Businessmodel of The Trade Desk

Customer Segments

Trade Desk operates a self-service platform that allows ad buyers to share their customised messages and ideas with a specific audience in a context that they can choose deliberately. The Company provides a range of clients within the advertising space, primarily advertising agencies and brand marketers. The Company does not maintain exclusive relationships with advertising agencies and depends on agencies as intermediaries in order to reach high-profile advertisers and companies.

As of 31st December 2015, Trade Desk had approximately 389 clients, consisting primarily of advertising agencies, many of which are owned by holding companies, where decision making is decentralised such that purchasing decisions are made, and relationships with advertisers, are managed, at the agency level. If all of the Company’s individual client relationships were aggregated at the holding company level, Omnicom Group Inc and WPP plc would each represent more than 10% of the Company’s gross billings for 2015.

The majority of Trade Desk’s clients are based in the US. The Company does also serve an international client base, however, single international market accounted for more than 10% of gross billings for 2015.

Value Propositions

Trade Desk provides value to its customers in the following ways:

• Its flexible and accessible platform, with the Company operating an online platform that allows clients to easily define and manage advertising campaigns with multiple targeting parameters independently, as well as access tools and functions on a self-service basis;
• Its international reach, with the Company’s online platform available to a range of advertising agencies across multiple countries outside its native US;
• Its commitment to innovation, with the Company committing a substantial portion of its resources to the development of new and innovative advertising solutions, and with the Company utilising technology that enables it to develop new features for its platform and make changes quickly and efficiently;
• Its extensive data access, with the Company providing its clients access to targeting data from more than 80 sources, as well as providing access to its own well of proprietary data; and
• Its scalable self-service model, with the Company operating a self-service model that lets clients direct their own purchases of advertising inventory, allowing the Company to scale efficiently and at a faster pace than the growth of its sales and support organisation. ### Channels

Trade Desk operates a website at www.thetradedesk.com, through which it provides information on its platform, its various ancillary services, and its trading academy. The Company’s website also serves as portal to its self-service platform, which allows customers to access insights and targeting data, manage advertising campaigns, and manage user accounts. Once customers have registered for the Company’s services they are able to access the Company’s platform through the cloud from desktop and mobile browsers.

Trade Desk makes its sales through a dedicated direct sales and marketing organisation, which works with clients directly and are organised by geographic region. The majority of the Company’s sales personnel are located in the US. However, Trade Desk does international sales team including in the UK, Australia, Germany, South Korea, Singapore, Japan, and Hong Kong, with plans to expand its international operations further, targeting countries that score low on Transparency International’s Corruption Perceptions Index.

Customer Relationships

Trade Desk makes its sales through a direct sales and marketing force, which consults closely with clients in order to provide the most appropriate services to their individual needs. Once sales have been made, customers are able to access the Company’s cloud-based platform independently, allowing them to utilise the Company’s various tools and resources, manage account details, organise advertising campaigns, and make payments without interacting with members of the Company’s sales personnel.

Trade Desk provides a range of online resources to its clients, including whitepapers, case studies, and reports, through its website, as well as various insights and technical support guides through its online platform. Alternative, customers are able to contact the Company directly over the phone or via an online sales form in order to receive a personalised response to queries and complaints.

Customers can also track the Company’s activities, as well as interact with it directly, through its various social media accounts, including with Facebook, Twitter, and LinkedIn.

Key Activities

Trade Desk is a US-based technology company. It develops and operates a global technology platform designed to serve ad buyers, primarily serving a number of advertising agencies.

The Company’s offers clients access to a self-service cloud-based platform, through which they can manage data-driven digital omnichannel advertising campaigns using their own teams across various advertising formats, including display, video and social, as well as on a number of devices, including computers, mobile devices and connected televisions.

The Trade Desk provides its clients with a wealth of data from a broad range of sources, including the Company’s own proprietary data, through the Data Management Platform. Trade Desk operates principally in the US, but also operates sales team across the UK, Australia, Germany, South Korea, Singapore, Japan, and Hong Kong.

Key Partners

Trade Desk works in collaboration with a broad range of companies, primarily those operating in the advertising and marketing sectors, in order to provide an effective service to its clients. These partners include:

• Supplier and Vendor Partners, comprising suppliers of services, tools, and equipment that are utilised across the Company’s operations to support its core business services;
• Data Partners, comprising various data analytics, targeting solutions providers, and marketing technology companies that provide up to date information that can be transmitted to the Company’s clients via its online platform;
• Inventory Partners, comprising advertising, internet marketing, and visual intelligence companies that provide inventory for the Company’s platform;
• Publisher Partners, comprising various online publications, media outlets, and retail website that provide advertising space to the Company, which can be sold to its various clients; and
• Strategic and Industry Partners, comprising advertising and digital marketing companies that collaborate on projects with the Company and provide advisory services. Trade Desk lists a number of its partners on its website. This includes data partners such as Bombora, Arcametrics, and Eyeota; inventory partners such as Facebook Exchange, LiveIntent, and Technorati; Publisher partners such as eBay, Vox Media, and BBC Worldwide; and industry partners such as Adchoices, Digital Advertising Alliance, and Evidon.

Key Resources

Trade Desk’s key resources are its technologies and intellectual properties, its online platform, its IT and communications infrastructure, its partnerships – notably its data and publishing partners, and its personnel – in particular its technical staff.

Trade Desk considers its protection of technology and intellectual property to be an important component of its success, relying on various intellectual property laws, including trade secret, copyright and trademark laws in the United States and abroad, to protect its intellectual property. The Company does not hold any patents, as it believes its proprietary technology is best protected by keeping its technology architecture, trade secrets, and engineering roadmap private.

Trade Desk also owns and or leases a number of properties, notably its international network of offices spanning UK, Australia, Germany, South Korea, Singapore, Japan, and Hong Kong.

Cost Structure

Trade Desk incurs costs in relation to the development of its online platform and technologies, the maintenance of its IT infrastructure, the implementation of advertising and marketing campaigns, the management of its partnerships, and the retention of its personnel.

In 2015 the Company recorded total operating expenses in the amount of $75.86 million. This includes sales and marketing costs totalling $26.79 million, platform costs amounting to $22.97 million, general and administrative costs in the amount of $13.28 million, and technology costs totalling $12.82 million.

Revenue Streams

Trade Desk generates revenue through the development and operation of an online ad buying platform. The Company derives revenue primarily through the collection of platform fees based on a percentage of a client’s total spend on advertising, data and other features through the Company’s platform. The Company enters into ongoing master service agreements with its clients as opposed to episodic insertion orders.

In 2015 Trade Desk generated $113.84 million in annual revenue, up considerably on the $44.55 million recorded by the Company in 2014.