Targeted Ads Go Bonanza, No Wonder Investors Cheered When This Disruptive Player Split The $84 Billion Pie

Published: Wed, 01/02/19

 

Targeted Ads Go Bonanza, No Wonder Investors Cheered When This Disruptive Player Split The $84 Billion Pie

Rally On, Traders!

We’re a long way from the days when all you needed to promote a product was buy space in the weekend newspaper.

And companies like Mobiquity Technologies (OTCQB:MOBQ) are as far from that old print ad as it gets. (VIDEO)

MOBQ is leaping into a future that’s already running at hyperspeed. Today’s advertising environment is literally evolving faster than you can refresh your phone screen.

And there’s a staggering amount of money trying for a toehold on that screen. The experts say out of the $200 BILLION advertisers spent this year, half of it online. When people crunch the numbers, 63% of that slice boils down to phones.

Don’t get me wrong, we spend a lot of time on our phones and the kids advertisers want to reach are the biggest offenders. But think about it: for an advertiser, the real edge those little screens provide is they travel with you.

Say you’re in a strange town looking for a good meal. The phone knows where you are and any smart restaurant nearby can buy ad space just to reach you and people near you. That’s easy. Location ads.

Maybe you’re shopping for something in particular. The phone knows your search history and can connect you to the closest store that carries what you want . . . or an online heavyweight like Amazon can try to lure you to just order from them at a cheaper price. Context ads.

The advertisers can even tempt you right there in a rival store. To get around the problem, some retailers have started “fencing” their sales floor to make sure they’re the only ones running ads when you’re there.

Compare those next-generation commercials to what you see on the old-fashioned desktop computer or wall-mounted TV screen. Those dumb ads have to stay home. They don’t change when you hit the mall.

The mobile advantage is obvious. And that’s where MOBQ is ahead of the curve. They call what they do “programmatic marketing” because the messages are programmed to react to people’s movements in real time.

You move, they move with you. You turn down one coupon, the offer changes. Advertisers LOVE it.

MOBQ says programmatic is an $84 billion global market already and should be 86% of all digital ad spend by 2020. Hey, that’s what, 13 months away? Huge.

But knowing how to build the programs starts with location. Building the database can take months, even years. MOBQ has already done the heavy lifting with a proprietary registry of 5 MILLION stores.

That’s the biggest data set of its type anywhere in the world, mapping 4,000 chains right up to the parking lot. If you want to tempt shoppers from a rival, you want a peek. And if you want to keep your shoppers, you DEFINITELY want to make sure you pay for a strong “digital fence.”

Do I expect MOBQ to leverage that database to capture $84 billion in ad flow overnight? Maybe someday but right now it’s an ambitious goal for a stock that trades under $0.25 a share to chase.

Even 1% of that opportunity is a huge win when you’re still a $70 million startup. That’s a 12X revenue multiple, well below what Wall Street disruptive darlings like Square carry now.

Getting down to “just” an Amazon level revenue multiple happens around 0.3% of the overall opportunity . . . and remember, it’s a moving target, mobile ads are where all the growth is. Cut out political ads on local TV and every other channel is attracting tumbleweeds.

So a year from now, these percentages need to ramp up just to keep up with reality. If MOBQ can’t grab that share of the market in the next 12 months, the target (and associated “fair value” on the stock) moves with it.

These are daunting numbers for a startup, requiring more brainpower than muscle. While the company has brought on a high-powered Chief Marketing Officer from IBM, so far the ground game has been about partnerships, leveraging existing ad networks to get the revenue flowing.

MOBQ signed a deal a few months ago with Barometric, which has the technology that confirms when stores make a sale due to the ads. They can see it in real time: cash register goes ka-CHING, MOBQ and eventually its shareholders see the score.

Then there’s the team-up with BDEX, which carves up the retail industry into segments that can be set for competition or any other relationship. Looking to target a shopper more effectively? Pay to play and generate what the companies say is a “substantial” revenue opportunity.

But it’s still too slow for the go-go management team here. So MOBQ thought outside the box: instead of fighting for the biggest slice of that $84 billion pie, why not team up with a rival ad tech provider and share the glory?

Technically MOBQ bought Advengelists just last week. In practice, it looks like the combined company will keep the acquisition’s name. After all, they’re the people PAYING $15 million for the privilege to join forces.

Read the fine print, they’ve also committed to generate $250,000 in sales between this month and next month or else part of the deal evaporates. That’s healthy confidence to show the shareholders!

Of course it’s not too hard to live up to that commitment when you’re already working so close together that you can release a major new product within 24 hours of the deal close. These companies are already integrated. Execution risk is looking LOW.


Post-merger synergy! Days after the deal closed, the teams work well together.

As the Advangelists CEO says, watching the teams come together was “an inspiring experience.” The MOBQ boss chimes in, he didn’t expect results to come in so fast.

What does it do? Take that 5 million store database and add it to the Advangelists analytics platform. Suddenly an advertiser can start building campaigns, store by store. 200+ advertisers and agencies are already on the platform. This might blow their minds.

I didn’t even mention that big chains like CVS and, yes, WALMART are already working with Mobiquity, as well as mighty Amazon. This is a true marriage of champions in the next-generation advertising space.

All Wall Street needs to do is put the pieces together:

  • Huge opportunity? CHECK, $84 billion a year just at this end of the ad world

  • Growth potential? CHECK, in the next handful of months 86% of the global action will be here

  • Disruptive technology? CHECK, other networks are welcome to map those 5 million stores themselves

  • Near-term revenue model? CHECK, management even made their immediate outlook part of the terms of the merger

  • Post-merger synergy? CHECK, both teams are already taking all-new products from drawing board to launch!

They say it can be good to invest in what you know, trends you see in the world around you. Ever check your phone at the mall and see the ads “chasing” you from store to store?

That’s the future. And here in the earliest stages, MOBQ shareholders are in for quite a ride. After all, the stock has already shaken off the "correction" that has so many other high-impact disruptors in the dumps. It's already doubled in the past six months. If you snooze, you lose!

Happy, Happy, Happy Trading!

                                        
                                                                                                

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