When someone utters the phrase "Black Friday," the first thing that goes through most traders' minds is: the market closes early. I suppose retail sales may come up in the conversation. Of course, I'm being sarcastic about the early close, but Black Friday is more than retail.
It isn't only consumers that businesses are trying to sell to around the holidays. That is the driving factor around my company/stock to watch this holiday season. No, not retail, but the company helping retailers and online sellers reach consumers through online ads: The Trade Desk, Inc. (TTD) .
The total market for online spot marketing is nearing $15 billion in 2017 as businesses search for the most efficient ways to reach consumers. The Trade Desk is a tech company that offers its self-service, cloud-based platforms to buyers of advertising. Through its platform, buyers can create, manage and optimize data-driven digital advertising campaigns across ad formats, including display, video, audio, native and social on a multitude of devices including computers, mobile devices and connected televisions.
A recent push has been to incorporate native video, video uploaded or created on social networks and played infeed as opposed to links where the videos are hosted on other sites. Nearly 90% of U.S. marketers and agencies have adopted native advertising.
The highly targeted video ads in a native environment result in a better experience for the consumer, leading to higher brand recall and engagement. This is the area where TTD excels. The company offers native video that can extend for up to five minutes allowing advertisers to tell stories rather than simple blurbs or single line hooks.
Since effectiveness and results are key for advertisers, TTD offers a reporting tool that provides simple and easy ways for users to garner campaign insights. This lets users include or exclude metrics from a standard template or build their own, so they can understand and adjust their advertising campaigns to achieve maximum performance.
Taking it one step further, The Trade Desk has redefined online advertising by using real-time bidding for smoother and more effective sales by employing analytics with a sharp local focus. The company's platform makes it possible to more quickly message specific ideas to specific people rather than by writing big checks to traditional media and hoping the commercials for their products are seen by the right people.
Buyers of advertising can log onto TTD's website and target only the ads that meet their target audience.
With outlets in the United States, Europe, Asia, and Australia, TTD is able to make advertising more effective by deploying massive amounts of data over curated ad formats. When a consumer lands on a webpage, watches internet-connected television or uses a mobile application, this sets into motion a programmatic bidding auction for advertising inventory. Auctions often occur in as quick as one-tenth of a second.
When the clock strikes midnight kicking off Black Friday or Cyber Monday or even Thanksgiving Day, you can bet every retailer will be racing to be seen by their targeted audience. After which, they will want to know immediately how impactful their advertised was upon the eyes of the view.
TTD has progressed beyond its competition, releasing a native video functionality that hosts creative workflow that supports video upload, completion rate metrics, and created safeguards. This curated data eliminates repetitive messaging to improve the overall experience of the targeted audience. Studies show consumer appreciation drops the second time they view the same ad during a show or a program, not only on a webpage. TTD plans to incorporate this ad technology with Roku (ROKU) and other streaming media services, which could be a huge driver of growth this holiday season as more and more people cut the cable and shift to streaming services.
Businesses using TTD have an opportunity to reach targeted consumers like never before. Rather than spending big money on a TV ad when the business doesn't know who will be watching, they will now have the opportunity to bid on spot ads either on a webpage or streaming service when someone who fits their targeted demographic visits or turns on a show. TTD offers retailers and sellers the ability to take their advertising efficiency to the next level.
For me, TTD is a huge under-the-radar long side idea not only for Black Friday, but the entire holiday season. Earnings are set for Nov. 9 and if we see any weakness, which is possible with a huge 24% short interest, I would look to be an aggressive buyer especially between $50 and $55, but even on a pullback to $59. A close over $66 could squeeze that huge short-interest and push TTD to $75 within a few days.
Overall, I believe TTD will trade above $80 in 2018 and closer to $100 in 2019.
Walmart (WMT) might stock your shelves soon.
Tim Collins is a regular contributor to Real Money Pro and Options Profits. Click here to get more trade ideas and columns on this site for active traders.