At the time of writing, The Trade Desk's stock price has dropped precipitously to start the year, a 60% decline from a 52-week high of $141.53 to $56.31 ($TTD ( ▲ 4.56% ) ). While this drop has materialized during a broader market pullback, TTD's massive and rapid decline warrants an analysis of potential product missteps, strategic decisions, and other headwinds.
The Trade Desk may have fallen victim to its own success, as the company has recently had a pristine track record for meeting guidance, which it did not in Q4 2024.
From Laura Schenkein, Chief Financial Officer, on the Q4 earnings call:
"for the first time in our eight and a half years as a public company, excluding the first quarter of 2020, our results came in below our expectations."
TTD pulled in $741 million in Q4 revenue, missing guidance of $756 million and analyst expectations of $760 million, ending a remarkable run of 33 quarters without a revenue miss. Further compounding concerns, the company issued weak guidance for Q1 that came under market expectations.
Missing revenue is one thing, but CEO Jeff Green sparked additional intrigue with a curious explanation for the miss:
For Q4, the reality is that we stumbled due to a series of small execution missteps.
Small execution missteps do not typically add up to tens of millions of dollars in a single quarter, so when pressed for more information on this miss, Green pointed the blame on specific people and a slower rollout of Kokai (the new version of their platform):
And when we talk about the missteps specifically, many of them involve people, mistakes that aren't appropriate to discuss publicly, especially when people are already learning from these mistakes. One of those, you're right, that Kokai rolled out slower than we anticipated.
It's a convenient explanation to shroud answers under the guise of protecting individual privacy. Maybe these people screwed up big time to the tune of a ~$20 million gap in expectations, but it feels more like a deflection than a solid answer. The last part of his answer could be the real reason for the miss: the slower anticipated rollout of Kokai.
Nokai
A couple of weeks ago, Adweek published a somewhat scandalous article (by ad tech standards) about the lukewarm reception Kokai has received. The article features feedback from anonymous "industry insiders," so we must approach the comments skeptically as we do not understand the agenda of any interviewed individuals.
However, the general feedback was that the updated platform "greatly reduced the use and function of The Trade Desk's buying platform."
Perhaps an unfair criticism, I thought, until I caught my first glimpse of the new Kokai UI myself:
This is the ideal DSP user interface. You may not like it, but this is what peak UX design looks like.
— Trey Titone (@TreyTitone)
4:33 PM • Mar 13, 2025
Given that this is one of the most viral Tweets I have ever published, there appears to be general agreement with my sarcastic take and that the new periodic table-style UX may have been a swing and a miss.
I eventually saw this wasn't the latest version live on the platform, but things haven't improved much:
[5/7] Here’s what you see on the AdGroup level. The challenge here is to:
Find the needed parameter across all of these elements.
Remember what you are targeting without clicking on this ‘tile’ because it just takes SO MUCH time to click on every parameter to check your actual— Programmatic 101 (@101Programmatic)
6:23 PM • Mar 13, 2025
Breaking design conventions is a risk, but if you do it, user testing should be a critical focus to determine if users can complete their tasks without frustration. One look at this interface, and I'm surprised it made it out of user testing and into a live platform.
The interface of a platform should empower a user to accomplish their goals with ease. The periodic table of Kokai elements would certainly frustrate me if I ran into it, and one of the Adweek sources (an ad buyer) echoes this sentiment:
"The new interface…is not intuitive and forces media buyers to learn an entirely new workflow that feels disconnected from industry norms."
Established design patterns may be boring, but they evoke a sense of familiarity and comfort for users. Breaking from norms and innovating can sometimes produce charming results, but the harsh reality of ad tech is that usefulness should trump all else. Ad platforms should strive to maintain a utilitarian nature over aesthetic desires, and Kokai appears to have gotten this backward.
Whoever designed this UI may have a passion for science, but it elicits a visceral adverse reaction for me and maybe others who pursued a career in advertising, far removed from the struggles with the school subject of chemistry.
Users are forced to memorize the location/color coding or scan an entire table of elements individually to find the one campaign option they want to modify — a break in convention from the expected step-based campaign setup we all know.
If all users begin their days frustrated with the platform, launching any campaign on this basis could overshadow Kokai's claimed positives, such as the 42% lower cost per unique reach, 24% lower cost per click, and 27% lower cost per acquisition. The worst-case scenario is that users look for alternative platforms that don’t cause so much friction in workflows.
OpenPath
The Adweek article highlights another controversial aspect The Trade Desk continues to push: OpenPath. I first wrote about OpenPath three years ago, and Adweek's reporting indicates that The Trade Desk is still banking on it as a core part of its future and interwoven into Kokai.
"OpenPath…is on by default on Kokai, and advertisers have to manually opt out of using it," according to three Adweek ad buyer sources. One of those sources noted that TTD reporting showed the majority of their spend on Kokai was going through OpenPath.
A streaming publisher source confirmed to Adweek that The Trade Desk is looking to charge up to a 5% fee for the cost of media to use OpenPath, with that same publisher indicating that OpenPath feels like an additional tax. However, TTD would be quick to point out examples like Vizio (mentioned on the earnings call), who "deployed OpenPath and immediately saw impressive results, including 39% improvement in revenue from our platform and an eight times improvement in fill rate."
Given the large amount of potential revenue The Trade Desk facilitates, the company could feel it has massive leverage to force a publisher's signature on an OpenPath agreement. But with its abrupt decline in share price and other problems brewing, will TTD double down on OpenPath or pull back?
