After two days of somewhat mind-numbing testimony by Mark Zuckerberg on Capitol Hill, Facebook (FB) is free to return to its day-to-day activity of gathering data as the hub of social media.
Based on the line of questioning, some of which felt rambling and not at all pertinent, I'm not sure if we'll see any changes in how Facebook operates. If we do, it may revolve around the advertising moat we see. This leads me to believe that an independent demand side platform could come into play. My favorite name in the space is The Trade Desk (TTD) .
I'm not the only one who views this company as a possible winner. Five solid names have added or expanded TTD in their portfolios.
1. Sumitomo Mitsui Asset Management bought an additional 368,555 shares between the end of September and the end of December 2017, taking their already sizable stake to a whopping $67 million.
These guys started purchasing shares in early 2017 when the stock was trading closer to $30 or $35 and recently added more around $50.
2. Eventide Asset Management continued to accumulate shares during the fourth quarter. They now hold more than $31.5 million worth of TTD stock.
3. Ashford Capital Management increased their stake during the fourth quarter as well. They're now sitting on an $18.5 million position.
4. The management team at Shellback Capital initiated a new position in TTD to the tune of $14 million worth of stock.
5. Granahan Investment Management also entered a new position, purchasing roughly $8.8 million worth of shares
I'm a fan of following big money that has a long-term view. The fourth quarter gave folks a reason to be optimistic as well.
The Trade Desk reported fourth-quarter revenue of $102.6 million, 42% above the figure from a year earlier. The company also delivered adjusted earnings of $39.5 million, smashing both the lowered $34 million guidance and the $37 million Wall Street consensus estimate.
I've discussed The Trade Desk before, but as a refresherThe Trade Desk is one of the leading tech companies in advertising today.
At its core, The Trade Desk provides ad agencies with a self-service, Cloud-based platform where they can create, manage, and optimize their advertising campaigns across multiple digital formats. The company offers advertisers what's called a demand-side platform (DSP). This DSP provides ad agencies and their brands a true omnichannel experience. Digital ad campaigns can be managed across display, native, mobile and video at the same time, on one platform.
Our increasingly digital world and the use of real-time analysis to break down big data have given birth to what's called programmatic advertising. Programmatic advertising is merely the real-time automated (computer-generated) buying and selling of ads with algorithms. Think of it as high-frequency trading, but instead of buyers and sellers transacting stocks and bonds, they're buying and selling digital advertising space.
Why is real-time programmatic advertising a big deal?
CEO Jeff Green explains it like this:
Real-time bidding means that every online ad impression can be evaluated, bought and sold all individually and all instantaneously. It is the future of all online advertising and enables exchanges and buyers to work together to sell and place bids on ads programmatically. It allows every impression to be cost-effective and to be placed in front of the right person at the right time.
Simply put, programmatic advertising allows a company to control who sees an ad, where they see it, and when.
Through the use of the company's data management platform (DMP), The Trade Desk provides clients with the ability to analyze first- and third-party data before using that information to buy advertising.
The next stage of growth for The Trade Desk revolves around connected TVs (CTV). Some folks call them smart TVs, others refer to them as connected TVs. Regardless, they are one in the same: the seamless merging of TV with the internet.
With a connected TV, a user can connect to the internet and access content outside the traditional offerings of his cable provider.
From fourth-quarter 2016 to fourth-quarter 2017, money spent on CTV advertising via the TTD programmatic platform increased by 535%. Even more staggering is that the year-over-year growth during December 2017 was nearly 1,000%. During the remainder of 2018, TTD expects CTV ad spending to double again on its platform. And that's why the company is laser-focused on growing their inventory of available advertising supply, partnerships, targeting data, and holistic omnichannel strategy.
Programmatic TV advertising is the next level of hyper-personalized media consumption.
TTD's international business is growing at roughly double the rate of its North American market, and when it comes to long-term growth, China is viewed as the hidden gem. Based on a report from eMarketer, China is forecasted to have roughly a quarter billion connected TV users during 2018. That compares with around 180 million CTV users in the U.S.
Chinese CTV content is mostly ad-funded. An ad-funded CTV presents a massive opportunity for an advertiser to reach the fastest-growing middle class in history.It also ensures long-term sustained growth for TTD and its programmatic demand-side platform.
Clearly, the days of spray and pray are dead. Big data and real-time programmatic ad buying have changed advertising forever. And with international growth and connected TV leading the way, The Trade Desk has only scratched the surface of their potential growth trajectory.
It may be time to look away from Facebook from the ad side and find an under-the-radar name like TTD to add to your portfolio.