With the so-called “cookie apocalypse” approaching, analysts are starting to size up the opportunities for large players in digital advertising.
And while it may come as no surprise to Business Times readers, a lot of national market analysts like the opportunities in front of The Trade Desk better than those facing Alphabet, parent of digital ad juggernaut Google and its powerful YouTube channel.
The “cookie apocalypse” is how digital marketers are describing the move by large internet companies — including Google and its Chrome browser — to stop allowing third parties to place “cookies” on web sites that allow them to track an individual’s search habits and deliver targeted advertising. The challenge is for companies to find ways to utilize data on users and still respect their privacy concerns.
Google had planned to phase cookies out in 2022, but on June 24 it announced it was pushing that back to the second half of 2023. Shares of The Trade Desk shot up in response to the news.
A recent comparison based on research from the web site TipRanks and its stock comparison tool looked at Ventura-based Trade Desk and Silicon Valley-based Google. Both were considered a “strong buy” by most analysts, but The Trade Desk had higher upside potential.
The TradeDesk — currently one of the biggest publicly traded companies in the tri-county region, with a market capitalization of more than $30 billion — has been growing fast, based in part on operating an advertising platform that is cloud-based and delivers lots of management tools, but also anonymizes data to address privacy concerns up front.
For the first quarter, the company reported revenues of $219.8 million, a jump of 37% year-over-year, and non-GAAP earnings of $1.41 per share, up from 9 cents a year earlier.
The company expects sales of around $260 million in the second quarter, but said its customers has been impacted by COVID-19. It also launched a potentially lucrative partnership with Walmart to provide advertisers with Walmart shopper data and other info. And it is preparing to roll out Solimar, a new upgrade to its ad platform that could yield better results for advertisers and also drive more revenue.
Meanwhile, Alphabet reports most of its digital ad revenue through its Google Services unit, which generates revenues through targeted advertising that users are likely to click on. Advertisers pay when a Google user clicks on an ad but, they can also run brand advertising and text and video that run across the platforms.
In the first quarter, Alphabet had total revenues of $55.3 billion and ad revenues of $44.7 million, up 32.3% over the prior year period, with significant upside indicated for its YouTube channel.
TipRanks reported that “2 billion users log in to YouTube and watch billions of hours’ worth of videos every day.”
Google still has to contend with the cookie apocalypse problem and antitrust concerns loop over Alphabet, in part because it dominated both advertising and search.
Analysts rate Alphabet a strong buy and the average estimate implies a 14.5% jump in its stock price. But the analysis complied by TipRanks puts that figure at 22.7% for The Trade Desk, giving the Central Coast company the edge.