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- [00:00]
A
Foreign.
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B
Hello, hello and welcome to another episode of the Digiday Podcast, a show about the business of media and marketing. I'm Kimiko McCoy, senior marketing reporter here at Digiday.
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And I'm Tim Peterson, executive editor of video and Audio Digiday Media. What's up, Kamiko?
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B
Tim, how's it hanging? How are you?
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A
I'm all right. I'm kind of swimming.
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B
It.
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A
It feels like all of us are swimming in news right now. There's just been a lot going on this past week and even like this week's advertising week in New York. So I think all of us are also girding up for just like what news is still to come this week. So I'm doing all right. How you been?
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B
I think swimming is a nice way to put it. I am more so along the lines of drowning in it, just fire hose style, you know, being tossed at me. But I will say through all of it, I'm treading water. Similar to our topic this week, which is the Trade desk. Now, I originally pitched this as the rise and fall of the trade desk, but to our executive news editor's point, Seb Joseph, they're not quite falling, so maybe it's an overshoot there. But nonetheless, it's expected to be a really interesting conversation. We've got our senior ad tech reporter, Ronan Shields, who will join us as well to talk about a, I guess we'll call it the growing challenges amid competition, mostly Amazon, that the trade desk is facing right now.
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A
Yeah, the heat check on the trade.
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B
It does, yeah. But before we get into all that, to your point, Tim, it's been a really, really busy, busy week. What's on the top of your docket?
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A
I mean, OpenAI in particular has been super busy. So even, you know, we're recording this on Monday, October 6th. This morning, OpenAI had its dev day where it announced some news like, I guess, its version of an app store. So long as people forget about the GPTs launch from a couple of years ago. But then, I mean, the big app that OpenAI launched this past week was Sora. So we'll get to talking about that. And then there was a Wall Street Journal report that Meta is planning to start using the data from people's conversations with its AI chatbot to target ads. Not the most shocking, almost anticlimactic in a way, but a lot of really interesting implications there. And then thirdly, again, just this morning, Paramount announced it is acquiring the Free Press, and that Free Press co founder and CEO Bari Weiss will be taking over as editor in chief of CBS News. So a lot to talk about, but I feel like we got to start with OpenAI because, well, we'll kind of just look at the app stuff because that's something I'm sure we'll probably be unpacking in future episodes with folks, especially as companies start building out these apps and seeing what kind of traction they get. But these apps basically are gonna allow someone to go into ChatGPT and say like, Hey, I need to. I'm moving ChatGPT. Help me find a new apartment. And then ChatGPT will be able to plug into the Zillow app within ChatGPT to like show listings that way. Is this something you would want to use?
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B
Yes, even though I do really enjoy spending time on Zillow just shopping. But that's interesting. So it's like an integration, essentially. Is this different from what they release with Pulse?
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A
So this is very different than Pulse because Pulse is basically like a email news digest in a way.
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B
So this is just you going into. Directly.
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A
Yeah, got it. So instead of you going to like Zillow or to Canva or Figma, those have been some of the others that were listed. You would just do everything, everything within ChatGPT. And so it's similar to like if within Google Search you could search Zillow listings and you don't have to leave Google Search. What's going to be interesting is like how okay companies are with this because is this yet another walled garden, assuming people end up using it? Also, what's the data that OpenAI is going to be sharing back to companies like Zillow, like Canva? I believe Target was one of the logos that was on, on like the presentation that OpenAI had.
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B
I think the reason why I got confused is because OpenAI is doing a lot right now. So they've got this, they've got Pulse. They just released a TikTok style Sora app for AI generated videos. They've got instant checkout. It's a lot happening. Firehose is happening right now.
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A
Well, they gotta figure out how to make this money back that they're spending on all of their costs and all the GPUs that they're using. But yeah, so let's talk about Soar. So last week we talked a lot about the Meta Vibes app or platform, which was the AI generated video feed that meta rolled out. A day after we recorded that, OpenAI said, everyone hold all the beers, we're going to roll out Sora, which they're billing as a Social app, which I think is really interesting because that seems to be where this is different than what Meta is doing with Vibes, where, I mean, effectively it just boils down to, it's like you said, TikTok, but AI generated videos. But the really interesting feature with Sora is called Cameos, where I could take a scan of myself within the Sora app. I guess you take photo or video of yourself and then you say some words or numbers or something and it'll create an AI version of you that then you can then use to put into videos, can also share that. So if you and I were connected on Sora, I could say, hey, Kimiko, if you want to like, use me as a character in one of your AI generated videos, you can use my cameo to do that.
