Facebook’s Strong Advertising Revenue Is Putting These Advertising Stocks On Investors’ Radar.
Digital advertising stocks are red hot in the stock market today. You have seen Snap’s (NYSE: SNAP) strong first quarter last week. Now, we receive another validation from Facebook’s (NASDAQ: FB) first-quarter results, in which revenue rose 48% from a year ago. The social media giant also attributed the significant increase of its revenue to its advertising business.
Not sure if you agree, but we’ve got a perfect storm here of different forces lining up in the digital ad space. Digital ad spending has boosted social media stocks, proving that digital advertising is a huge business. But on another side of the business, we have ad tech companies that are flourishing as well. These companies help brands and agencies target, deliver and analyze their digital advertising efforts.
A surge in screen time and tech dependence coincided with a rise in Connected TVs (CTVs). According to eMarketer, advertisers spend over $70 billion a year on TV while CTV ads make up just 10% of TV ad budgets. As CTV continues to phase out cable, top advertising stocks like Roku (NASDAQ: ROKU) will steal more and more of the $70 billion pie. As targeted advertising moves beyond social media and websites, TV is expected to be the next big arena. Therefore, if you believe TV advertising is going to take charge, here is a list of top advertising stocks to watch for massive growth opportunities in the stock market now.
Top Advertising Stocks To Watch Right Now
- Magnite (NASDAQ: MGNI)
- The Trade Desk (NASDAQ: TTD)
- PubMatic Inc. (NASDAQ: PUBM)
- Criteo (NASDAQ: CRTO)
Magnite
First up, sell-side advertising platform Magnite is definitely worth a closer look. It is the world’s largest independent sell-side advertising platform which operates across numerous channels and formats, including ads on streaming TV. For those unfamiliar, Magnite is the result of a merger between digital advertising company Rubicon Project and software company Telaria.
In February, the company acquired SpotX for $1.17 billion from RTL Group. This is turning Magnite into an ad tech firm that has a hold on every major cable network and streaming channel. The merger also strengthens the company by creating a cost-saving synergy of $35 million annually. That in turn fortifies Magnite’s position in the ad-based streaming vertical.
Of course, the recent performance of MGNI stock may deter some investors from getting on board. The company’s stock price has shed around 30% from its all-time high. As nothing has changed fundamentally since then, the recent dip provides a nice set-up for investors to buy at discount. After all, the pandemic has dramatically pushed up demand for programmatic advertising. With such bright prospects, will you be adding MGNI stock to your portfolio?
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The Trade Desk
Next up, The Trade Desk is one of the largest independent demand-side platforms (DSPs) globally. For those unfamiliar, the company helps brands place their ads strategically within various media forms. The Trade Desk generates revenue by taking a spread on the advertising slots that it purchases on behalf of brands that use its platform.
There are a few tailwinds that could continue to bring great revenue for the company. First thing is that the CTV advertisement is booming and you can thank COVID-19 for that. Looking at this, brands would certainly have good reasons to adopt advertising on CTV platforms. Furthermore, the company has partnered with Walmart (NYSE: WMT) to launch an expanded version of Walmart Connect. Considering that most Americans shop at Walmart, the synergy between these two could bring in significant revenue for both companies.
Considering that TTD stock has slid from its all-time high of $972.8, would now be a good time to scoop up the shares at a discount? If you are planning to invest in TTD stock as part of your long-term investment, it is still a well-managed business with a massive market opportunity. Just expect some volatility along the way over the long haul.
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PubMatic Inc.
Coming up next, PubMatic is a tech company that develops and implements online advertising software and strategies for the digital publishing and advertising industry. In brief, the company fuels the endless potential of internet content creators. It provides a specialized cloud infrastructure platform that enables real-time programmatic advertising transactions. PubMatic’s purpose-built technology and infrastructure provide superior outcomes for both internet content creators and advertisers.
From its fourth quarter and fiscal year 2020 financial results, revenue came in 64% higher year over year to $56.2 million. Net income for the quarter was $18.8 million and the company also ended the quarter with $101 million in cash. In a note about those who can benefit from Alphabet’s (NASDAQ: GOOGL) decision to avoid using third-party cooking for tracking purposes, KeyBanc mentioned that PubMatic’s products support alternative IDs and first-party publisher data. It could be looking at revenue growth of over 20%.
These impressive financials are likely due to PubMatic’s differentiated market position across the digital advertising ecosystem. The company is currently in the midst of an accelerated digital transformation as more consumers are spending more time online. With that in mind, will you consider PUBM stock as a top tech stock to watch?
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Criteo
Last but not least, Criteo is a company with a strong focus on retargeting products for its customers. The company operates by allowing its customers the option to provide targeted ads for recently viewed items its consumers may want to revisit. The practicer of ad-retargeting is at risk of becoming obsolete as main search engines have all banned third-party cookies on their platform, citing privacy concerns.
While this looked like a major headwind for the company, the company was not sitting idly by. Instead, the company made a smart move of diversifying its business away from retargeting. It now develops software solutions that could help improve media outreach, boost e-commerce volume and etc. Additionally, Criteo has taken part in the Unified ID 2.0 initiative. Unified ID 2.0 is a new approach to identity which replaces third-party cookies and aims to improve privacy on the internet.
On April 28, Criteo announced a first-of-its-kind product that connects first-party commerce data with real-time contextual signals. In particular, this would allow marketers to continue to better target audiences and drive revenue in a post-cookie world. With these innovative developments, would you be betting on CRTO stock?
