When it rains, it pours.
The Trade Desk, which continues to reel after last week’s earnings call, posted great numbers for Q2 (+19% year-over-year and a beat) but projected lighter growth for Q3. As a result, the stock dropped roughly 30%. The immediate thought we had was that a rebound was likely, as occurred earlier this year when TTD missed expectations and then roared back. However, analysts have downgraded TTD, and it feels a bit different this time, as a result.
Unfortunately, that downward pressure continued today as The Information dropped a big story—claiming that TTD “could be in danger of losing one of its most valuable clients—Walmart.”
The story goes on to note that last year, Walmart renegotiated its four-year pact with TTD for Walmart Connect, which is a white-labeled version of TTD. Per The Information, the deal is “no longer exclusive,” which means “the retail giant can tap the ad-buying platforms of other ad tech firms.”
Why This Matters:
It matters in that TTD values Walmart quite a bit, as it’s a big piece of business for them. Potentially losing exclusivity would be a blow, though you have to wonder if much of this was really just posturing behind the scenes to get better terms on the way they work together.
According to the report, “The Trade Desk’s high fees have frustrated Walmart.” The DSP giving the most headaches to TTD right now is Amazon DSP, and, of course, Walmart obviously isn’t working with them, though there are other players who could be a fit.
Anyway, TTD is softly disputing the story, though indirectly, with a statement they published after hours on their website, which reads as follows:
Since 2021, Walmart Connect’s standalone DSP has combined the best-in-class technology and performance of The Trade Desk with the robust scale of Walmart’s unparalleled first party omnichannel data, allowing advertisers to be more effective with their overall media spend.
Since then the two companies have extended their multi-year agreement and have helped drive record retail data deployment as part of programmatic ad campaigns.
As The Trade Desk CEO Jeff Green said last week, “Objectivity is a major factor here. Unlike others in the market, our goal is to drive the use of retail media across as many advertiser campaigns as possible. We do not compete with retailers. And only an independent objective partner like us can truly help advertisers unlock this opportunity. In Q2, a record amount of spend was influenced by retail data, both on our platform and on the Walmart DSP as more shopper marketing budgets flow into programmatic.”
The Trade Desk and Walmart Connect are fully committed to the partnership and continue to innovate together. The two companies are looking forward to expanding the partnership in the years ahead. As Ryan Mayward, senior VP of retail media sales for Walmart Connect, said in June, “We are all in on The Trade Desk.”
Experts React:
The reactions are piling in. Here are a couple of great tweets about the report:
Our Take:
People like to come for you when you’re down. Narratives matter. The narrative is there’s blood in the water for TTD. How they deal with the chum will be interesting. We think focusing on AI innovation would be a wise move, but maybe Jeff Green has a LinkedIn post teed up to offer more insight tomorrow.
