics, fledge, and their core attribution API.

Again, when these topics fledge and their API get introduced, they are still not going to go away immediately, like say iOS, where they are going to take another couple of years for them to roll this, develop, test, deploy to the majority of the devices. The impact here is that once these IDs are lost, then where would these advertisers go? Because now advertisers are losing those key identifiers for targeting the users at an individual level. Again, if you see these money, which went to, say, iOS and Android, basically Apple and Google and whatnot, these dollars could shift to the open internet, which is where

you have UID 2.0 and IDL and whatnot, where you could still get that information for a particular user at a user level, and it's much more secure, and you could have a lot of capabilities on some measurement and attribution and whatnot, right? So that's where I'm seeing these things kind of shifting. in this space. Are there any other, I guess, major trends that you're seeing in advertising today? Is there maybe a direction? Is it kind of fading away from the wall of the gardens? What are you seeing in the space? Yeah. So those are the trends that I'm seeing specifically on on the privacy side where like trade desk is obviously uh pushing for you uid 2.0

and obviously if you see right they announced a lot of partnerships in in 2021 with the ssps with the data partners with publishers like you name it right uh publicist zander fubo tv uh snowflake Omnicom group and whatnot, right? So that's definitely one thing that I'm seeing where they are pushing for a lot of UID 2.0 adoption in the industry specifically. But at the same time, when we are losing all these identifiers, what I am kind of seeing is the budgets will start shifting from your Facebook, Snapchats, and the Pinterest of the world to these open internet companies. And again, if you saw like TradeDesk very recently announced

a tie-up or a partnership for the EUID, which is the European UID. Obviously, there's GDPR in European countries. So obviously they would need to come up with a solution which would kind of be in line with the GDPR. And what Trade Desk is doing here is it's working with LiveRamp on the development and deployment of the EUID. Trade Desk will lead the creation of the EUID, but LiveRamp will be responsible to provide the essential

infrastructure with their authentic traffic solutions. So obviously, those are the things that I'm seeing, and I'm kind of excited about where we are seeing this space go, specifically from the identity and the privacy perspective. Now, one thing that I want to highlight here, again, is these identity privacy changes, nothing applies to connected TV. and and that's where like connected tv is is so important here just because when you are on a roku tv right basically you already are logged in so they already have the your information with your email addresses that you are the one who is watching this they don't need any sort of uh

like identifiers like cookies or ids or nothing like that and that's where like that becomes a huge proposition uh in terms of like where the ad dollars could be flowing and obviously all of this would benefit a company like Trade Mask. What are the competitive landscapes out there for SSPs? You talk about how they're an integral part. You have DSPs connected to the SSPs. You went through that four-step process. Who's leading that side? You mentioned Pubmatic, Magnite. Is there anyone else? Magnite and Pubmatic are the leaders here in the space, Magnite specifically on the connected TV front because they acquired SportX and Teleria that gave them that specific advantage on the connected TV side.

Pubmatic obviously has been taking the market share from Magnite and they have been focused on something called supply path optimization. Obviously, Magnite and Pubmatic are the two big players here and uh and yeah i i do think um those will those two companies will continue leading on on the ssp side okay and i want to get to this final question here and i think you talked about it with us on the show before and you ranked say the leaders in the open advertising industry and you had roku number one trade desk number two magnite number three does that still apply today and why these three or anyone else so yeah like i would think uh trade desk and roku could be flipped here so trade the number one here roku number two and and magnite and pubmatic maybe

the three uh both of them tied together at three um but yeah with roku they have they have had their own set of challenges offlaid with all the supply chain issues. Again, if they are not able to increase their active users just because they are marred by the supply chain, then obviously that would impact the engagement rates and obviously bring down their ARPU. Obviously, like with Roku, I saw that they were not able to reach their own revenue estimates, let alone the the analyst estimates so again roku was a very high conviction position maybe a year before but now like the execution has lacked and obviously that you must have seen like a very key uh person from the team uh actually is leaving like scott rosenberg and i was uh hopeful