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B
We, every day we stray farther and farther away from God's light, closer and closer to the Uncanny Valley. I do wonder what the implications here. I. I know, you know, they're probably going to pitch this in the same way that Meta has pitched it, where it's like, oh, this could be like a tool in the tool belt, but you've got to won about like what this means for like IP and copyright, right? And then also for creators. Now, even before we got on this call, we Talked about how OpenAI did like a real fast about face on how people were allowed to opt in or opt out of their, what is it? Copyright holders.
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A
Yep.
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B
Yeah, yeah, yeah, yeah.
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So originally, you know, I think it was the Wall Street Journal reported last Monday that OpenAI was telling Copyright holders, you're going to have to opt out if you don't want us using Mickey Mouse to appear in these SORA videos. Obviously that did not go over well. I think it was even one of the major Hollywood talent agencies told OpenAI, okay, all of our clients are going to be opting out of this. But then on Friday, so four days after Sora launched, Sam Altman, CEO, co founder of OpenAI, wrote on his personal blog, okay, actually we're not going to do that. We're going to make this opt in. So a Disney, I would assume a Studio Ghibli. But what was interesting is in OpenAI's blog post announcing Sora, they had a direct ripoff of Studio Ghibli. They even used Studio Ghibli by name in there, which just felt super brazen. But basically copyright holders will need to opt in. Well, let me quote Sam Altman's language because he's not super clear about how this is going to work. So this is what he said in his blog post. Quote, we will give rights holders more granular control over generation of characters similar to the opt in model for likeness but with additional controls. And that's all he said. Can we go? Do you know what he's talking about here?
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B
I know. I don't know what additional controls means. Is this like, if it's an opt in model, is this like one button that I check and I opt out of everything? Are there certain aspects that are opt out of? If my copyright, my IP is at risk here and I'm like Disney Studio Ghibli or any of these others, like, I, I need a little bit more clarity as to what this means.
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A
Yeah. Because similar to the opt in model for likeness, like maybe this is splitting hairs at the same time. Yeah, we're words people. Words are important. We're also journalists. It's. It always is something of a red flag when someone uses not as clear of language but like similar to the opt in model for likeness means not the exact opt in model for likeness. So what's the difference going to be? I guess we're going to have to see how that proceeds. Maybe Disney or NBC or Warner Brothers Discovery who have filed lawsuits against Midjourney. If they do or do not file lawsuits against OpenAI. I think that'll tell us something. Another interesting piece of information in this blog post by Sam Altman. They're going to have some sort of rev share component within Sora. Again, he was unhelpfully vague about it, but I'm just going to quote you what he said in his blog post. Quote, we are going to try sharing some of this revenue with rights holders who want their characters generated by users. The exact model will take some trial and error to figure out, but we plan to start very soon.
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B
I don't know what. There's so much unclarity and I feel like I don't know how much gray area is to be allowed for or allotted for when you're talking about someone's ip, you know, and then not to mention like these, there's been. The big concern here is like disinformation and misinformation. It's just not just somebody using your ip, it's somebody using it in a negative light. There was even a AI generated CCTV video of Altman himself stealing in Target. That way is making its rounds online.
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So you know, which was made by an OpenAI employee.
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B
Love that. Even better. A full circle moment, if you will. But yeah, it calls into a question a lot all in the name of. For a company that was very poo poo on ads, trying to build out some type of business to rake in money.
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A
Yeah, well, it also gives an indication that there's going to be some revenue to be shared. Not clear what that's going to be because as far as I know, no one's paying to use Sora. Like I don't think it's limited to ChatGPT plus or Max subscribers, but in thinking about it, there does seem to be, I think everyone kind of immediately jumped to, well, if you're going to have a feed of content, what else do you put in a feed of content ads. And so maybe there's some sort of like advertising rev share component similar to like TikTok which has like its Pulse program that shares revenue with creators based on like the ads that appear like before or after their videos on that platform.
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B
Well, yeah, you've also got to consider like, I mean like I said, it makes sense. At one point OpenAI did kind of shrug at the idea of like ads, but you're burning through large sums of cash for talent hiring people away from other companies. Right. Also like the data infrastructure in the data centers themselves, you've got to find a way to recoup that and you know, make good on your, on your promise. So ad that's. It's the playbook ads kind of becomes the, the way to do that.
