Operator: Next question comes from Matthew Cost with Morgan Stanley. Please proceed.
Matthew Cost: Hi, everybody. Thanks for taking the questions. I have two. The first one is just on the conversation with advertisers. So at the time that you guided to the fourth quarter, I think you had seen at least in certain verticals some brand spend weakness through October and November, but obviously the quarter came in significantly ahead of your guidance at that time. So I guess how did the conversation evolve with advertisers? Where did you see them lean in, in ways that you didn’t expect? And how has that trended through the beginning of 2024? And then the second question is just on the growth outside the US. I think there’s a comment before about seeing green shoots there and continued faster growth than inside the US. I guess, are there specific ways that advertiser behavior or the inventory are changing that you would call out? Thank you.
Jeffrey Green: You bet. Thank you for the question. Just writing it down so I don’t forget. So yes, in Q4 — early in Q4, there was a little bit more, I would say, hesitation in the ecosystem, in the landscape, and I think that was not isolated to advertising. I think that was just macroeconomic angst, if you will. But of course, for the last few years, and I would just say that the angst in the CFO’s office has been more closely connected to the angst in the CMO’s office, really since the pandemic at a level that I haven’t seen in my career. So I think there was some angst early on. And as the quarter went on, we saw some advertisers really lean in and some advertisers see some pressure. And even as we completed the quarter, it really is a tale of two cities where some companies are really driving for growth and spending aggressively to go get growth and some are watching every penny carefully and trying to be really deliberate.
And that meant some spent more and some spent less. And in the end, we have an increase in spend, obviously, beyond what we guided. As it relates to outside the United States. I think a significant amount of this is caused by the same macro environment that we were just talking about. So as things change in the dollar and some of the macroeconomic policies of governments, I think that does make it easier for things outside the United States to do well. But there’s also some trends in media consumption. So if you look at places like the UK or Germany, we see their CTV growth meaningfully higher than what we’re experiencing in the US. And that’s often because they’re a year or two behind the US in terms of the competitive landscape forcing the change, the ad-funded models, and some of those types of things.
But we’re seeing the exact same trends play out. So in the same way that we saw those green shoots a couple years ago here in the United States, we’re now starting to see them in more markets around the world and that’s very good for us. So I would say it’s those two things on the international or outside the US front. Thanks for the question.
Matthew Cost: Thank you.
Chris Toth: Thank you, Matt.
Operator: Next question comes from Matt Swanson with RBC Capital. Please proceed, Matt.
Matt Swanson: Thank you. I’ll add my congratulations to you guys on the quarter and congratulations, Bryce, on his baby if you’re still listening. So, Jeff, I think from the product event when we were talking about Kokai, one thing that was really intriguing to investors was this idea of being able to deliver attribution and KPIs and kind of segment it out throughout the funnel, right, not just give it all to the last click. It kind of sounded like the example you gave from Samsung. So when you’ve been out meeting with customers, can you just talk a little bit about like, what’s exciting them the most about Kokai? What’s driving adoption, and maybe how this new way of looking at attribution could kind of change spending patterns longer term?
Jeffrey Green: You bet. So, first of all, thank you for the question. And there’s so many things to talk about in it because there’s just so many things that are inside of Kokai. So, if you don’t know, and obviously I know at RBC you know this, but maybe some others on the call don’t. We went on what we call a world tour at the Q4 to go to four continents and talk to our customers around the world about the product that we’re launching. Honestly, I did that out of concern in the sense that I know we are giving them more change than ever, but I am confident that this is an upgrade in almost every way to our platform. And I was concerned that the amount of change would make them afraid of adopting something new simply because of how much it changed, rather than really considering all the reasons why we did it.
And so, we spent a half a day on four continents. We did I think three in the United States and LA and Chicago and New York and then we also did in London and we also did it in Singapore and also did in Australia. And the reception was phenomenal. It really put to bed any concerns that I had about reluctance for adoption. We explained the reasons why we were doing everything. A big part of what they love, to answer your question about what are they most excited about, is we have streamlined our reporting. We’ve made it way faster. There are some reports that you just have to wait multiple minutes for it because they’re just so robust. And we found ways to accelerate that. We’ve also added AI throughout the platform, especially in forecasting.
So it’s a little bit like if you were to make a hypothetical trade in a trading platform for equity, and then I’ll tell you what we think is going to happen to the price action in the next 10 minutes. So we’re showing them what the effects of their changes are going to be before they even make them. So that they don’t make mistakes. Because sometimes what happens is, people put out a campaign, they’ll put tight restrictions on it, they’ll hope that it spends and they come back a day or two or even three later and then realize they made it so difficult with their combination of targeting and pricing for us to buy anything that they didn’t spend much money. Or the opposite, they spend more and it wasn’t as effective as they wanted. So helping them see all of that before they do anything helps.