that he was the one who would take over as the CEO role once Anthony Wood would retire, but that's not going to happen. So obviously that kind of brings in a lot of uncertainty there too. But again, Roku, the story is intact. Connected TV, the tailwinds for Connected TV is still there. but uh the supply chain issues um they they cannot control the pricing of the tvs right and they obviously moved into uh creating their own content which was a big question mark and now i'm kind of hearing the rumors that they are kind of trying to build their own tvs so i am not sure

like what direction they they want to go but with trade desk like you have a very easy sort of a thesis there and and they are trying to go in in in a direction and and not trying to kind of diverge from where they kind of set for so obviously trade desk is a much higher conviction position at this point compared to roku but that could obviously change depending on how the the execution kind of goes in in the next year or so so i'm kind of watching both of them i still still hold both of them so yeah no that's that's a great overview of why that's it kind of shows why trade does stock is probably held up versus rokers recently now you spend a lot of time in the investment community uh especially on twitter you know you're active on there a lot and

advertising is a really popular topic what what do you think like most investors do not understand about the industry that's say actually vital and there's kind of these misconceptions out there Because I know I had a ton of them even before talking to you today. Right. So again, what I would see is people kind of like to club all the ad tech companies into a single bucket. But I would think, okay, you should not kind of look and put in, say, all the companies into the same bucket.

So I would put, say, Facebook, Snapchat, Pinterest in a different bucket compared to your trade desks and the roku of the world because they like even though like all of those companies are an advertising company they are not the same companies one of the bucket would be your wall gardens one of the buckets would be your open internet and the issues that the wall gardens are seeing right now that do not apply to the your trade desk and and your roku's of the world right so obviously when you are trying to to look at a company's result and and then see okay this company is facing these issues now this company would also face these issues that's not how this works right so ios impact facebook snapchat pinterest all of them had like the idfa like the impact and facebook

obviously they they kind of talked about how much uh they are expecting to lose maybe over 10 billion dollars due to the loss of idfa whereas straight desk comes and says yeah we We are seeing no impact due to IDFA changes. Again, I would think with the IDFA changes that went in and with the Android changes that are going to go in, the open internet companies are going to benefit instead of having any sort of potential issues with those companies. That's where I'm trying to position myself and trying to make sure that people should not be putting them in the same bucket like that's where i would kind of begin with what would have

to happen for you to like question your position in the trade desk like is there anything where you'd be like all right that's really concerning to me right so again like if you kind of see like with trade this right they keep talking about like almost the same kind of topics in their portal earnings call and that's where kind of i kind of keep reviewing so obviously they talk about ctv they talk about unified id 2.0 they talk about like shopper marketing they've started talking about shopper marketing since the last two quarters they talk about international and international is again like a very key component to like the growth of um of of trade desk because like right now the highest amount of growth is going to come from international and

And again, I kind of saw a report from Magna where they're saying the strongest growth, obviously, in APAC would come from, say, India, Philippines, China, Malaysia. And TradeDesk has already penetrated in those regions and specifically like China, where all these companies like Facebook and Google, they are not even allowed in those regions, whereas TradeDesk is obviously kind of right there. So, again, when you start seeing trade desks going into international and then trying to succeed there, obviously, that kind of would be a great thing. But if we see issues in the international growth, then we don't know where the growth would come from, right? So, international is one thing that I'm kind of keeping my eyes on specifically. and obviously like uid 2.0 adoption that has gone a long way but again that's obviously a risk and the other risk factors are the relationships with the the agencies specifically so if you see like two of the agencies they are kind of like 10 percent of their revenue so each of them is 10

percent of their revenue so obviously if losing one agency would be a significant sort of impact on on trade desk and uh that would kind of make me so yeah okay i think that's all the questions we have brett do you have any more i don't uh default where can people find you uh they can find me on twitter or and double underscore kotecha and i have a blog as well uh on my website like doublekotecha.com and i kind of write about a lot of um ad tech stuff there too Perfect. All right. Well, we want to remind our listeners that we are not financial advisors. Brett and I are not financial advisors. Anything we say or discuss here on Chitchat Money is not formal advice or a recommendation. We are, however, general partners at Arch Capital.

So clients may have positions in the securities discussed in this podcast. Thank you all for listening. We'll see you next time. Thank you.