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A
And there feels like one opportunity for like a native ad product. In here is the cameos feature where you could see a duolingo making it so that people could use the. It's an owl. It's a Duolingo owl. You've reported on this way more than I want people to be able to like use the Duolingo owl as a cameo in their video. And so Duolingo pays OpenAI to promote that as like a featured cameo or something like that. And maybe it's even build based on the number of people who actually add it to videos. And what OpenAI would then need to figure out is like the attribution system to be able to like measure not just how many people used it, but did that lead to signups for Duolingo?
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B
Well, in all of these things I think OpenAI has the second mover advantage here kind of following or looking at the footsteps of matter of Google and to some extent even Amazon. Meta also made some big news about its AI chatbot going to be used to target ads. So you've got another stream there, right.
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A
Which probably like no one should be Surprised by this. This is also almost anticlimactic. Like it's absolutely notable and it's therefore worth noting. This takes effect December 16th and there is, according to the Wall Street Journal, which reported on this no opt out option. So if you're having conversations with Meta AI, your data is going to be used to target you with ads and to recommend the content that you're seeing out. They are putting some guardrails of According to the Journal report citing meta, conversations involving religious or political views, sexual orientation, health and racial or ethnic origin won't be used to customize ads or content. Still, I feel like people are going to need to be pretty careful with the conversations they're having with meta AI. But that also all of this is contingent on people using meta AI. And I haven't used Meta I as far as I know maybe when I'm using like Instagram search.
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B
Well that's something else. One I want to everybody who had their tinfoil hats on about these platforms listening to you and then recommending you products, now is your time to shine. You have finally been vindicated. But also to your point about like how many people use Meta I like I know like by the numbers. A lot of chatbot searches start with ChatGPT as opposed to any of the ones that are in the platform and whatnot. And I wonder if meta will use just your regular search bar function to kind of pad those numbers, right. As to how many people are using it to then turn that back to advertisers, which would make sense.
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A
I mean it's similar to like what we're seeing with Google with AI overviews AI mode that like any. It seems like any search surface is gonna eventually become a AI prompt bar.
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B
Yeah. I am curious of like with ChatGPT OpenAI's ChatGPT having the instant checkout feature if they'll kind of do something similar again taking a page out of meta's playbook. But to me this like I can't think of anything else. Like this is all a play to be able to make some money for how much cash they're burning through.
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A
Right. Which I mean they need to. And that'll be interesting to see how they roll this out from a targeting option perspective. Like are they going to include this as a separate targeting option for advertisers within like the self serve, you know, buying tools. And if so, is that going to carry a certain premium? Are you going to have to pay $5 more on the CPM to use this AI chatbot data? Because maybe this Data is more valuable. They'll have to like prove out that there's some performance impact from applying this data for ad targeting. But knowing meta they will have that data.
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B
Yeah absolutely. Which you know kind of flicks at them. Them being the ones have a kind of written the playbook here that OpenAI may need to be taken a page out of. I don't have a good transition for talking about bear amount.
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A
It's kind of like the opposite of talking about a and kind of the future of media Talking about legacy media with Paramount and CBS News. So this morning and it's been reported for more than a month, I think a couple of months now. Oliver Darcy from Status, I believe it was the one who broke the news last week that this announcement was impending and now has been made. Bari Weiss, who is the former New York Times columnist who went on to co found the Free Press. I believe it started as a substack newsletter built it up. It has 1.5 million free and paid subscribers according to the New York Times today, so has a good sized audience. But Paramount is acquiring the Free Press and Weiss will take over as in this new role at CBS News as editor in chief reporting directly to David Ellison. What strikes me as most interesting about this is last year with the US presidential election, there was so much talk about that being the influencer election. And like the podcast election, this seems to be an example of an influencer becoming a media mogul that they have tapped. Bari Weiss, who is a journalist but is also a news influencer, really is now running a major news organization.
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B
Yeah, you made me chuckle earlier before the mics got hot when you said this would be akin to Paramount tapped Mr. Beast to run Paramount Studios. Which kind of speaks to the, the, the influence that influencers have. Right. Because Weiss also doesn't have a TV news experience background to be coming into this role. And Ellison, you know himself as well as the other, you know, 1 percenters of the world have looked to her as kind of their, their news leader, henceforth bringing her into the environment for, for first editor in chief of cbs.
