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What the Super Bowl Can Teach Us About TTD Stock

Like any high-flying asset on Wall Street, there’s an argument to be made that Trade Desk (NASDAQ:TTD) needs a breather. Last year, TTD stock returned a massive 132% for shareholders. And since its initial public offering, the equity has consistently broken new ground. But once you see that attractive entry point for Trade Desk, you’ll want to pounce for one pivotal reason: the advertising efficiencies inherent in the company’s programmatic platform.

Source: Shutterstock

In my last article about TTD stock, I discussed the underlying organization’s positioning in the future of content advertising. Particularly, innovations in streaming and connected TV affords advertisers informational opportunities that simply don’t exist in the linear TV ecosystem. I wrote:

Where Trade Desk stock specifically benefits is that the underlying company can offer advertisers unprecedented information about their ad engagements. With streaming technologies, Trade Desk can offer clients the who, what, where, when and why. That simply wasn’t possible in the linear TV era.

Super Bowl average ad costs
Click to Enlarge
Source: Chart by Josh Enomoto

And this opportunity truly comes into play when we’re talking about live events such as the upcoming Super Bowl. Over the decades, the final game of the NFL post-season has become linear TV’s flagship arena. According to data compiled by Statista, in 2002, the average cost of a 30-second Super Bowl XXXVI commercial was $2.3 million. Last year, for Super Bowl LIII, this figure ballooned to $5.25 million.

But for advertisers, the Super Bowl is a big question mark. As Washington Post contributor Paul Farhi noted, “Second-half advertisers, meanwhile, not only risk losing droves of viewers to a bum game, they also have to fight viewer fatigue.”

And this is exactly why TTD stock is so compelling longer term.

TTD Stock to Benefit from Ad Efficiencies

As you probably know subconsciously, not all Super Bowl commercials are equal. Farhi further states that, “Advertisers tend to clamor to show ads in the first half of the game and usually in the first quarter. The reason? It’s when the audience is most stable, most predictable and most attentive to the advertising.”

That’s a completely true statement … for linear TV. But what if an organization can mitigate this unpredictability and leverage it for advertising efficiencies? This concept is the core of what drives the longer-term narrative for TTD stock. As a representative from Trade Desk’s corporate communications wrote to me in an email:

Within linear TV, the broadcast gives away ad slots or puts a low price tag on them during overtime for advertisers because live sports is just so unpredictable; there’s no way a broadcaster can predict the game will go into overtime. But with CTV [connected TV], TTD can capitalize on the overtime and find advertisers willing to pay in real-time because that last 20 minutes may bring an audience that is the most engaged.

That almost-exact scenario played out in 2017 for Super Bowl LI. Prior to this championship game, no other Super Bowl in history went into overtime. Obviously not knowing that this game would become possibly the greatest comeback in football, Fox (NASDAQ:FOX, NASDAQ:FOXA) sharply discounted ads for such a scenario.

Now, if viewers watch on linear TV, this programmatic advantage is moot. But Trade Desk’s representative notes that:

…there’s an increasing number of people who will be watching the Super Bowl through streaming services…That’s where the opportunity lies for programmatic advertising. If the game goes into overtime, advertisers will have the opportunity to target these viewers. Advertisers plan out their ad campaigns through TTD, knowing that overtime is a possibility.

Programmatic Ads Adapt with the Audience

An interesting wrinkle to the burgeoning programmatic advertisement space is that linear TV is losing popularity even in marquee events. For instance, Super Bowl TV viewership peaked in 2015 with 114.4 million viewers.

Last year, viewership plummeted to 98.2 million.

To be fair, this could be a combination of streaming’s growing presence in live events, as well as declining interest in traditional sports. However, evidence indicates that when the modern Super Bowl audience watches the big game, they’re more attuned to advertising influence.

Shopify streaming stats during Super Bowl
Click to Enlarge
Source: Chart by Josh Enomoto

For instance, during the 2018 Super Bowl, Spotify (NYSE:SPOT) reported a 671% increase in streaming for Will Powers’ “Adventures in Success.” This song was related to Squarespace’s commercial. And Skylar Grey’s “Stand by Me” enjoyed a 408% boost due to a Budweiser commercial.

In other words, today’s live sports audience members are watching in a digitally connected network of instant information and gratification. And as this audience evolves with the underlying technology, so too will their penchant for connected TV. Logically, this plays directly into the hands of Trade Desk and TTD stock.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2020/01/what-the-super-bowl-can-teach-us-about-ttd-stock/.

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