September 16, 2021 -- InvestorsHub NewsWire -- via NetworkNewsWire
Editorial Coverage: The evolution of media and advertising
dates back to ancient societies carving on rock. Ironically,
carving on a rock is probably about as effective today as an email
blast, which was all the rage only a few years ago. Hard to fathom
where digital media and advertising will be in another 5,000 years,
but safe to say that future innovations will continue to build upon
technologies evolving today. The industry moves so fast based upon
consumer trends that steadily cross inflection points and determine
the history of modern digital media. It is clear that the new era
of digital media will redefine how brands connect with consumers,
as innovation pushes the boundaries in digital media strategies to
make advertising personal and native like nothing seen before.
Email marketing is dead and taking static banner ads with it,
replaced by more intelligent and fluid technologies supported by
artificial intelligence. This next generation of digital media is
being spearheaded by companies such as DGTL Holdings
Inc. (TSX.V: DGTL)
(OTCQB:
DGTHF) (Profile) with its strategy to build a
digital media conglomerate in the categories of social, mobile,
gaming and streaming. DGTL has begun with a comprehensive software
solution platform in the social category complete with innovative
content, measurement and distribution solutions, alongside
engagement and communication tools and the technology designed
specifically for identifying the most-efficient strategies.
Companies know that consumers are ultra-savvy and intolerant of
meaningless ads, which is driving business to DGTL. Other savvy
companies, including Constellation
Software (TSX: CSU)
(OTC:
CNSWF), Magnite Inc. (NASDAQ:
MGNI), ESE
Entertainment Inc. (TSX.V:
ESE) and LOGIQ Inc. (OTCQX:
LGIQ), are seeing opportunities for growth and
evolution in their respective industries, often acquiring or
partnering with others to stay on the leading edge of
innovation.
- DGTL is working to complete acquisition of Engagement Labs,
which is modeled to add C$3.5–$4 million to DGTL revenue.
- DGTL Holdings and Spaceback have partnered for the world’s
first certified social influencer advertising platform, converting
content to web ads for any screen format.
- DGTL acquired CaaS provider Hashoff in 2020 at 2x revenue, saw
sales expand 71%.
- DGTL Holdings has completed the latest version of Hashoff 2.0,
positioning the company to target video ads on apps such as TikTok,
YouTube and Snapchat.
Click here to view the custom infographic of
the DGTL Holdings Inc. editorial.
An Acquisition at 0.5x Sales
DGTL
Holdings Inc. (TSX.V: DGTL)
(OTCQB:
DGTHF) had already established itself as a premier digital
media software portfolio company focused on Content-as-a-Service
(“CaaS”) and is now in the process of completing the acquisition of
Engagement Labs (“EL”), which will give DGTL ownership of Total
Social, Engagement Labs’ fully commercialized social media
analytics software. Total Social is essentially the only AI-driven
platform that provides a total online and offline diagnostic of an
enterprise level social media ecosystem.
DGTL has a history of savvy acquisitions, and EL certainly
qualifies in that category, expected to add C$3.5-$4.0 million in
annual revenue to DGTL at a purchase price of C$1.7 million, or
0.5x sales. This is particularly impressive considering DGTL has a
market cap currently around C$11 million. DGTL founder John
Belfontaine recently
called Total Social “a perfect complementary asset to our
existing social media CMS software, Hashoff” as TotalSocials
analytics platform validates how effective Hashoffs campaigns are,
and Hashoff provides a stable of global brand customers for Total
Social.
The strategic acquisition also marries perfectly with DGTL’s new
partnership with Spaceback and the launch of
Hashoff 2.0, which puts DGTL on the leading edge of video-based
social media markets. The next-generation video technology is a
significant development for DGTL insomuch that it presents the
opportunity for clients to seamless identify and succinctly target
users of popular video applications globally, including the wildly
popular TikTok and SnapChat, which could be the gateway to billions
of consumers. The benefits are bidirectional, meaning that adding
video platforms further expands the population of social media
influencers, which the company can add to its marketing arsenal by
more than one billion monthly active users.
These solutions position DGTL at the forefront of the emerging
mobile/social media environment. When integrated, the company
should have one of the most comprehensive packages for both the
marketing technology (martech) and digital media industries. The
corporate acquisition strategy aligns with broader market trends as
indicated in a Goldman
Sachs note, which reported that so far this year 29 SPACs have
raised $73 billion in proceeds, up a stunning 462% from the same
period in 2020 and outpacing traditional IPOs by $6 billion.
Brand Names Equal Growing Revenue
As is often commonplace in the ad market, DGTL, Hashoff and
Engagement Labs can’t disclose every client’s name for competitive
reasons. Still, investors can put together the puzzle to figure out
who some are. For example, DGTL didn’t spell out the name of one of
its newest clients in a press
release in April, but it didn’t take a gumshoe to
understand it was alcohol-purveying juggernaut Suntory Beam. Other
times, however, as when DGTL announced a major Asian
airline as new client, the picture is opaque, although it
is likely safe to say that it is a big company considering the
named $200,000 contract.
Specific names are great, but only if they translate to sales,
and DGTL’s portfolio clearly does. During fiscal Q3
ended February 28, 2021, DGTL reported C$1.25 in revenue, a
jump of 68% from Q3 fiscal 2020. That followed a 70% year-over-year
rise in revenue during the second quarter to C$1.25 million. During
the first nine months of the fiscal year, DGTL booked C$3.67
million in sales, which is fodder for analysis of the market cap
and the incoming sales with the Engagement Labs acquisition.