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A
Yeah, yeah. Because that was one thing that was interesting to me about all this is. I mean granted I'm not like the biggest news junkie. I stay up on the news but I'm not, you know, getting newspapers delivered to my home. I don't have, I have a New York Times subscription and a subscription to Apple News plus and that kind of gets me by for the most part. I've never read the Free Press. I don't know Anyone who reads the Free Press. Do you read the Free Press, Kamiko?
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B
I don't. And to. I mean, does it matter? You know what I mean?
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Exactly.
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B
Because to your point earlier, it's about the influence as opposed to, you know, the. The actual experience and whatnot of it.
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Yeah. There was this New York Times profile of Weiss that was published last year. And in it, one person that the Times reporter spoke to said of Weiss, quote, she speaks to the 100th of 1%, and they'll listen. And the investors in the Free Press include Marc Andreessen, David Sachs, Howard Schultz, Jeff Zucker, who used to be at NBCUniversal and CNN. He was one of the people who's spoken fondly of Weiss. So you and I may not read the Free Press, but very powerful people read the Free Press. And that seems to be one of the things that ultimately is what matters to Paramount, CBS News, and, you know, their CEO, David Ellison.
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B
Weiss has also been described as like, a radical centrist or described herself as a radical centrist. And I wonder how much I understand what that means.
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A
A radical centrist. Abnormally normal.
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B
This. I'm gonna leave spongebob memes out of this, but it speaks to. And I wonder how much of this speaks to, like, where CBS News kind of wants to go with its coverage. I've been having conversations with media buyers where there's more interest in playing both sides of the field. There has been before. So if you're talking about, like, ad revenue, which, Lord knows broadcast news needs it. Right. You're kind of setting yourself up to take in those. Those ad dollars from those players that are a little bit more adamant about, well, we don't want to play either side of the fence anymore because that's going to be hot water. Maybe we'll get into both. And if CBS can strike that chord now you've got the 1% of the 1% being like, yeah, opt in. And you've also got advertisers.
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A
Yeah. And so I guess, like, one of the first signals we can look for, you know, in terms of the. The Weiss regime at CBS News is Semaphore reported this morning that CBS News is in talks and having Donald Trump on as an interview for 60 Minutes sometime soon. It seems like that would be the first big showing of the white regime. And then to your point, we'll have to see how advertisers respond to all this, to what extent they're putting money towards 60 minutes, towards face the Nation, towards the Free Press as well. But that all will Remain to be seen as will what happens with the trade desk, given all this competition it's getting from the Amazon DSP as well as, you know, Google still being in the mix. What's happened with Walmart and others as we talk about with Seb and Ronin.
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B
Yeah, it's a real, real good conversation. Juicy, if you will. So with no further ado, let's have, let's have it.
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A
Foreign. And Seb, welcome to the show. Thanks for joining us.
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C
Good to be here.
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D
Thank you for having us. Good to be here.
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A
Yeah. Kimiko and I excited to have you both here because we've been talking a fair amount on the trade desk. I feel like all year, every like month or two, there's some news related to the trade desk that we're bringing up on the show.
- [22:11]
B
Yeah, yeah, absolutely. There's never a falling out of news. Always new things to be, to be tackling. Recently the trade desk made an announcement about a third party marketplace and also pushing forward with Ventura. So there's a lot happening with it and there's a lot of happening with its competitors as well. Hence kind of the theme of this, this episode. I don't want to call it the Rise and fall, but maybe it feels.
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A
Like a heat show.
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B
Yeah, yeah, yeah. I think that's a good way to put it.
