The world of marketing is changing, and rapidly. It is not simply a case that the Internet or social media has shaken up the industry. In the world of Big Data, advertisers are relying more on technology, including machine learning, to deliver a far more personalised experience to consumers. It is an industry in transition.
Here we look at four interesting plays on the quiet revolution going on within the marketing industry.
#1. Next Fifteen Communications (LON: NFC)
Next Fifteen Communications is a global marketing and communications group providing communications services across the world. Since its formation in 1981, the company has grown to have more than 2,000 employees in 15 locations across the globe and have a market cap in excess of £1 billion.
Last month, the UK-based company, which has long pursued a buy and build strategy, confirmed it was in talks to take over advertising and communications firm Engine UK – a company that creates marketing campaigns and experiences for its clients. With a strong track record of acquiring high-performing businesses, Next Fifteen Communications is likely to build on its recent financial successes, with revenues growing by 106% in the last five years alone.
Next Fifteen Communications’ global client base and diverse mix of revenue streams will provide resiliency whilst giving it further exposure to one of the fastest-growing segments of the global economy.
#2. Electric Guitar (LON:ELEG)
Electric Guitar is a London-listed cash shell or SPAC which is on the hunt for opportunities within the marketing and advertising sector. The company provides private firms in the space with the opportunity to go public via a reverse takeover. With the whole process of listing SPACs in London is now looking more expensive due to FCA changes, those already on the market are starting to look more valuable.
In the case of Electric Guitar, the SPAC has been founded by advertising industry veteran John Regan, who is convinced that the ground is shifting under the feet of many international advertising and marketing agencies, with a shift towards technology, artificial intelligence and closer engagement with the end customer. Regan told The Armchair Trader that there is scope with Electric Guitar to build a company with a combination of interesting acquisitions from the private space that could offer bigger agencies the technology tools they will need to succeed in the future.
Electric Guitar is the only SPAC in London we are aware of that is specifically targeting this space. With Regan’s long track record in the advertising industry and his broad network of contacts, it should be interesting to see what sort of deal or deals he comes up with.
#3. Tremor international (LON: TRMR)
Tremor International is an advertising-technology company that provides an end-to-end software platform which enables advertisers to reach relevant audiences and publishers to maximise yield on their content. The company executes across all digital channels but focuses open video format ads on all devices and connected TV (CTV), boasting Amazon, Twitter and Disney as some of its notable customers.
Global digital advertising spend was around $455 billion in 2021 and is expected to grow at a 11.4% CAGR to $700billion in 2025. From this sector, Tremor International has targeted CTV and digital video as its niche, accounting for approximately 80% of its revenue, largely due to the expectation that ad spend in this subspace will grow at a faster pace than the balance of the market.
#4. WPP (LON: WPP)
WPP is a British multinational communications, advertising and commerce holding company which ranked as the world’s largest advertising company as of 2019. WPP operates through three segments: Global Integrated Agencies, Public Relations, and Specialist Agencies, and has established itself as a significant player in these markets, with over 100,000 employees across all parts of the world.
Despite WPP’s upbeat preliminary annual results announcement last month, its shares saw a significant price drop due to the ongoing conflict between Russia and Ukraine. The company reported a pre-tax annual profit of £951 million, against a loss of £2.8billion in 2020, whilst net revenue increased 12.1% to £10.4billion on a like-for-like basis, representing its fastest organic growth in two decades. However, the London-based firm’s latest financial update was largely overshadowed by Russia’s invasion of Ukraine, where WPP has around 200 staff, casting a shadow over the company’s future financial success.
