Adveritas poised for ‘rapid’ growth underpinned by record balance sheet and strongest pipeline to date

Adveritas TrafficGuard ASX AV1 advertising fraud digital 2020
Adveritas’ TrafficGuard product provides a holistic solution for detecting and preventing ad fraud which cost advertisers about $42 billion last year and is forecast to grow to $100 billion by 2023.

Ad fraud mitigation software developer Adveritas (ASX: AV1) is positioned to rapidly increase its business scale and global reach, with a record $8 million balance sheet to underpin its plans.

Through its main product TrafficGuard, Adveritas delivers software as a service ad fraud mitigation solutions.

The SaaS TrafficGuard product provides a holistic solution for detecting and preventing ad fraud which cost advertisers about $42 billion last year.

With global digital advertising spending expected to reach US$236 billion this year and continue rising, advertisers are increasingly looking for anti-fraud options.

Adveritas offers consumers its solutions via three pricing models: Freemium, Land and Expand, and Long-dated Contracts.

Among its current clients are multi-billion-dollar businesses LATAM super-app Rappi and APAC super-app GO-JEK.

Other well-known customers include Ladbrokes (a subsidiary of global giant GVC holdings worth around £6 billion), CrediNord, Shaver Shop, and Jumbo.

Increasing demand for ad fraud mitigation solutions

With advertisers losing billions each year, demand is on the rise for ad fraud mitigation solutions such as Adveritas’ TrafficGuard.

At Adveritas’ annual general meeting this week, chief executive officer Mathew Ratty pointed out TrafficGuard is the “world’s first full funnel solution” that enables clients to make informed decisions with their marketing budgets.

It operates across a client’s entire digital ad spend including mobile, desktop, programmatic, and Google ads.

As well as this, TrafficGuard analyses every stage of the consumer’s digital marketing journey and is able to determine whether the ad engagement is genuine or fraud.

The SaaS product also reports across multiple channels with clear transparency along the entire consumer journey.

This is compared to traditional vendors which mostly offer detection only solutions and operate in one channel.

With global companies around the world spending on multiple channels such as desktop, mobile and Google, TrafficGuard offers a “one-stop-shop” option to protect across all channels at the same time.

Global push to meet mounting need

To drive the company’s entry into global markets, Mr Ratty pointed out Adveritas had secured new sales personnel across North America, Europe and Asia.

Additionally, prospective customers are currently running trials and come from high-spending sectors such as insurance, money transfer, on-demand services, retail, automotive and betting.

Strategic partnerships have been formed, which have already “generated strong interest” from ad agencies via a referral partner program.

Mr Ratty said this has already introduced TrafficGuard to a wider client base.

Further strategic partnerships have been planned with digital agencies to build the company’s momentum for rapid expansion.

One of these partnerships is with Google, where discussions are “advanced”. Adveritas and Google are looking at combined go-to-market strategy of TrafficGuard’s pay per click product.

It is anticipated customers will be able to consume TrafficGuard’s solutions with “minimal effort” through the Google Cloud Marketplace.

High profile enterprise level clients have also been locked-in including a $100,000 contract with the Australian subsidiary of LSE listed GVC Holdings.

This contract alone has led to expansion opportunities, with discussions underway about rolling-out TrafficGuard across the wider group.

Sales, education and PR strategy

As 2021 advances, Adveritas will boost online marketing via Google, Facebook, LinkedIn and other traditional channels to further accelerate global adoption of TrafficGuard.

The company anticipates this strategy will increase online sales.

As well as the marketing activities, Adveritas plans to grow awareness and understanding of its product by publishing white papers and case studies.

Backing up this multi-pronged push is ongoing cultivation of the company and technology’s reputation.

During the last quarter, Adveritas ramped up public relations activities.

This resulted in industry leading journals such as eMarketer, The Drum and Forbes Magazine publishing content on TrafficGuard.

The Australian Financial Review also placed TrafficGuard eighth on its list of Australia’s Most Innovative Companies.

In addition to gaining positive publicity in key publications, TrafficGuard has won several industry awards, beating multi-billion dollar firms competing for the same awards and has been shortlisted for several others.

Freemium leads to higher fee-paying customers

To facilitate access and awareness of TrafficGuard, Adveritas introduced the Freemium product.

During the September quarter, Adveritas revealed an 80% increase in Freemium subscribers compared to the June quarter.

The Freemium service provides fraud detection only – up to about $2,500 of reportable ad spend.

Clients who want prevention then transition to the Land and Expand product, and, from there, Long-dated Contracts.

Paying customers climbed by 25% during the September quarter and Adveritas attributed the higher number to a strong conversion rate from Freemium to fee paying.

By the end of the September quarter, Adveritas had 50 paying clients – up substantially from three the previous year.

As 2021 advances, Adveritas’ strategy is to increase adoption of Freemium – resulting in more fee paying conversions.

Healthy bank balance to underpin growth plans

Earlier this week, Adveritas director and tech entrepreneur Mark McConnell put more of his own money behind Adveritas and its growth potential.

The director bought an additional $1.12 million shares in Adveritas on-market – lifting his stake in the company from 14.8% to 17.1%.

This follows a $2 million subscription in October and a $70,000 share purchase at the start of November.

Adding to the company’s bank balance was FY 2020 revenue of $1.23 million – representing a 91% rise on FY 2019 levels.

In the annual general meeting, Mr Ratty said Adveritas was moving forward with a record balance sheet of around $8 million and hinted at increased enterprise level contracts being signed in the 2021 March quarter.

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