Brian Fitzgerald: Thanks. Jeff, we saw a recent piece from the Head of Media, Bush, talking about her preferences for PMP deals within CTV versus programmatic guaranteed. She said because it helps me manage reach and freak across CTV destinations better, i.e. decisioning. But what trends are you seeing there? Are marketers shifting from programmatic guaranteed and saying we need reach and frequency control? And what’s the marketer kind of makes that step down the decisioning path, do they tend to use more of what you offer in terms of expressiveness and personalization and getting into kind of open auction environments?
Jeff Green: First of all, thanks for the question. Second off, super impressed with how well you understand the business. That’s just implicit in the question is just a deep understanding of what’s going on in the space. You are spot on. The premise of your question is spot on, which is that inside of programmatic guarantee, you don’t have the same amount of decisioning as an advertiser. And so it means that you are often giving up your choices in terms of what you buy, and you are getting up your ability to control reach and frequency and just other things, which to me, doesn’t make a lot of sense. In equities markets, you wouldn’t necessarily just hand over all decisioning. If you are a portfolio manager, you want to make your own decisions.
So, you want to decide what you are going to buy. And that’s exactly the people that we are appealing to. Those are the people you are talking about that are in highs . There are people who want to make decisions about what they are buying and selling and especially because if you are going to pay a premium, you want to make certain that you are controlling reach and frequency. And in fact, the math just doesn’t work, if you are not controlling reach and frequency, then the premium that you are paying to PMC TV is no longer justifiable. And so the math is putting decel towards using and leveraging more decisioning, but also just people wanting to be more effective, that’s the way that they had the most amount of control. And we are seeing more and more of the move towards PMCs and just anything that is fully decisioned.
So, PMCs are going to present the most common way that that happens in CTVs and whether those PMCs are initiated by us or others really doesn’t matter. What is most important is that the advertisers themselves and/or their agency representing them, have a full decision in where they decide to put the ads. And when they have that, that’s where CTV is at its best. That’s where digital is at its best.
Brian Fitzgerald: Got it. Thanks. Appreciate it.
Chris Toth: Thanks Brian. Next question.
Operator: Your next question for today is coming from Mark Zgutowicz at The Benchmark Group.
Mark Zgutowicz: Good morning guys. Jeff, just curious how much of your 4Q revenue you would attribute to UID2? And what do you expect that number to look like in €“ for the year? And then how many of the large pub UIDs that you are talking about are activated in your auction? And then separately, curious what you expect Apple will do with private related this year and what Google will do with its ID over the next, call it, 24 months and how that may impact ROEs on your data graph? Thanks.
Jeff Green: Yes. So first, the first part of the question is pretty hard to answer in terms of how much of it came from UID2. And that’s in part because, of course, we use UID2 that then leverages the graph. And in that graph, it’s still of cookies and lots of other identifiers that we lean on for now and in some cases, won’t be there in the future. But we of course, could deduce the same thing with just slightly lower statistical confidence and still have lots of room to provide personalization across the Internet. So, we don’t really know how it’s impacting it until it’s not there. But UID2 continues to grow at a rapid pace. And it often is the connected tissue between all of those other things. And then when you couple the fact that in Q4, only about 15% of our data €“ our third-party data had UIDs associated with it, and we expect that to be over 70% in the first half of this year.
There will be dramatic upticks in what’s happening with UID2, and it gets rid of much of the matching problem, but we did see large upticks in the use of data in the second half of the year, largely because of UID2. So, it’s hard to quantify, but in terms of the total revenue impact. But in terms of impressions and data that are leveraging that, it’s just substantial. It’s a substantial part of our business today. So, this is a huge driver for our business now. And every day that those buy is becoming more and more of the case. I am sorry, these are being leveraged more and more as time goes on. And in fact, our OpenPath initiatives as well as our initiatives to just get closer to publishers and SSPs in 2023, the IDs and global placement IDs are being adopted around the Internet.