The company may not need to do much convincing if impressive results like Vizio become the norm. But if publishers balk at the fees TTD is charging, will it remain on by default for Kokai users?
Missing: Programmatic Guaranteed
The last concerning aspect of Kokai is the alleged lack of programmatic guaranteed deal types. One source told Adweek that the only way to execute programmatic guaranteed is to switch back and forth between Kokai and Solimar (the legacy TTD platform).
TTD told AdWeek that it plans to add PG later, but its exclusion is an alarming warning sign for publishers that rely on that type of execution. However, it should not surprise anybody that they are slowplaying its inclusion.
DSPs typically earn more on private marketplace deals (decisioned) since the fee they charge is higher on PMP than PG. TTD's margins will naturally improve if they push more spending to PMP from PG. It also obviously gives the DSP and advertiser much more control since (typically) all the targeting lives on the demand side.
Publishers love the guaranteed revenue that PG facilitates, making planning much more straightforward. Publishers relying heavily on PG may not always enjoy the fact that PMP naturally swings more control toward advertisers and DSPs to cherry-pick the best impressions.
However, PMP can work out in favor of publishers over PG if a DSP can use its technology to squeeze out the most value for every impression. The tradeoff is there is no guarantee that a publisher sells the inventory or that the advertiser can access that inventory (if someone outbids them).
PG is a table-stakes feature for many agencies, and its absence is notable and begs the question of whether TTD slowed its rollout to Kokai for ulterior motives.
Sonos Oh No
And the hits kept coming in Q1 when an unfortunate twist of fate entirely out of TTD's control occurred in mid-March — Sonos abandoned its plans to release a streaming media player that reportedly would be the initial device to feature The Trade Desk's Ventura CTV operating system.
Sonos' change in plans came as no surprise. Well before the announcement, I questioned the company's ability to release a compelling streaming device and the strategic decision to do so amid ongoing controversies around the decline in the quality of its core audio products:
I do not believe Sonos + TTD can release a compelling TV device. Sonos does one thing well (multi speaker control) and they bungled that by expanding their product line into headphones. Adding another thing outside their core competency smells like a recipe for disaster.
— Trey Titone (@TreyTitone)
2:46 PM • Feb 12, 2025
While this is clearly a Sonos problem, TTD still suffers as part of The Trade Desk's strategy hinges on shortening the supply path and ensuring the signals are clean between its platform and publishers, which it looks to accomplish with OpenPath and could achieve with its Ventura OS.
Embedding themselves at the operating system level could give TTD a more direct line of sight into CTV inventory and ensure no funny business occurs between the publisher and The Trade Desk.
If TTD owns the operating system, it could dictate the rules of the road. The company could ensure no additional hops and fees from superfluous ad systems enter the mix and eradicate any undesired modifications to floor prices or metadata.
But now that Sonos is out of the picture, which TV manufacturers or hardware vendors will TTD partner with on Ventura? There aren't any rumors about other manufacturers featuring Ventura, and many were skeptical about an ad tech company breaking into a crowded CTV OS market even before Sonos dropped its plans.
Competition and Headwinds
The Trade Desk has enjoyed a nice run, and a large part of that has been due to the growth of CTV. The company reiterated in its earnings call that CTV is its "largest channel."
However, competition continues to grow in CTV. We have seen investments into new CTV buying features by Amazon and Google's DV360 is making significant policy revisions (most likely to catch up in CTV) by reversing its restrictive rules around using IP addresses (a crucial signal on CTV).
The recent news of an impending MNTN IPO shows that self-serve performance-focused CTV DSPs are the real deal and a growing demand source type that will continue competing for CTV inventory. In addition to MNTN, companies like TVScientific, Vibe, and even Comcast are getting into the mix with Universal Ads.
Even though these buying platforms (primarily) focus on a different segment of buyers (SMBs), they can start driving more competition in CTV inventory.
As more advertisers begin to see CTV as a performance channel, will TTD look to compete harder in performance? Especially when behemoths like AppLovin ($APP ( ▲ 7.06% ) ) enter the fray.
Branding vs Performance
— Arthur Querou (@arthurquerou)
8:07 AM • Feb 13, 2025
AppLovin acquired WURL in 2022 to break into CTV, and now it's looking to branch beyond gaming apps and has been testing bringing e-commerce advertisers onto the platform.
AppLovin is now worth four times more than The Trade Desk ($114B vs. $29B), so further advancements into CTV by a more resourced company would be a worrying sign for any buying platform looking at CTV as a growth engine. (Although AppLovin may have bigger problems to worry about right now.)
Lastly, SSPs continue to try to woo buyers away from DSPs. Magnite, with its Clearline product, or Pubmatic with Activate, can pounce on the PG deal type that TTD seems to be moving away from with its lack of inclusion in Kokai. If TTD doesn't see these types of buys as a priority to enable, these SSPs will gladly facilitate them and add a new line of revenue to their business in place of a traditional DSP.
TTD may have had a rocky start to 2025, but given the company's track record, I anticipate a swift reaction as it attempts to restore the value of its stock. I expect Jeff Green to right the ship as they navigate potential changes to their Kokai rollout. But if the company's stock endures an extended period of malaise, will we see a change behind the strategic execution of OpenPath and Ventura? Time will tell.
As the company moves deeper into 2025, it must gather client feedback and improve its platform, figure out how to partner with publishers without publishers feeling like they are adding an unnecessary tax, determine the strategic priority of Ventura, and compete in an increasingly crowded CTV buying landscape.
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