The advertising industry is currently going through something of a revolution, with businesses now embracing digital technology to interact with customers in new and meaningful ways.
It’s about rewriting the rulebook for the incumbents, who must evolve or die. But it also creates opportunities for newcomers. Here are five stocks in this sector to watch this year.
#1. Magnite Inc. (NASDAQ: MGNI)
Magnite is an American online advertising technology company that was formed as a result of a merger between Rubicon Project and aria, two small advertising companies, in 2020. As one of the largest independent sell-side platforms for digital advertising in the world, the company is well positioned to capitalize on the growing programmatic advertising industry. Last year, Magnite expanded its connected TV business with the acquisition of SpotX and SpringServe, and expects to control more than 30% of this market in the medium to long term, underlining the promising signs related to the development of its commercial operations. Magnite’s recent financial performance has been equally impressive, with the company reporting revenue figures of $115 and $132 million in the second and third quarters (respectively), indicating that it should have one of its best years. in terms of total revenue generation. Magnite’s disappointing year-to-date performance (-30%) may discourage some investors from buying shares, but this could prove to be an opportunity for investors to buy at a discount.
#2. Electric Guitar (LSE:ELEG)
Electric Guitar is a newly listed SPAC (cash shell) in London that is seeking acquisition opportunities, particularly in the areas of advertising, AdTech and data. Deputy CEO John Regan, Electric Guitar seeks to serve as a platform for building a next-generation advertising consultancy that will seize the massive opportunity that exists in customer data. Regan says big tech companies like Google and Firefox are pushing for change in advertising, with new restrictions on third-party cookies. Google Chrome, which accounts for 64% of the web browser market, will phase out support for third-party cookies within three years. This will have serious consequences for traditional media agencies. Electric Guitar is seeking acquisitions in the first-party data market that will support the growth of next-generation ad businesses. Regan predicts that many media agencies will have to turn to data scientists if they are to remain competitive in a few years time and Electric Guitar – or the company it will eventually become – will be well positioned in this regard.
#3. Criteo SA (NASDAQ: CRTO)
Based in France, Criteo is an advertising company that delivers online advertisements based on each customer’s online browsing preferences and behavior. Founded in 2005, the company has grown to operate in 27 offices, has over 2,600 employees and serves over 4 billion advertisements every day. In December, Criteo announced that it had acquired IPON WEB, a market-leading AdTech company. With this acquisition, Criteo will likely be able to offer greater control to its marketers and their partner agencies, as well as expand monetization opportunities for media owners, thereby increasing the company’s profitability. Even in the midst of a global pandemic, Criteo’s revenue has held up extremely well, with year-over-year revenue rising to over $2 billion for the fourth year in a row and growing. are expected to continue this trend in 2022 and beyond.
#4. S4 Capital (LSE:SFOR)
Digital marketing has proven itself during the pandemic, and Sir Martin Sorrell’s agency S4 Capital has been one of the big winners here. While the stock price rose 69% in the first nine months of 2021, the stock struggled towards the end of the year. The company was held for a while in our tactical trading portfolio and we were able to make a profit on the trade before it triggered our risk limit. Investors got a little lazy with this one, with some shorter-term investors bailing out despite other respectable results from the company. S4 says it is now focused on growth rather than just increasing headcount. In its business update for the first 11 months of last year, S4 reported comparable revenue growth of 40%, again well above forecasts. Sorrell himself has also stocked up, increasing his stake to 10.5% last month. It has publicly announced its ambition to double its organic revenue over the next three years, a view supported by analysts. FactSet reports consensus earnings per share of 28.3p for 2024.
#5. PubMatic Inc. (NASDAQ: PUBM)
PubMatic is an American company that develops and implements online advertising software for the digital publishing and advertising industry to increase its monetization. The financial success of the company in recent years represents a great investment opportunity here. PubMatic’s third-quarter success is just the latest in a multi-year trend of rising revenue as the company continues to prove its resilience in the face of the ongoing Covid-19 crisis and spending cuts in the industry. advertising industry that have taken place since 2020. In addition, its 2021 three-quarter net profit was $28.4 million, already exceeding the $26.6 million generated for the whole of 2020, while its total assets ($438.8 million) were more than double its total liabilities ($218.0 million) at the end of Q3 2021. This financial success is poised to continue into 2022 and beyond. beyond that, as global digital ad spend is expected to increase over the next few years, acting as a strong revenue driver for PubMatic and making the company a compelling growth stock.
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