The Trade Desk faces more pressure as second audit launched

The Trade Desk's (TTD) shares slid more than 6% on Tuesday after Ad Age reported that a second major advertising holding company is launching an audit into the ad-tech giant's fee structures.

According to Ad Age, Omnicom told clients in a memo that it will be launching a third-party audit of TTD, although it noted that its initial review of the company's fee structures "revealed no issues."

This comes after Ad Age reported last week that Publicis, one of the world's largest advertising holding companies, has advised its clients to stop working with the ad-tech giant because of a "failed audit" over fee structures.

Ad Age reported that Publicis had commissioned an independent audit that found "multiple violations" of the master service agreement it had signed with TTD.

In a post on LinkedIn, The Trade Desk founder and CEO Jeff Green disputed the report, saying "TTD has not 'failed' any audit ever."

The Ad Age report led to TTD's shares being downgraded twice last week.

Stifel’s Mark Kelley, who was one of the analysts downgrading TTD shares, pointed out that Publicis is the company's largest holding company client, representing more than 10% of gross billings in 2024 and 2025.

It's unclear what percentage of TTD's revenues come from Omnicom's clients.

Although Evercore ISI analyst Mark Mahaney lowered his price target on TTD shares last week to $32 from $35, he maintained the firm's Market OutPerform rating on the stock, noting that while the Publicis audit was "a clear headwind," the selloff had been "overdone relative to potential financial impact."

"Our conversations with industry participants and TTD management suggest that Publicis could be leveraging a purported TTD contract compliance/billing audit failure as a negotiating tactic and there could still be a resolution to come," Mahaney wrote in a client note.

"While industry participants have also noted to us the risk of 'contagion' to TTD's other agency relationships, we believe the level of disruption seen in the Publicis relationship is likely to remain an outlier."

However, the report of Omnicom launching its own third-party audit of TTD appears to disprove Publicis as an outlier, and it remains to be seen whether it does instead turn out to be a "contagion" to TTD's other agency relationships.

Amazon becoming a bigger threat

The Trade Desk differentiates itself from digital ad giants like Alphabet's Google, (GOOG), Amazon (AMZN) and Meta Platforms (META), which operate so-called "walled gardens" where the platform controls all the content, user data and ad technology.

Advertisers gain first-party data targeting through these platforms, but face "black box" reporting and limited transparency.

TTD on the other hand sits strictly on the buy side and exclusively serves the advertisers. Its main value proposition versus walled gardens is this independence and the fact that it has no conflict of interest by having its own ad inventory.

But Morningstar analyst Mark Giarelli sees Amazon creating increased competitive pressure, noting that the e-commerce giant is “directly stealing business” from TTD. He pointed out in a note last week that major agencies like Omnicom, which have been TTD’s largest customers, are increasingly shifting advertising budgets from TTD’s platform to Amazon’s due to lower take rates.

“With its extensive scale and valuable consumer behavior data, Amazon is likely to challenge TTD’s growth and profit margin,” Giarelli said. “The emergence of text-based, agentic workflows and the growing customer demand for outcome-oriented, low-touch optimization tools are making TTD’s user interface less sticky.”