The advertising industry is somewhere in the process of an important punctuated evolutionary transition, something like what life on Earth went through 65 million years ago after a big rock crashed into Mexico and kicked up a thousand years of dust into the atmosphere, drowning out sunlight, spoiling the air, and setting off a transformative process that would reshape life on this planet for eons to come.
The internet is analogous to that big rock.
While it seemed at first to offer greater access to audiences and more data about what they respond to, the net effect has seemingly been to undermine the effectiveness of traditional ad strategies over TV and print media while teaching consumers to assign more nuisance value than click ratio to internet ads.
The result is a multi-billion-dollar industry in search of new solutions to define its future. With that in mind, we take a look at some of the potentially most promising new players in the space for investors, including: Trade Desk Inc (NASDAQ:TTD), Criteo SA (NASDAQ:CRTO), Clubhouse Media Group Inc (OTCMKTS:CMGR), and Magnite Inc (NASDAQ:MGNI).
Trade Desk Inc (NASDAQ:TTD) is a cloud-based advertising-buying platform. Ad buyers can value each impression like traders value stocks, using first and third party data to decide which impression to buy and how much to pay.
Its platform enables advertising clients to purchase and manage digital advertising campaigns across various formats, including connected TV (CTV), mobile, video, audio, display, social and native, on a multitude of devices, including smart TVs, computers, and mobile devices.
Trade Desk Inc (NASDAQ:TTD) most recently announced financial results for its fourth quarter and fiscal year ended December 31, 2020, including a continued share gain in industry positioning, with 2020 gross spend on the platform coming in at approximately $4.2 billion, a 34% increase from a year ago, and continued strong customer retention, which remained at 95% for the quarter – a streak that has now lasted 6 years.
“While 2020 was a uniquely challenging year, it was also a turning point for our industry and our company. We won more share in our fastest growing channels such as CTV and Audio, which helped drive record ad spend of $4.2 billion on our platform in 2020,” said Co-Founder and CEO of The Trade Desk, Jeff Green. “Perhaps just as important, in 2020 we saw several years of advertising disruption and innovation compressed into a few months. Marketers are being more deliberate and data-driven in everything they do, and as a result, they are gravitating to the advertising opportunities of the open internet. With CTV now offering a data-driven alternative to linear, with brands seeking a scalable and brand-safe alternative to user-generated content, and with new identity tools that provide a common currency for the open internet as well as enable better cross channel measurement, the industry is gravitating to the open internet and standardizing on our platform.”
While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action TTD shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -2% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.
Trade Desk Inc (NASDAQ:TTD) generated sales of $319.9M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 48% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($624M against $1.5B, respectively).
Criteo SA (NASDAQ:CRTO) trumpets itself as “the global technology company powering the world’s marketers with trusted and impactful advertising.”
According to company materials, 2,600 Criteo team members partner with over 21,000 customers and thousands of publishers around the globe to deliver effective advertising across all channels, by applying advanced machine learning to unparalleled data sets. Criteo empowers companies of all sizes with the technology they need to better know and serve their customers.
Criteo SA (NASDAQ:CRTO) recently announced financial results for the fourth quarter and fiscal year ended December 31, 2020 that exceeded the top end of its most recent quarterly guidance.
Megan Clarken, Chief Executive Officer of Criteo, said, “I am proud of how much we achieved in 2020. We made multiple structural changes across the company that we believe have set Criteo up for sustainable profitable growth and led to significant over-performance of guidance during Q4. We believe that our transformation into a Commerce Media Platform, building on our unique Commerce data and Reach assets and purpose-built marketing and monetization capabilities, positions us for durable growth and long-term shareholder value.”
It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things.
Criteo SA (NASDAQ:CRTO) generated sales of $662.8M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 39.1% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($488M against $600.3M, respectively).
Clubhouse Media Group Inc (OTCMKTS:CMGR) is an influencer-based marketing and media firm with a massive and parabolically growing global aggregate social media reach.
Clubhouse media has seen its reach grow at a rapid pace over recent months while its core group of influencers has become more visible and marketing deals with prominent global brands have been signed. While some in the financial media have resorted to narratives explaining away the stock’s success as an artifact of mistaken identity (the Clubhouse app has gained in popularity alongside the company’s rising traction), this explanation doesn’t hold up well when scrutinized more closely in terms of the chronology of events.
Clubhouse Media Group Inc (OTCMKTS:CMGR) shares could benefit further from the company’s recent announcement that its influencer, Lindsay Brewer, an emerging star female race car driver and social media icon with more than 2 million followers, recently competed in her first major motorsports event since returning to professional racing this year.
This is particularly important because Clubhouse Media is featured prominently in media surrounding her rise. According to the release, after gaining attention and traction as a teenager in motorsports, and then taking a 4-year break to get a business degree from San Diego State University, Brewer returned to pro racing this year, participating in her first TC America Series Race earlier this month at Sonoma Raceway in California. Brewer was a feature focus in the CBS broadcast of the event, mentioned repeatedly. She has also noted that she may participate in on-air commentary at racing events in the near future, which stands to point even more attention toward CMGR.
“This is a different type of racing for Lindsay, at a new track and in a new car, and she still came out strong, rising in rankings between day 1 and day 2 and setting the third fastest lap time to qualify on practice day,” said Clubhouse Media President and Co-Founder, Chris Young. “Clubhouse Media, as her lead sponsor, couldn’t be more thrilled with her performance and her strong re-debut and we see big things happening for Lindsay in racing this year.”
Clubhouse Media Group Inc (OTCMKTS:CMGR) is particularly interesting given that it is perhaps the only pure play on the rising influencer model in the advertising and marketing industry. If the industry truly is at an evolutionary crossroads, and the influencer model is a new and promising path, then investment capital in search of exposure to the path ahead in the space seems likely to find its way into CMGR shares sooner or later, which might explain the bid we have seen here so far this year.
Magnite Inc (NASDAQ:MGNI) bills itself as the world’s largest independent sell-side advertising platform. According to the company, publishers use its technology to monetize their content across all screens and formats – including desktop, mobile, audio, and CTV.
Company materials go on to note that the world’s leading agencies and brands apparently trust its platform to access brand-safe high-quality ad inventory and to execute billions of advertising transactions each month.
Magnite Inc (NASDAQ:MGNI) recently announced that it has entered into a definitive agreement to acquire SpotX from RTL Group for $1.17 billion in cash and stock. SpotX is one of the leading platforms shaping CTV and video advertising globally.
“Sellers have been looking for a scaled independent alternative to the giant companies who dominate the CTV marketplace,” said Michael Barrett, President & CEO of Magnite. “The combination of Magnite and SpotX will make this a reality by bringing together the best CTV technologies and teams at a critical time. Ad-supported CTV is just beginning to draw budgets from linear TV and we will be well-positioned to participate in the strongest segment of industry growth for the foreseeable future.”
And the stock has been acting well over recent days, up something like 3% in that time. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -13%. Magnite Inc (NASDAQ:MGNI) pulled in sales of $82M in its last reported quarterly financials, representing top line growth of 69.1%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($117.8M against $522.2M, respectively).
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