US adult users spend more time with digital video than with social media and this trend is anticipated to continue globally.  According to Financial Times Newspaper, a generation of young Americans that used to turn to television for entertainment is finding its fix elsewhere. They are watching on-demand services, such as Netflix and Hulu but turning off “linear” TV. This migration has been gradual but is starting to show up in the quarterly results of some of the world’s biggest media companies – and investors are beginning to notice.  With the explosive growth in online digital video, ad spend is following suit.  According to BusinessInsider.au, US digital video ad spending is forecast to climb to US$14.4 billion in 2019 (up from US$3.8 billion in 2013 (CAGR of 24.8%).  

 

The significant growth in digital video and digital video ad spend has provided the landscape for the creation of this platform connecting online publishers to selected video advertisers, optionally integrating web video content.  This ad tech platform was developed from scratch in-house around mid-2014 and grew to handle up to 12 billion video requests per day at the peak of its activity.  It achieved revenues up to $1.8M USD per month, using an arbitrage model filling publisher inventory with video advertising from a range of demand partners. 

 

The company owns its core technology, unlike most competitors who reuse other suppliers’ platforms. This will allow the purchaser to leverage the ability to adapt new features as needed, and protect themselves from industry volatility (such as the earlier LiveRail withdrawal of platform services from existing customers). The tech stack business redesign undertaken in early 2016 highlighted the ability to filter traffic to the most profitable requests and achieved a dramatic reduction in operating costs. This was too late for this company to capitalize on this greatly improved efficiency, as it ran out of funding to relaunch with this new stack in place. However, with significant IP invested to date, and proven revenue potential in the product set, a new owner with stronger capital position can more aggressively pursue the potential of the platform.

 

The significant added advantage of a DSP product and expanded ad server capability provide a well-rounded platform that is quite unique in the marketplace. Development of a platform of similar capability would require 1-2 years and at least $US5M+ investment. The platform and software is ideally placed to receive strategic investment or purchase by an established ad tech network, as the platform can help reduce costs of transacting business between supply and demand channels, with ability to make prompt strategic decisions using quality data and reporting.  As there were millions invested into the development, the platform provides an almost immediate opportunity to replace third party costs and limitations and own the distribution network adding value between publisher supply and demand networks.

 

LISTING OPPORTUNITY: The owners are seeking a full acquisition for $2M asking price or a capital investment of $1.2M for 51% equity in the company.

  

Valuation is based on its established fundamentals including: 

*Cutting Edge Technology - Ad Serving Platform 

*Historical rapid growth in sales, ad impressions served, users, etc. 

*Strong brand awareness

*Scalability

*Exploding growth of this industry

 

This listing is ideal for a strategic investor who can seize the opportunity in this industry and integrate the software platform into an existing advertising technology business to reduce third party costs, create differentiation and generate profits!