The Trade Desk's Next Decade: 3 Tailwinds Investors Shouldn't Overlook

Core Viewpoint - The Trade Desk is positioned to benefit from three significant megatrends in digital advertising, despite facing short-term challenges such as slower growth and increased competition [1] Group 1: Connected TV (CTV) - The U.S. connected TV ad spend is projected to grow from $30 billion in 2024 to nearly $40 billion by 2027, with a global market expected to expand from $268 billion in 2024 to $531 billion by 2030, indicating a substantial opportunity for The Trade Desk [3][4] - The Trade Desk operates as an independent demand-side platform, providing advertisers access to premium streaming inventory across various publishers, which positions it favorably against competitors like YouTube and Facebook [3][4] - The company’s partnerships with major streaming services such as Disney+ and Netflix, along with its Unified ID 2.0 initiative, enhance its competitive edge in the CTV space [3] Group 2: Retail Media - Retail media is emerging as a new advertising frontier, allowing brands to place ads directly on retailer websites and apps, which is more effective due to the use of first-party purchase data [5][6] - The global retail media market is expected to reach $177 billion by 2025, indicating rapid growth in this advertising channel [6] - The Trade Desk has established itself in this sector by powering retailer ad networks outside of Amazon, exemplified by its partnership with Walmart Connect [7][8] Group 3: International Expansion - The Trade Desk currently generates most of its revenue in the U.S., but the international advertising market presents a significant growth opportunity, with global digital ad spend projected to reach $1.1 trillion by 2025 [9][10] - Only 12% of The Trade Desk's revenue comes from international markets, highlighting the potential for substantial growth if the company can replicate its U.S. success abroad [9][10] - Capturing even a small share of the global ad spend outside the U.S. could result in tens of billions in additional revenue capacity for The Trade Desk [10] Group 4: Long-term Growth Potential - Despite current challenges, The Trade Desk is at the center of three rapidly growing areas in digital advertising: CTV, retail media, and international expansion, which are expected to drive long-term growth [12] - These markets collectively represent several hundred billion dollars of addressable spend in the coming years, positioning The Trade Desk as a leading independent DSP [12][13] - The company does not need to dominate every segment but must remain a trusted alternative to larger competitors, which is crucial for patient investors [13]