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A
It feels, that's kind of like a heat check. So Seb, a year ago, almost exactly a year ago, we're recording this on October 1, 2025, you wrote this piece on October 8, 2024 titled Untangling TTDs DDT. I appreciate the acronym wordplay there. So DDT referring to dominance, distress, trauma. And in the piece you talk to a lot of people and it seems like the piece kind of amounts to the trade desk had gotten really big and really powerful and there was kind of some concerns about its power and how much companies want to be relying on the trade desk. Because at that point we were just coming off, we were still in the midst of Google's ad tech antitrust trial, which it ended up losing. It was found guilty of operating an ad tech monopoly. And there were kind of bubbling concerns of is the trade desk the next kind of too big player in the ad tech space? This year the trade desk is still like pretty dominant, but that dominance has definitely been put in check by the rise of not even the rise of Amazon's dsp, but Amazon's DSP seems to like have shifted into a new gear this year. Like Kimiko mentioned today as we're recording this, Amazon announced a Partnership with Spotify to have Spotify's video and audio inventory available for sale through the Amazon dsp. Meanwhile, the trade desk has just had a tough year. Its stock price is down by almost 60% this year. Seb is this. Are we seeing what's. And so we want to talk about what's going on with the trade desk kind of as a lens of looking at just the DSP space overall, is what we're seeing this year with the trade desk. How much of it is a heat check on the trade desk and how much of it is a response to what Amazon's up to or even What Google with DV360 is obviously the biggest DSP in the space. I believe just what's going on on that.
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C
Yeah, I think such a nebulous thing. It's probably worth just going back a bit. So I think you and Kameka are right. The trade desk has definitely had a rough kind of time of it probably going as far back as 18 months. No two ways about it. You could kind of feel that pressure building, like last spring when Amazon rolled out ads on Prime Video. As we reported, that kind of move alone kind of threw a spotlight on the Amazon ad business and I think by contrast, pushed the trade desk into a more vulnerable position. But the kind of real shift came, you know, when the traders missed its Q4 2024 numbers. Right? That was its kind of first revenue miss. And investors really didn't take it lightly. The stock got hit and so did, I think, the broader narrative around the business. And since then, what had been kind of slow building headwinds, competition, pricing pressure, market saturations kind of suddenly came into focus. And honestly, that's been, you know, kind of, if you guys have both alluded to, like, it's been one of the major storylines of the year because I feel like it ties into so many of the big themes in advertising right now. Retail media, Amazon, CTV consolidation. But I don't think that's necessarily about the trade that's doing something wrong. I think the market's finally catching up to it after years of being out ahead. And the kind of Spotify. Spotify's decision to kind of work with the Amazon dsp, I think is a great example of that because it shows that access to inventory is becoming a scale advantage for larger DSPs. Right. Since those types of wall gardens, I think the correct term for them now is hedge gardens. Spotify, Netflix, Pinterest, et cetera, they're very picky about who they let bid, you know, and that wasn't necessarily the case during the kind of the halcyon days of the kind of Trade Desk. Right. Like it kind of had the kind of pick of the kind of bunch, I think now Amazon, Yahoo and so on, you know, they're able to. What's the word? Oh, how to put it? They're able to kind of pitch a better kind of case, present a better case to those hedge gardens than they have done. And that is obviously kind of putting more pressure on the Trade Desk.
- [27:27]
A
Now, to Seb's point. So Trade Desk had its Q4 2024 earnings call in February. And if you look at Trade Desk stock price this year, there's a really precipitous fall in that stock price in February. In the wake of that earnings call, there's a second cliff that the stock price fell off this year and that was in August. And it seems like there were two things that happened around that time that would have contributed to this. Another Trade Desk earnings report and specifically an earnings call where I believe Trade Desk CEO Jeff Green kind of shied off the Amazon competition in a way that it seems like the investors and analysts didn't really take to. I don't know if it was a concern that the Trade Desk isn't taking the threat of Amazon seriously or is downplaying it to such a degree that it's almost reading between the lines like, oh crap, this is, is actually a huge threat. But then at the, you know, around the same time, Walmart ended Trade Desk exclusive access to Walmart's shopper data and inventory. Ronan, how significant was the, the end of the exclusivity window for this Walmart deal for the Trade Desk?
- [28:41]
D
Well, yeah, it was one of the big tent pole narratives they had as a big player. And I think, yeah, as you said, it's that pincer movement that they appeared to be in because the growth of the Amazon DSP is coming forward. I think that was probably more of a blow to its stock price. But yeah, losing Walmart, it's not going to bolster confidence of the market any, that's for sure. But yeah, I think much of this decline in its market value is due to the emergence of the Amazon dsp. Obviously there's a saying out there. If Amazon is getting into your business, it's time to get out of your business. That's a sort of cautionary tale. They're competing aggressively on price. And earlier in the year, sources of contact, myself and I think also Sebastian, but yet we certainly as a group, certainly we picked up on Amazon being more willing to be a bit more malleable with the holding company agencies when it came to commercial deals and competing on price. It's from sources that we collectively speak to here. It's very, very small margins they are charging for in order to gobble up that market share. Yeah, it really has been a year of firsts for the Trade Desk since they went public in 2016. I believe it really has been their toughest year in terms of the market.
