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This week we spoke to John Regan, who is CEO of Electric Guitar (LSE:ELEG), a cash shell that has just been listed on the London Stock Exchange. The company has been listed to pursue one or more acquisitions in the rapidly changing world of digital advertising.

The premise behind Electric Guitar plc is to exploit opportunities in the world of digital advertising, as it evolves to meet new demands around privacy and customer interaction. Regan, who is a veteran of the advertising and data industry, sees the big platforms like Google (Alphabet) and Facebook (Meta) changing the way they do business to stay ahead of new privacy regulations.

This is changing the way advertisers can work – e.g. Google is planning to drop the use of third party cookies, some 70% of the entire browser marketplace (Microsoft is considering doing the same). These companies now have tremendous control over the advertising market, so advertisers are having to look at new ways to deal with data.

Technology is playing a bigger role in the type of experience the consumer has when interacting with advertisers. Market leaders have been using that data to change the way they interact with customers. Regan calls it “a seismic shift”, with the advertising industry shifting away from content to the creation of actual utility. It is a move away from the creative aspect to data.

Data is now much more critical and the skills required to create a 360-degree view of each consumer and respond to that in a contextual way are more important than ever. Those skills and expertise exist, but outside advertising. Now they have to come together with the creative firms, and this is where the opportunity lies for investors.

More consumer control over data

Another big theme is going to be allowing the consumer to have more control over their own data and who gets to use it. Consumers will only be providing data to brands they trust.

The team at Electric Guitar see a considerable opportunity in putting together a set of businesses in the space that can be complementary and effective in merging the skills inherent in both data and advertising. This should include data businesses which can deliver global coverage, but also businesses with advertising technology (e.g. programmatic media). The intent is to create a seamless service.

As a cash shell, Electric Guitar is not permitted to discuss any specific corporate targets until it makes an actual acquisition, but it looks well-placed to tap into some of the fast growth opportunities that exist within this sector.

Agencies in the space still say they lack the data skill to build the appropriate consumer profiles. Here at The Armchair Trader we think Electric Guitar has the scope to build a very interesting business that will be sought after by players in the advertising space who will realise they are still focused on the optimisation process. Regan says this represents a very limited view of what’s going on.

“The reason this was not done in the past is because it wasn’t possible,” Regan says.

Solutions like these will be appealing for not just end advertisers, but also agencies. It’s what Regan calls “a hybrid situation.”

Related

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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