And then we put data and decisions next to each other in a better way than we ever have before. But included in those decisions are upgrades to the attribution methodologies and reporting. So we are definitely trying to do a better job of attribution, while at the same time, not adding complexity. It’s a very difficult thing to do in our space. It’s hard. When you want to give people more power, give them the ability to do more, usually that means you hand them more complexity. And how can we give them more power and yet not increase the number of buttons exponentially, not increase the number of — numbers on the screen exponentially. So we think we’ve threaded that needle and will continue to simplify, but those are the things that they’re most excited about and that’s part of the reason why I go into this earnings report with so much confidence is just spending so much time with our customers over the last four months.
Operator: The next question comes from Brian Pitts with BMO Capital Markets. Please proceed, Brian.
Tim O’Shea: Yes. Hey, it’s Tim O’Shea on for Brian. Thanks for taking my question. Look, we’ve spoken about the impact of cookie deprecation, but what about timing and readiness? You work with so many advertisers, all the agencies. The question is, do you believe that advertisers are ready for Google to deprecate the remaining 99% of cookies in 2024? And if they aren’t ready, what needs to be done? What is being done to prepare them? And then maybe just what happens to the ad market if Google decides to deprecate right before the holidays and the US presidential election? I’m curious, is there a pause? Is there a pullback? I know that Jeff spoke about what happened when Apple made similar policy changes in the past. Thank you for taking my question.
Jeffrey Green: You bet. I love this question. Thank you very much for asking it. So of course, the answer is some are, some aren’t. So, who is ready for cookie deprecation? So, I believe here at The Trade Desk, we’re in a phenomenal position. As a company, a big part of our technology stack centers around what we call an identity graph. And that is incredibly robust. And that is the result of our efforts. And you will recall, we’ve launched UID2 before the pandemic, we launched UID before that, and all of those efforts were seen around corners and we knew that this would happen. So we’re confident that we’re in a fantastic position. As it relates to advertisers, some are prepared and some are not. I would say the majority are not doing as much as they can.
If I were to just paint a picture of the typical advertiser, they’ve adopted something like Snowflake. They have been trying to take their data from 20 different silos all over their organization and they’re trying to figure out how to make certain that they’re respecting their relationship with the consumer. And I do want to underline, I’ve never met a big brand that doesn’t start every one of these discussions by saying, I want to be really careful about respecting the privacy of my consumer. They want a long-term relationship with them. They want to sell soap or cheeseburgers or pizza or whatever to them over and over again and so they want to be respectful. And as they’re doing that, they’re trying to figure out how to bring it all together and make certain that they keep it all safe.
Many as they’re doing that internally are saying, we know we have to put first-party data to work, but we have to really think about the implications of what they do. And many have started to do that, and many have not finished it. There’s a lot of internal meetings that have to happen, and they all have to move more quickly. The thing that’s been good about all the discussions today is, it’s getting everybody to move a bit more quickly and say, hey, we have to act. And so, I think that’s that is super healthy. But if I were to estimate, I would say most advertisers are not as ready as they could be, but the 25% that are, are going to benefit if Google were to go faster. The side of this that I’m really worried about though, is the publisher side.
Again, we don’t represent publishers directly. We represent the buy side. But of course, we buy from all these publishers and we want to see an open Internet thrive. But I would say that 90% of publishers that have a meaningful amount of their traffic from browsers are not prepared at all. And so you would see a rapid revaluing and you would see some struggle come as a result of Google accelerating cookies. It could have a meaningful impact on the election in the sense that if people can’t advertise on those sites effectively, then the prices would go down. And then it would change the way that they either generate content or even their ability to afford to continue to generate content on those journalistic outlets. To me, they’re the ones to watch most carefully because I think they’re the ones that are often hurt the most, as we’ve just seen so many headlines in journalism of layoffs of late.
And so I do think it’s really prudent to be thinking about the pace that Google is going. I think they’re trying to recognize all of these implications, and they don’t want to have to testify before Congress in two years about what did you do to journalism or anything like that. So as a result, like them deprecating cookies 1% at this point is a good way to get people to act. And now the important thing is for advertisers and publishers to act. And I think that’s going to give tons of additional momentum to things like UID2 and OpenPass. And that’s one of the many reasons why I’m just so confident about our 2024.
Chris Toth: Thanks for the question. And John, can you close out the call, please? Thanks.
Operator: Absolutely. Thank you. This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.