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B
I want to ask for, for those that are a little bit outside of ad tech. Right. What was the Trade Desk original strength? It was being in the open marketplace. Right. So, like, where do you pivot from there if you've got Amazon kind of tapping into all of these different players and becoming, I guess, less of a walled garden?
- [30:40]
D
Well, I think the Trade Desk, it's opening narrative to market or certainly it's USP. What's helped to accelerate to 2016, when it became a public company was it was the big friend of the holding companies. They had excellent customer service by all accounts, and they were the, hey, we're as good as Google, but we're not Google. I don't know if that chimes with what sources have told you historically, Seb.
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C
No, definitely. But, you know, that was a key reason why it, you know, kind of grew and was able to, you know, outgrow some of its kind of contemporaries. You know, I also think it had, you know, that unique, exclusive access to some of the best inventory out there, which. Which made it, you know, attractive despite, you know, the kind of high rates that it was kind of charging. Advertisers like that is obviously being chipped away at now, both in terms of access, but also, you know, the fact that, you know, the larger. Its largest rivals, Google and Amazon, are aggressively undercutting it on kind of price as well. So. But I think, again, like, I think that was always going to happen. Right? Like, give those a. There was never any doubt that Amazon and Google were going to make a play for that part of the market with their DSPs. It was just a question of when do I think these are existential threats to the Trade Desk? No, particularly when you look at how much Runway it has outside of the U.S. i just think it will be interesting to see how the Trade Desk chooses to respond to that. Does it sort of start to drop down some of those kind of fees that it's sort of charging, which I think it will have to do at some point, or does it just to kind of continue to sort of aggressively move into some of those kind of emerging markets where Amazon and Google aren't necessarily their DSPs anyway aren't necessarily the strongest.
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B
And I know we also talked about, to your point, we also talked about like there's external factors happening here. Right. But at our Programmatic Marketing Summit earlier this year, and I think Ronan, you touched on this with a piece that you wrote where someone in our confessions hall essentially called Trade Desk the spirit airlines of DSPs. Right. So how much of it is kind of its own doing?
- [33:16]
D
Well, I believe the Spirit Airlines quote. Sorry, am I just remembering that? But it came up. I believe you're also there, Tim. It was about the hidden fees and that lack of transparency that was, it's a good way of crystallizing the umbrage that exists out there. I'm not saying it is ubiquitous, but it is certainly there. It's a skilled supplier to the media buying landscape. People always grumble. Yeah, I mean that's, that's, that's life. But yeah, I think a lot of it is where a lot of the people in that town hall they said that, you know, the trade test got to a point where basically where Wall street became more important to Madison to, to them than Madison Avenue. That is the people that were in that room, the people that keep putting money their way quarter after quarter. But well, they've obviously a lot of competition out there, Amazon being the biggest one and then obviously Google has always been there. And also I think it's probably worth noting it's more of a slight sidebar, but we also have these supply side platforms are also competing with them with this homogenization of the platform business. We've got Magnite and Pubmatic and going through with their offerings. I think one is called Clearline and the other one is called I forget, I'm not going to commit to saying one is the other because I just know I'll get an email from a comms person. But I just thought that is worth noting that there is also an element of competition from those players. So it's a pretty cutthroat marketplace. But yeah, they're getting bigger than their customers. That's always going to be a problem and introduce tension to any dynamic.
- [35:18]
A
And they're also like one thing that we heard in that town hall during DPMS in May and then the virtual town hall that we did with Programmatic agency execs in June as well as conversations I was having with agency execs back in May around the TV upfront week and kind of the Upfront negotiations is just how inflexible the Trade Desk has been with the deals it does with agencies, not really letting them out of spending commitments or if spending comes short of whatever the commitment is in a given quarter, not allowing them to roll that into the next one. In addition to the fees thing, and one thing that's been interesting in the past year is both Amazon and Google with YouTube and DV360 have seem to have recognized, oh, there's an issue here. From the buy side perspective, we can exploit that. We can undercut the Trade Desk when it comes to fees. We can provide greater flexibility, especially because they own two major inventory sources in CTV with Prime video and with YouTube. But they're also increasingly selling or making inventory available through other third party streaming services through their respective DSPs. And so it's interesting because Trade Desk had one of its biggest advantages the past, what, six, seven years was that it was pretty early to CTV and building up that CTV business. And it feels like this year we've really seen that part of the Trade Desk business get challenged in a way that feels like indicative or illustrative of what we're seeing going on with the Trade Desk this year overall of just like where it used to have a moat, that moat has dried up a bit.
