Jeff Green: To the first part of the question as it relates to walled gardens. So first, let me just remind everybody what walled garden is and I’ll give you just one of the definitions, which is that this is a destination that is essentially a must-have on a media plan. So that the owner of that destination, whether it’s a social network or a video platform or any other walled garden, the owner of that can afford to be draconian and set their own rules. And what’s happening in part because of CTV because as I mentioned in the prepared remarks, the CTV is perfectly fragmented. And what it does is it makes it so that there are enough players that no one can afford to be draconian. And no one has enough market share to do that.
But it’s also concentrated enough that you have very large sophisticated players that are making decisions, and so they are all hypercompetitive and actually hyperrational. So what I think that does is it puts a lot of pressure on walled gardens because of the fact that there is this alternative that are super competitive and super efficient. When you add to that, the CTV is driven by nearly 100% authentication. It lends itself to just highly personalized content in a way that no other channel has to deal with, whether we are talking about in the mobile environment where IDs are under pressure, in part because of Google and Apple or in the browsing web for the same reason, we are €“ in CTV, we have authentication nearly all the time. Additionally, because of those UIDs, we also have the opportunity for retail to do exceptionally well and all of that puts pressure on walled gardens in the open Internet now poses as a very viable alternative.
So, whether we are talking about CTV, whether we are talking about retail, whether we are talking about the economic environment and pressure that, that puts on walled gardens to want to welcome incremental demand. All of that points towards an ecosystem, where more and more of them are considering bringing down the walls even the largest of them so that they can welcome incremental demand. And certainly, an environment like this is where you are most likely to see some of those changes. So, there is lots of activity considering that sort of stuff. And I do believe you will see announcements in 2023 suggesting more and more walls coming down. Thanks for the question.
Chris Toth: Thanks Youssef. Next question Holly.
Operator: Your next question for today is coming from Vasily Karasyov at Cannonball Research.
Vasily Karasyov: Good morning. Jeff, can you please talk in more detail about the forward always on Connected TV event you mentioned in your prepared remarks? And then connected to that, can you talk more about the €“ your forward market product that you mentioned today? And also, I think you spoke about it a couple of quarters ago. That seems like a very interesting product. And of course, fighting the upfront market is a pretty gargantuan task that you are undertaking here.
Jeff Green: Yes. So, Vasily first, I really appreciate the question. You are right. The upfront market is huge. But I see that as an opportunity, one, because it of course, adds to the TAM, but also because as we pointed out in the prepared remarks, the upfront market hasn’t changed since 1962, much. And really it’s a shame that it hasn’t changed because the way the upfronts work today is that you can’t really bring data to the table. And so CTV is in a very interesting position right now, which is that it has been getting a premium largely because their scarcity. So, consumers have moved into CTV, into on-demand, over the Internet content. But as they have moved, the number of ads available for advertisers to put in front of those consumers hasn’t gone up nearly as quickly as consumers have moved over.
So, that’s created a scarcity premium for all the ads. But we are seeing more and more inventory come online. And so some of the biggest content owners in the world are having to find ways to make the efficacy justify those prices instead of scarcity. And that’s part of the reason we talked about that the amazing case study with Disney, where they talked about 12x more effective as a result of using UID2 than alternative means of personalization that what is absolutely required to bridge that gap between what was coming from scarcity and now being provided via efficacy. And so of course, CTV is getting more effective. But if you don’t bring that same level of data to the upfronts, then you are going to miss out on almost half of television.
So, what we have designed is an always-on forward market, which is essentially just a new version of the upfronts. But in this case, we are using technology to make it so that you can bring data to the table. And because of the fact that we have already integrated with most of the largest content owners, at least in North America and many of the leading CTV countries around the world, we think as we pointed out, we are one of the unique companies to be able to host an event like that as well as to build the market that makes it possible for forward contracts to be established on an always-on basis. And when I say always on, the upfront is done once a year. You think about commodities and equities markets, those markets are on all the time. It doesn’t really make sense to only do it one week a year.
And there is an opportunity for advertisers and content owners to constantly be evaluating the value of entering a commitment so that you can either get a discount or be assured that you are going to sell all of your inventory. I believe that’s going to be an important role in TV, the same €“ or in CTV, the same way that it was in traditional television. But we need a product that brings data to the table. Otherwise, it cannot justify the high CPMs that everyone has become accustomed to in CTV. And of course, advertisers aren’t going to pay high CPMs that the efficacy isn’t there. There is no way to bring all the best parts of digital to the table, leveraging the upfronts the way that they have existed to-date. So, we are very excited about it.
We don’t think that we have to compete with anything other than a 1962 product. And because of our super low, I think we are in a really phenomenal position.
Chris Toth: Thanks Vasily. Next question.
Operator: Your next question is coming from Jason Helfstein at Oppenheimer.
Jason Helfstein: Thanks. Jeff, can you talk about the opportunity to go direct to publishers with OpenPath and just broadly the benefits to the publisher, the advertiser and then Trade Desk as you think about measurement, targeting and economics, so kind of this broad question on basically the pitch to everybody about OpenPath? Thanks.
Jeff Green: Yes. So thanks. I really appreciate the question because I don’t know that most understand what OpenPath is. And so I appreciate the opportunity to just clarify. And so from the very beginning of the company, we have been pretty obsessed with improving the supply chain. And as I mentioned in other forums, I often look at the biggest technology companies in the world and try to study them for what they have done successfully. And I find a lot of inspiration from Amazon in this, which is just, I think as a company, one way to define their success is just they obsess over supply chains, how do we make it more effective for the end consumer. And that’s exactly the same thing that we have been doing, both with the ad tech ecosystem.
There are a lot of steps between advertiser and publisher that are unnecessary at times and are in some cases, unfair or that people are taking more in fees than they are adding in value. And ultimately, that is to the detriment of us and the advertisers and agencies that we represent. Often also on the sell side and in the exchanges, there can be an auction that is unfair. I mean to some extent, that is exactly what the Department of Justice is filing suit against Google for an unfair auction dynamic. So, what we have been trying to do is to create a supply chain that is fair and transparent and competitive. We found in our discussions with publishers and content owners that often they are as frustrated as we are with the supply chain, and say, why can’t we just integrate directly.
So, we made it very clear to the market, especially to SSPs that we are not interested in competing with SSPs. We are not interested in doing the yield management for publishers. But when a publisher wants to do their own yield management, we are happy to integrate with them directly so that together, we can ensure that the auction is fair and that the pipes are clean. And as a result, we also think that not only will we clean up the supply chain and make certain the fees aren’t extracted where they shouldn’t be, but we will also have greater transparency, and that will actually create better CPMs because efficacy will go up. So, this is especially important when we are talking about connected television in part because so many of the content owners have purchased SSPs, and so most of them own it.
So, they have already made the decision to get in the business of yield management. So, we are extremely excited to be integrating with some of the largest. We have talked a lot about our partnership with Disney, and that’s in part because Disney, I think represents the largest amount of CTV ads anywhere on the Internet currently, meaning owned by one company. And with their commitment to both UID2, but as well as to integrating with us directly, we think that that sets the tone and the pattern from what will happen to everyone else. Of course, we have announced our partnerships on UID2 with CBS and Paramount Plus, and Disney and some of the others, but that lays groundwork for us and then continue to do the same on OpenPath. There is a long to publishers, not just in CTV, but in other channels that have also signed up with OpenPath.
And we think that represents the start of a much cleaner supply chain in the open Internet. Thanks for the question.
Chris Toth: Thanks Jason. Next question please.
Operator: Your next question is coming from Brian Fitzgerald at Wells Fargo.