As it relates to Google’s ID, there is a bunch of different Google IDs. Of course, there is a single sign on. Of course, there is the Android ID, which there is a lot of discussions about in the future. And then of course, there is cookies. All of those are largely in the control of Google. One thing I think Google has done well on most of these is they have given announcements and said we are going to do this years from now. And some of those dates are end of 2024. So, we are talking about 2 years from now. I think it’s reasonable to expect that part of the reason why Google is putting timelines out like that. And so that they can see what happens with things like the Department of Justice litigation, they want to see how the dust settles.
And they are kind of between a rock and a hard place as it relates to protecting privacy, but also guarding against antitrust pressure. So, I actually don’t think it’s in Google’s best interest to make those all go away. What I love about and some of the things that they have said publicly on this specific issue is that they have to consider the impact on the Internet €“ really on the open Internet and all the publishers that they support and especially with the amount of scrutiny that they have right now on the antitrust side. I am not sure that it’s ever in their interest to see those go away from the open Internet. But I think another way to look at it is that we are just hoping that things like UID2 to go really, really well and it takes some pressure off of them.
So, it sort of goes back to the one way or another, things are going to get better. And I think with the pressure that Google is facing right now, I think that’s more true than ever.
Chris Toth: Thanks Mark. Next question.
Operator: Your next question is coming from Laura Martin at Needham.
Laura Martin: Hey there. Jeff, tactically on the DoJ, so it’s 150 pages of how Google has been abusing their clients. My question is, have all the smart clients that could leave Google already come to The Trade Desk, or do you feel that in 2023, you are going to be getting incoming calls now that their clients have read this 150 page really draconian treatment of clients. So, do you benefit from that in the near-term? And then secondly, UGC, so I agree with you on the walled gardens. You have been writing that a long time that walled gardens are losing share to the open Internet. UGC, it’s the first time I have heard you talk about that. And I guess I hadn’t thought about it because I was thinking TikTok was taking share from the two big guys, meaning YouTube and Meta. Could you go more into why you think UGC is losing share to the premium because I don’t really understand that one?
Jeff Green: Sure. So, on the first part of the question related to the Department of Justice and their litigation against Google and will that benefit The Trade Desk and our clients coming to us as a result, I definitely think that, that will continue. As you know, we have great relationships with most of the largest advertisers in the world. So, I wouldn’t say that there are not many that are extremely large that would move over that hadn’t already done something with us. But there are some that are changing the politicians, if you will. So, meaning they are doing less with Google and doing more with us. So, I do think that there is an opportunity for that to be positive for us, but pretty early to tell. As it relates to the UGC side, so €“ and why I think there is a change happening with UGC and more moving to premium.
Let me just explain a little bit what I think is happening with the economics. And a lot of this comes back to UID2. So, because of the pressures that are being put on identity across the Internet, there is even more premium that is heading towards connected television because it’s nearly 100% authenticated. So, because of that 100% authentication that does enable personalization that is not likely to be changed or controlled by any one company. There is enough fragmentation whether you are looking across operating systems, or whether you are looking across content owners. And of course, you have to log-in with an e-mail address almost every time to watch content. So, that enables a level of personalization and pushes people towards the open Internet.
While at the same time, UGC is having more supply than ever. And with less personalization and less control coming from advertisers, there is just a more stark contrast between what’s available in CTV and what’s available in UGC. Said another way, there is finally a viable, scaled alternative to massive UGC platforms that now make it. So, it’s not quite €“ it doesn’t give the same luxury to be draconian in those UGC platforms as you could be elsewhere.
Laura Martin: Thank you.
Chris Toth: Thanks. And Holly, we have time for one more question.
Operator: The next question is coming from Dan Salmon at New Street Research.
Dan Salmon: Hey. Good morning everyone. Just one quick one for me. The take rate stayed in that consistent 20% range once again, ticked down a couple €“ a little bit in the last couple of years, picked back up again. You have talked about the balance of large and small clients driving that in the past. Is there anything different going on there? And I would be interested to hear just a little bit more about how your JBPs, or joint business plans, compare on a take rate business and if that’s an important variable as well? Thanks guys.
Blake Grayson: Maybe I will take a stab, Jeff, if you want to follow-on.
Jeff Green: Okay.