- [37:18]
C
Yeah, I think that's fair.
- [37:19]
B
Everyone nods and agrees.
- [37:20]
C
I think that's fair, Tim. But, and I also think you could kind of argue we're seeing the same thing play out in retail media as well, right? The kind of Walmart, you know, kind of example that you referred to at the top of the conversation I think is a, you know, is a perfect microcosm of that, you know, that was always, you know, meant to be kind of training wheels for kind of Walmart, right? For what was it, four years they kind of used it as its exclusive path to, you know, kind of programmatic demand. But behind the scenes they were just kind of watching how the Trade Desk did it, right? How their shopper data performed, what advertisers pay for and how much demand was genuinely out there that the exclusivity that the Walmart had via that deal gave them almost like a no risk way to learn the business while the Trade Desk kind of did the hard part, right? Building out the pipes and kind of proving demand. Now Walmart's going more direct. It's, you know, it's kind of stepped away from that, you know, exclusivity. But I think you see that dynamic playing out in so many different ways in both the kind of ctv, you know, retail. And obviously with the Spotify announcement audio. Now that, you know, I think it's fair to say they don't really have a moat anymore.
- [38:40]
A
And it feels like part of the challenge too is especially when it comes to ctv, at least that's like the space that I'm most familiar with. So much of that buying is being done through private marketplaces or programmatic guaranteed deals where inventory access is different because inventory access really comes down to the brand or the agency level. If you have an agency holding company who's doing an upfront deal with a Disney or an NBC or what have you, and either of those sides have a preferred dsp, that DSP is going to figure out how to make that inventory available. It's not like, oh, well, I'm only going to buy inventory available through this dsp. It's kind of flipped that dynamic in a way where it kind of commoditizes the DSPs. It seems like in a way. There was an agency exec I was talking to a few weeks ago just about like the DSP landscape in ctv and I was asking them, like, what's their hierarchy or what are the DSPs they're using. They named Yahoo DSP because they just like the customer service that they get there. And then they're just like DV360 because we have to. Because clients ask for it, because YouTube, Amazon, DSP because we have to, you know, the shopper Data prime video. And then they're just like. And you can probably guess who I don't prefer to work with. And I said, trade desk. Why is that? They named the fees. But they also said there's just like the, the way they look at DSPs right now. It comes down to what's the Data that the DSPs are bringing to the table? Amazon and Google. That's clear. This person seems to just like the Yahoo DSP team and working with them. But they were also, like, acknowledged, like, I don't know how long that's going to like, last or be enough to be funneling money there. Whereas with the Trade Desk, it just doesn't have that exclusive data. That seems to be what everything's orienting around right now.
- [40:46]
B
Yeah, it's no different when I talk to retail media buyers, they're kind of in the same boat where, you know, that data exclusively becomes important. When I talk to them about their rankings of how they're spending with retail media networks, you know, it once again brings the question of can the Trade Desk compete with an Amazon? Because that's where a lot of the ad spend goes when it comes to retail media networks. And to Seb's point earlier, they lost the exclusivity with Walmart. You know, if they ink deals about exclusivity with others, like does it become a situation where you're just training wheels and just enabling retailers to catch up versus having your own, you know, your own thing there.
- [41:23]
C
And it's also why you see so many of the hold codes now building CTV partnerships with SSPs, you know, the Magnites, the Indexes, the Open X's of the world, because they have the, you know, kind of that telemetry on how that CTV infantry is kind of being sold that the Trade Desk just doesn't have access to. So for those Holcos, to Tim's point about kind of being in the driving seat when these deals are being kind of architected, the SSP just is a more logical point to do that from. And so it is why you see, you know, kind of Dentsu in Emea now having a seat within the Magnite SSP and saying to marketers, we can either buy directly via this SSP or curate the deal within the SSP and then allow you to buy via, you know, the Trade Desk or Amazon who or whoever or Yahoo maybe. But I think that's another, you know, kind of way you're seeing this sort of shakeout, you know, to Tim's point about the Trade Desk just not having the data to be able to kind.
