It is not getting any attention in the press, yet companies are spending more than ever to advertise their products and services. This is a big opportunity for investors.

Advertisers spent $126 billion in 2021, according to Magna Global, a media investment and intelligence company. The new spending is 19% greater than pre-Covid levels, with digital ad sales growing fastest.

Longer-term investors should consider buying The Trade Desk (TTD).

The Ventura, Calif.-based company is in the business of programmatically matching up top tier ad buyers like Nike (NKE) with ad inventory everywhere on the internet not controlled by Facebook (FB) and Alphabet (GOOGL). It’s a big business that will surely get bigger more brands sync up their digital transformations with ad buying.

What is So Great About The Trade Desk?

Leadership. Although the company is competing with Google and Facebook, The Trade Desk offers the best-in-class platform for ad buyers to quickly purchase inventory everywhere from websites and podcasts, to connected TV platforms like Hulu, Fox and Paramount Plus.

When Apple (AAPL) made changes to the operating system that runs iPhones and iPads, several ad technology companies cried foul. The new OS promised to make tracking users far more difficult. Jeff Green, chief executive officer at Trade Desk didn’t even blink. His company was far ahead of the changes with a universal ID system. He correctly predicted no impact.

The company reported third-quarter financial results in November that were another blowout. Revenue at the programmatic digital ad platform was $301 million, a 39% increase from a year ago. Excluding political spend related to the U.S. elections last year, growth was up 47%. And Unified ID, its ad tech platform standard, continued its strong industrywide momentum.

Sector momentum is the second piece of the story at Trade Desk. The company is riding a huge tailwind that is only going to get bigger.

Digital ads are the future of advertising. Ad buyers want to be able to marry the data they are collecting with customer relationship management software to targeted demographic profiles online. And they want to do all of this in real-time, cost effectively. Trade Desk provides an open platform that lets them buy ads using algorithms in the blink of an eye. This programmatic approach is fast, measurable and reliable.

This is impossible with traditional TV, radio, billboards, print and cinema.

Magna Global researchers did find that advertising revenues from traditional formats is rising. Those sources in 2021 will reach $268 billion, a 9% increase. However digital ad sales, consisting of search, social, video, banners and digital audio should surge to $442 billion, up a staggering $105 billion, or 31% year-over-year.

Digital ad sales now represent 62% of total ad sales globally, and rising.

There is a lot of nonsense being spread about the digital ad sector. Contrary to what some would have investors believe, digital ads are not going away, either through OS level privacy changes or regulation. And there is no slowdown in momentum.

The largest brands in the world are transforming their businesses with digital inputs. Advertising is a big part of that new model. This means clear sailing for companies like Trade Desk for the foreseeable future.

The big opportunity is shares have been knocked back in recent days. After climbing to $115 following the Q3 earnings report the stock has settled back to $88.33. This is a terrific bargain. The current business is only a fraction of what it will be as enterprises fully commit to digital strategies.

It’s no longer a matter of if this will happen. It is happening right now.

Trade Desk trades at 96x forward earnings and 38x sales. While these metrics might seem heady, they are within the historic range, considering the business has 81.6% gross margins.

I first recommended Trade Desk to our members on April 20 last year, and shares are up 292% since. There is more to come. Newcomers who are long-term investors should use the current weakness to buy shares.

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