engage:BDR stays positioned for growth in the $US130bn digital advertising market
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Special Report: The company has taken advantage of the disruption to increase cash, cut costs and onboard new customers.
For programmatic advertising business engage:BDR (ASX:EN1), the disruption caused by COVID-19 has provided a unique opportunity to strengthen its business model and position for further growth.
In a market update this morning, the company highlighted that cash on hand had increased by almost 50 per cent in the month of April, to $US2.4m.
Along with a successful application for $690,000 from the US government’s payment protection program, the business has also taken a disciplined approach to reducing operating costs as the US economy navigates the worst of the pandemic.
And in terms of conditions on the ground, CEO Ted Dhanik told Stockhead that it’s still “business as usual” as engage:BDR looked to build out multi-channel revenue streams for its programmatic advertising service.
“We’re still focused on the same things, but we’ve seen an opportunity to onboard new revenue streams quicker than we ordinarily do,” Dhanik said.
“Companies we haven’t been able to talk to in years have now opened up. We’re finding a lot of companies in the space are more welcoming and open to partnerships
“So there’s a lot of incremental opportunities and we’re positioning ourselves for when markets do recover, we’ll be much stronger from a revenue standpoint than before this disruption.”
With April marking the first month of a new quarter, Dhanik highlighted that it was typically a quieter period for advertising firms, as budgets rolled over and ramped up towards the end of Q2.
Despite that, engage:BDR has booked $US835k in revenue for the month so far, with a material increase in activity over the past week.
And Dhanik cited that shift as evidence that “markets are starting to open up again”.
“What we’re trying to do is effectively beat that curve, by doing things to compensate for that change, and raise enough momentum to eclipse the broader slowdown in business activity.”
Looking ahead, Dhanik remains focused on the broader strategic goal – to cement engage:BDR’s first-mover advantage as global advertising budgets shift towards targeted, programmatic solutions.
He cited the example of listed peer companies in the US that were trading at multiples of up to 20x revenue, as markets ascribed values based on the broader direction of the industry.
“The reason those companies are valued that way is because they represent the advancement in that type of advertising technology,” he said.
Data from statista.com showed digital advertising spend in the US market reached $US130bn in the 2019/20 financial year.
“All advertising budgets have moved to digital. It’s about creating an omni-channel solution that’s effective across multiple devices – mobile, desktop, smartTV,” Dhanik said.
“And we’re on the same path — the tech is ours, it’s proprietary. We own it, we built it and we wrote it. So I think the key point is that this is the future of all advertising, and we’re at the forefront of that shift.”