February 23, 2023

Expect Programmatic Ad Buys to Keep Growing

By Jay Bemis | Advertising Systems Inc.
Programmatic ad buys are looking even more popular now for advertisers, thanks to fourth-quarter earnings news last week from programmatic-ad kingpin The Trade Desk.

The Trade Desk reported that its fourth-quarter revenues for 2022 rose 24% year over year to $491 million, and that its yearly revenues rose 32% to a whopping $1.58 billion — all at the same time that many companies were cutting back on their ad spending because of inflationary concerns.

Programmatic ad buys are intended to target ads to the best platforms under current conditions. They often target digital platforms, such as streaming services and connected TV, but a programmatic ad buy also might include a mix of print, mail or traditional TV advertising, too.

Programmatic ad buys had proven popular in recent years with smaller businesses, many of which have enlisted the help of marketing strategists to help them best target their ads over the programmatic landscape.

But several factors, including the eventual disappearance of third-party cookies in the not-so-distant future, as well as mid-2022 inflationary concerns, made some wonder whether programmatic might become, well, problematic.

Not so, said The Trade Desk with its earnings report last week.

What’s The Trade Desk’s Chief Weapon? It’s Called UID2

The Trade Desk’s healthy earnings report last week is in large part because of a programmatic ad tool that the tech giant introduced a couple of years ago: The Unified ID 2.0 initiative, which it has hailed as a replacement for third-party cookies.

Describing UID2 as “an identity fabric for the open internet,” The Trade Desk says its post-third-party-cookie solution provides more holistic targeting and measurement “for an internet that’s becoming more privacy-conscious.” The tool, it says, offers greater targeting precision and more efficient ads — plus better cross-device and cross-channel frequency management.

Disney is not the only company that likes The Trade Desk’s UID2 solution.

The UID2 approach also has been adopted by such companies as Nielsen, LiveRamp and Criteo. And then there’s FuboTV, which said in October that its use of UID2 had increased ad impressions by 25% and advertiser spend by 61.5%.

Earnings Impress Marketing Experts, Investors Alike

News of The Trade Desk’s fourth-quarter surge in earnings last week sent its stock on the NASDAQ exchange soaring as well. Its shares there climbed 24% by week’s end.

“Trade Desk’s performance was much better than that of its larger rivals Meta Platforms and Alphabet, which both saw their ad sales decline in the fourth quarter,” noted the Motley Fool.

The experts at eMarketer/Intelligence, meanwhile, were abuzz with the earnings news.

“The ad industry has found itself in a tough position over the last year, with advertiser spending shrinking due to up-in-the-air addressability across multiple channels, looming ad privacy regulations, and a tightening economy,” eMarketer said.

“But amid the chaos, channels that provide flexibility like programmatic stand to benefit.

“ … The Trade Desk’s strong results show the industry’s hunger for solutions that can clear up the addressability cloud over multiple channels and the sunsetting of browser cookies. With several successful partnerships under its belt, Unified ID 2.0 could become a leading solution in the new advertising landscape.”

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