- [42:37]
A
Of.
- [42:40]
C
Find a new sustainable kind of growth route to go on.
- [42:47]
A
And I guess that's why the Trade Desk is doing things like Ventura, which is its CTV operating system, because it seems like Trade Desk recognize we don't have the data, we don't have the exclusive inventory. How do we get more upstream? And one way to get more upstream, especially in ctv, is to be the operating system to be that choke point. Just this morning Trade Desk announced that it's creating a custom version of Ventura with DirecTV. And seems like the idea is that this DirecTV version of Ventura, a smart TV maker could pre install it into their TVs. They seem to be especially targeting like hotels and restaurants, I guess. So like we could set aside the question of like in some of these environments, is it actually CTV or is it out of home? That's something that David Nirenberg has been very Vocal about on LinkedIn lately. But Ronan, are you seeing what Trade Desk is doing with Ventura as it trying to shore up some of these vulnerabilities that we've been talking about that.
- [43:56]
D
It has, yeah, absolutely. I don't think it will give up on the ghost of Ventura, which obviously has a bit of a staggered start, should we say? I think it first started.
- [44:09]
A
Do you want to talk a bit about that? Because that was one of the lowlights this year, right?
- [44:13]
D
Yeah. Well, I think it first got unveiled 12 months ago. I think most of us recording here would probably agree that came out a little bit ahead of time, the time that they wanted to go public with it, but then they decided, okay, ride with it. Let's just go. Hence, it's probably not the polished launch of which they would love to show both Madison Avenue and Wall street, but I would expect them to do that. And if we are coming to the closing phases and we're in the fourth quarter of the year now, I would say maybe we could expect the trade desk to maybe look to acquire more to shore up those links. They made a notable acquisition earlier in the year with Sincera. Yeah. There's been some changes in its corporate development team which have raised some eyebrows. So I would say, yes, I'd agree with you, Tim. Maybe expect some more acquisitive growth or kind of consolidation at the behest of the Trade desk.
- [45:19]
A
Could it also be an acquisition target? Because, like we had mentioned, its stock price is down 60%. Therefore it's cheaper to buy now than it would have been a year ago. Also, I mean, last week there was the news about OpenAI looking to hire people to build up an ads business over there, an ad platform over there. Is there the potential for an OpenAI to acquire the Trade Desk and for the trade desk to be to OpenAI what the DoubleClick acquisition was to Google?
- [45:52]
D
I hadn't thought about that when I was talking about the potential for the trades to acquire companies. But that's. Yeah, you're thinking 3D chess compared to my checkers.
- [46:03]
C
I don't think you can rule it out, though.
- [46:04]
B
Right.
- [46:05]
C
Like, you know.
- [46:06]
D
Yeah, absolutely. Absolutely. It does make sense.
- [46:08]
C
Well, OpenAI generated, what was it, 4.3 billion in revenue, but burned through 2.5 billion in the first half of the year. So the need to spin up an ads business quick time gets more intense by the quarter, so going on the M and A trail is the kind of fastest way to do that. And despite the issues with the trade desk, it's still a robust businesses. There are far worse businesses and businesses you can buy out there than the traders.
- [46:38]
D
So, yeah, it did get admitted to the S&P 500 this year.
- [46:46]
A
Seb, I know we've been talking about these bold call live streams that we've been doing throughout the year. Maybe the next one we need to do is why OpenAI should buy the Trade Desk.
- [46:55]
C
Let's do it.
- [46:55]
A
All right. Awesome.
- [46:57]
B
Cool.
- [46:58]
A
All right, Well, I appreciate you both coming on. Help Kimiko and I wrap our heads around what's going on with the Trade Desk and really what that says about the state of the DSP market, which is it's just funny how this year, DSPs and search have been two things that we've all been covering for more than a decade at this point, but feel as relevant and as kind of in upheaval as I can remember.
- [47:24]
C
So cool again. It's good.
- [47:29]
A
Awesome. All right, Ronan, thanks for coming on.
- [47:32]
D
Thank you very much. Bye.
- [47:40]
B
Well, that brings us to the end of this episode of the Digiday Podcast. Thank you to everyone for listening. And please don't forget to share this episode with someone who you think would enjoy it. You can even rate us and leave us a comment on Apple Podcasts. We'll be back next week with another episode of the Digiday Podcast. Thank you so much for joining us.