Google (NASDAQ: GOOG) and Facebook (NASDAQ: FB) have become so engrained into our psyche that, if you ask the next one hundred people that you speak with, it’s very likely that every one of them will say that they’re familiar with these sites and most will say that these sites are a regular part of their desktop activity. Conversely, if you ask those same people about ad tech, none of them will have a clue about it, yet, without ad tech, these giants would probably still be figuring out how to monetize their platforms.
Today’s ad tech companies are a far cry from the first generation ad technologies that facilitated the buying and selling of digital ad space on ad networks and exchanges, which was a key development in fueling the industry’s rapid growth. By mastering analytics, data management platforms and other digital tools, advertisers are able to more effectively employ marketing campaigns that target specific audiences.
So, as these digital landscape dominators are accelerating their mobile push into 2017, the roles are reversing and, this time, they’re paving the way for companies like Trading Desk (NASDAQ: TTD), Social Reality (NASDAQ: SRAX) and AppNexus to move into the sector and utilize their sophisticated advertising platforms to deliver a unique branding and advertising experience for their respective customers.
Depending on the metrics, Google accounts for roughly 60-80% of desktop searches in the the U.S. According to StatCounter’s August 2016 data (http://nnw.fm/Sp20s), close to 80% of U.S. desktop searches were through Google, while comScore’s (NASDAQ: SCOR) Explicit Core Search Share Report, earlier in the year, ranks Google sites at approximately 64% of the segment’s traffic, or about 11 billion of the approximately 17 billion explicit monthly core searches, while Microsoft (NASDAQ: MSFT) sites, with over 3.5 billion searches, is about 21% and Yahoo (NASDAQ: YHOO) sites’ two billion hits generate about 12%.
As dominant as Google’s U.S. desktop performance is, it pales in comparison to Google’s U.S. mobile search share, which typically runs at about 95%, but random searches and results are no longer enough.
Digital platform service providers want to retain captured market share and advertisers want to increase return on investment, and both groups agree that the best way to do this is by engaging their users, which is where ad tech comes into the picture.
Ad tech helps personalize the ad experience and draw the target market, as opposed to spraying the mass market and hoping that enough sticks to cover the surface. Plus, ad tech companies are much better positioned to ensure that their clients’ are getting top quality ad buys.
Plus, ad tech can engage customers with social ads and remarketing, thereby reaching their target when the time is right, but without seeming like a pushy car salesman, and hitting the highest conversion rates possible.
Facebook is the most popular social network site in the United States, with more than 123 million mobile users accessing the Facebook app in November 2016 and accounting for over 40% of all social media site visits for the month. While this market penetration is amazing, the user engagement is what’s truly mind blowing
This statistic gives information on the most popular social networking apps in the United States as of November 2016, ranked by monthly user engagement. During that month, mobile Facebook users spent an average of 929 minutes on the social networking platform, making it a perfect platform for many marketers. Audience targeting is becoming so hot that, in September 2016, Facebook sold out its inventory for the first time.
Social Reality is a leading provider of automated digital platform technology and social management software, for Internet and mobile advertising. The company’s advanced ad serving technology and seamless integration can now empower its clients to build and run a vertical ad network.
By offering an all-encompassing digital marketing services platform, and providing tools that brand marketers and content owners need to be more effective in the competitive digital advertising space, the SRAX platform technology suite of offerings is what differentiates Social Reality from its competition. The company’s platforms include SRAX (Social Reality Ad Exchange), a Real Time Bidding (RTB) sell and buy side representation; SRAX Social, a social media and loyalty platform that allows brands to launch and manage their social media initiatives; SRAX MD, an ad targeting and data platform for healthcare brands, agencies and medical content publishers; and SRAX APP, a platform that allows publishers and content owners to launch native mobile applications.
Social Reality also creates custom applications for brands both large and small that leverage traffic on the partner sites to seed the applications to help them go viral. The company is also able to provide managed advertising services that utilize data from platforms including Google.
Despite the sagging economy, internet and mobile advertising has been growing by approximately 20% per year. Yet, despite the growth rate, the past two years have been tough for the industry, and venture funding for ad tech startups became harder to secure. With this recent trend, any positive momentum is very welcome and may even explain the analysts’ enthusiasm for the players in the ad tech space. One example is The Trade Desk, which is rated a ‘Buy’, or stronger, with an average price target of $33.43 and a call as high as $40.00. Meanwhile, Social Reality, which uplisted to the NASDAQ Capital Market in October 2016, has its analysts calling it a ‘Buy’ on an EPS of 27 cents in 2017, with an average price target of $10.75 and the high target of $14.00.
Social Reality is a leading provider of automated digital platform technology and social management software, for Internet and mobile advertising. Management has consistently grown revenues, from about $500,000 in 2010 to over $30 million in 2015, an average annual growth rate (AAGR) of 170%, while typically running blended gross margins in the 45-55% range.
The Trade Desk is similar to Social Reality, in that its technology is designed to empower ad buyers by providing a self-service platform that enables its clients to manage data-driven digital advertising campaigns.
The Trade Desk has become the fastest growing demand-side platform in the industry by offering agencies, aggregators, and advertisers best-in-class technology to manage display, social, mobile, and video advertising campaigns.
AppNexus is an independent internet technology company that harnesses data and machine learning to power the world’s open digital audience platforms. Its powerful, real-time decisioning platform supports core products that enable its clients to acquire, engage and monetize their audiences.
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