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Can Audio Advertising Become Trade Desk's Next Big Growth Driver?
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Key Takeaways
The Trade Desk sees audio ads growing beyond the current 5% share of its business mix.
AI-driven Kokai platform boosts ad efficiency, with major gains in reach and click rates.
OpenPath and OpenAds enhance transparency as TTD faces competition from Amazon and Magnite.
The Trade Desk ((TTD - Free Report) ) is striving to boost its top-line expansion beyond connected TV (“CTV”). While video, which includes CTV, remains the largest share of its business, audio is emerging as a key driver. On the last earnings call, management noted that audio represented around 5% of the business and it expects CTV and audio to increase as a percentage of the business mix due to the “premium authenticated nature of these channels.”
TTD highlighted that audio is benefiting as consumers spend roughly three hours a day listening to music and podcasts, creating an expanding addressable market for digital audio ads.
The company’s AI-powered platform, Kokai, is emerging as a key catalyst unlocking performance gains in audio campaigns. TTD cited Bayer’s omnichannel campaign on Kokai, which, after integrating Spotify, witnessed a 15% jump in its incremental reach. Kokai is used by 85% clients as their default experience and has been strengthening TTD’s competitive moat.
TTD highlighted that Kokai delivered (on average) 26% better cost per acquisition, 58% better cost per unique reach and a 94% better click-through rate compared with Solimar. Embedding AI to enhance Kokai bodes well. TTD’s OpenPath and OpenAds initiatives further strengthen its ecosystem by connecting advertisers directly to publishers, improving transparency and supply-chain efficiency.
However, TTD faces tremendous competition in the digital ad space. Amazon’s ((AMZN - Free Report) ) expanding DSP business is giving tough competition to TTD. Beyond big tech, independent ad-tech companies, such as Magnite ((MGNI - Free Report) ), are expanding their efforts and competing for ad dollars.
Taking a Look at Business Strengthening Efforts of AMZN & MGNI
With annual ad services revenues of $56.2 billion in 2024, Amazon is quickly gaining market share in the digital ad space. Currently, it is one of the leading DSP players. AMZN is ramping up investment in the DSP and CTV businesses, putting it in direct competition with TTD. Amazon Ads delivered $17.6 billion of revenues in the third quarter, up 22% year over year.
In the United States, advertisers can now reach an average ad-supported audience of more than 300 million across its retail marketplace, Prime Video, Twitch, Fire TV, Live sports (NFL, NASCAR, NBA), as well as third-party websites and apps. AMZN is also upbeat about its DSP platform. AMZN noted that its integrations with Spotify and SiriusXM will give advertisers programmatic access to more than 560 million (400 million on Spotify and 160 million on SiriusXM) monthly digital listeners across both platforms.
Magnite is a supply-side platform that helps publishers manage and sell their ad inventory across various formats like streaming, online video, display and audio. MGNI’s reported third-quarter revenues of $179 million, up 11% year over year, and adjusted EBITDA of $57 million, representing a robust 34% margin.
CTV was the key driver with deep partnerships with major publisher partners and agency marketplaces, along with momentum, particularly in live sports and SMB advertising. Higher intake of its ClearLine platform, which now boasts more than 30 clients, was another plus. MGNI highlighted SpringServe (CTV ad serving and SSP platform) as a critical differentiator as it plays a key role as the "mediation layer for publishers".
TTD Price Performance, Valuation and Estimates
Shares of TTD have lost 13.6% in the past month against the Internet – Services industry’s rise of 16.5%.
Image Source: Zacks Investment Research
In terms of forward price/earnings, TTD’s shares are trading at 21.3X, lower than the Internet Services industry’s ratio of 26.97X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TTD’s earnings for 2025 has been marginally revised upwards over the past 60 days.
Image: Bigstock
Can Audio Advertising Become Trade Desk's Next Big Growth Driver?
Key Takeaways
The Trade Desk ((TTD - Free Report) ) is striving to boost its top-line expansion beyond connected TV (“CTV”). While video, which includes CTV, remains the largest share of its business, audio is emerging as a key driver. On the last earnings call, management noted that audio represented around 5% of the business and it expects CTV and audio to increase as a percentage of the business mix due to the “premium authenticated nature of these channels.”
TTD highlighted that audio is benefiting as consumers spend roughly three hours a day listening to music and podcasts, creating an expanding addressable market for digital audio ads.
The company’s AI-powered platform, Kokai, is emerging as a key catalyst unlocking performance gains in audio campaigns. TTD cited Bayer’s omnichannel campaign on Kokai, which, after integrating Spotify, witnessed a 15% jump in its incremental reach. Kokai is used by 85% clients as their default experience and has been strengthening TTD’s competitive moat.
TTD highlighted that Kokai delivered (on average) 26% better cost per acquisition, 58% better cost per unique reach and a 94% better click-through rate compared with Solimar. Embedding AI to enhance Kokai bodes well. TTD’s OpenPath and OpenAds initiatives further strengthen its ecosystem by connecting advertisers directly to publishers, improving transparency and supply-chain efficiency.
However, TTD faces tremendous competition in the digital ad space. Amazon’s ((AMZN - Free Report) ) expanding DSP business is giving tough competition to TTD. Beyond big tech, independent ad-tech companies, such as Magnite ((MGNI - Free Report) ), are expanding their efforts and competing for ad dollars.
Taking a Look at Business Strengthening Efforts of AMZN & MGNI
With annual ad services revenues of $56.2 billion in 2024, Amazon is quickly gaining market share in the digital ad space. Currently, it is one of the leading DSP players. AMZN is ramping up investment in the DSP and CTV businesses, putting it in direct competition with TTD. Amazon Ads delivered $17.6 billion of revenues in the third quarter, up 22% year over year.
In the United States, advertisers can now reach an average ad-supported audience of more than 300 million across its retail marketplace, Prime Video, Twitch, Fire TV, Live sports (NFL, NASCAR, NBA), as well as third-party websites and apps. AMZN is also upbeat about its DSP platform. AMZN noted that its integrations with Spotify and SiriusXM will give advertisers programmatic access to more than 560 million (400 million on Spotify and 160 million on SiriusXM) monthly digital listeners across both platforms.
Magnite is a supply-side platform that helps publishers manage and sell their ad inventory across various formats like streaming, online video, display and audio. MGNI’s reported third-quarter revenues of $179 million, up 11% year over year, and adjusted EBITDA of $57 million, representing a robust 34% margin.
CTV was the key driver with deep partnerships with major publisher partners and agency marketplaces, along with momentum, particularly in live sports and SMB advertising. Higher intake of its ClearLine platform, which now boasts more than 30 clients, was another plus. MGNI highlighted SpringServe (CTV ad serving and SSP platform) as a critical differentiator as it plays a key role as the "mediation layer for publishers".
TTD Price Performance, Valuation and Estimates
Shares of TTD have lost 13.6% in the past month against the Internet – Services industry’s rise of 16.5%.
Image Source: Zacks Investment Research
In terms of forward price/earnings, TTD’s shares are trading at 21.3X, lower than the Internet Services industry’s ratio of 26.97X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TTD’s earnings for 2025 has been marginally revised upwards over the past 60 days.
Image Source: Zacks Investment Research
TTD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.