A Word on Hashoff
As mentioned, DGTL’s business acumen shows through in deal
structure. For instance, the Hashoff acquisition in January 2020
for just two times revenue included stipulations that Hashoff sales
must rise from C$3 million to C$10 million in order to receive 100%
of the stock and cash promised as part of the C$6 negotiated
valuation, or else the purchase price is subject to clawbacks.
Management has a knack for incentivizing the target company, while
building and protecting value for DGTL shareholders.
Hashoff allows brands worldwide to identify, optimize, engage,
manage and track top-ranked digital content publishers for
localized brand marketing campaigns. The company works with brands
of all sizes, offering its package a la carte to represent campaign
size, inclusive of more than 150 million freelance influencers that
hold the key to consumer’s attention no matter what or where any
product or service is being offered.
Want to sell lime beer in San Francisco or flip flops in Miami?
Hashoff has the database of influencers to find the most likely
customers. That explains why the likes of DraftKings, Door Dash,
Veritone, Anheuser Busch-InBev, PepsiCo., Nestle, Post Holdings,
Danone and Keurig-Dr. Pepper, Ulta Beauty, Pizza Hut, Live Nation,
the CW, Scribd, and Novartis, to name a few, have run campaigns
with Hashoff.
The First to Market — and a Big Market It
Is
DGTL is a trendsetter as the inventor of a new social media
marketing category. Called “social influencer advertising” and
“content-to-commerce,” DGTL’s CMS is the first of its kind that
quickly and efficiently converts social media content into web
advertisements. This technology can turn the DSP banner ad market
on its side and command ad dollars in multiple verticals, such as
digital out of home (“DOOH”), signage and broadcast television.
The scale of this market opportunity is difficult to completely
comprehend. Global Industry Analysts estimate the global digital
advertising and marketing size at $350 billion in 2020 and more
than doubling to $786.2
billion by 2026. Drivers include an accelerated shift to
digital advertising brought on by the coronavirus pandemic that
forced companies to either explore the digital space for the first
time or dedicate more resources to the space to try and reach
stay-at-home consumers.
In every facet of technology, investors are looking to get in
front of the next hot trend. Social display ads look to represent
this type of opportunity. According to Spaceback,
which specializes in bridging the gap between social and paid
media, these new ads are “authentic recreations of social media
posts configured to deliver in traditional banner placements,
supporting programmatic campaign goals (awareness, prospecting,
direct response).” Pioneering the market, Spaceback is working on
the first certified content creators for social display ads.
New Ways of Getting in Front of Consumers
DGTL is the new kid on the block focused on disrupting the
space, but DGTL is by no means alone. Companies big and small are
looking for the latest technologies to establish a presence in a
wide range of markets. That is best accomplished by progressive
companies making the most of the latest tech. As it goes, the
market is ripe for consolidation as savvy companies acquire or
partner up to maintain a competitive edge.
Constellation
Software (TSX: CSU)
(OTC:
CNSWF) is an international provider of
market-leading software and services to a number of industries,
both in the public and private sectors. In the past six
months, the company announced the completed
sale of FICO’s Collection and Recovery business to
Constellation’s Jonas Software operating group, a leading provider
of enterprise management software solutions, as well
as the
acquisition of SSP Limited by Volaris Group, a CSU
subsidiary; SSP Limited is a leading global supplier of technology
systems and software for the property and casualty insurance
industry.
Magnite
Inc. (NASDAQ:
MGNI), the largest independent sell-side advertising
platform, last month launched the first-of-its-kind performance marketplace through
a partnership with Quigley-Simpson. Magnite’s robust platform is
optimized for long-form video and supports high-quality advertising
and viewing experiences. With more than one-third of U.S.
households no longer reachable through traditional TV in the
next few years, Magnite’s CTV looks to play a fundamental role in
advertisers’ media plans.
ESE
Entertainment Inc. (TSX.V:
ESE) is a Europe-based entertainment and
technology company focused on gaming and esports. The company
just completed
the acquisition of 100% of the shares of Auto Simulation
Limited T/A Digital Motorsports, an Ireland-based provider of
advanced simulation racing infrastructure, technology and support.
“Closing this deal catapults our digital motorsports business to a
new level, providing us with an industry leading ecommerce
platform, new technologies, global tier 1 partnerships and
additional esports infrastructure,” said ESE CEO Konrad Wasiela.
“The synergies are clear, and our vision to become the #1 global
brand for esports in the Motorsports industry remains”.
LOGIQ
Inc. (OTCQX:
LGIQ), a global provider of award-winning e-commerce
and fintech solutions, has partnered
with GumGum, a global media and contextual intelligence
company, to provide e-commerce marketers a powerful targeting
solution for their digital advertising campaigns. GumGum will offer
its contextual intelligence solution, Verity(TM) through
the Logiq Digital Marketing(TM) platform. This combination
creates a powerful solution that scans the entirety of a digital
media environment, providing a precise understanding of the overall
context through text, imagery, audio and video.
Technology is a key factor in evolution, whether in advertising
or any other industry. As long as technology grows and advances, so
will the services and products offered by companies committed to
being leaders in their fields.
For more information about DGTL Holdings Inc. (TSX.V: DGTL)
(OTCQB:
DGTHF), please visit DGTL
Holdings Inc.
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