Authorised Investment Fund sets sights on increasing exposure to programmatic advertising market

Investment house Authorised Investment Fund (ASX: AIY) will up its stake in its investee company Asian Integrated Media (AIM) and increase its footprint in the multi-billion dollar programmatic advertising sector under a new joint venture with Ambient Digital Group.

AIM and Ambient have extended an invite to Authorised Investment Fund to participate in the new joint venture.

As part of the new venture, Authorised Investment Fund’s interest will be 30%.

Subject to a PDF board approval, the parties have proposed a non-binding term sheet with consideration for Authorised Investment Fund’s 30% interest set to be provided through a placement of 5.2 million Authorised Investment Fund shares at $0.30 each, with further attached options on a one-for-one basis exercisable at $0.40 per option.

The new venture is aimed at providing global highly targeted, data-driven programmatic online advertising campaigns, with emphasis on the travel, luxury goods and private wealth sectors.

Digital media company Ambient Digital, which provides services to advertisers in six major South East Asian markets with a combined reach of 580 million people, has extensive experience in running targeted online campaigns using proprietary technology supported by beneficial third-party trading relationships.

Meanwhile, AIM has long-established experience in the business sectors enabling the joint venture set to tap into the company’s valuable client list.

AIM chief executive officer Peter Jeffery said he was very excited about the new partnership.

“Through our relationships with airlines and the travel industry we are now in a position to offer even more channels of engagement and through our association with the Ambient Group we are able to facilitate this,” he said.

Partnership advantages

Conservative investment projections by AIM and Ambient anticipate potential pre-tax revenue of US$2.7 million in 2019-2020, US$5.1 million in 2020-2021 increasing to US$7.1 million in 2021-2022.

In addition to healthy revenue returns, the collaboration will give the companies a solid footprint in the growing programmatic advertising sector with Ambient having invested more than US$2 million in proprietary programmatic technology.

In addition, AIM and Ambient have created a bespoke programmatic digital advertising company, called Travel Elite, providing brands with the opportunity to target both international and domestic travellers.

Travel Elite was launched in China at the end of 2018, permitting access to the lucrative China travel market by utilising programmatic advertising channels, including the mobile dominant China market such as: Weibo, Baidu, Tencent, JD and Toutiao.

Programmatic media market

Programmatic advertising is a term used in digital marketing to describe computer-based automated buying, selling, placement, and optimisation of digital advertising.

The market is currently worth around US$70 billion and is growing at a rapid rate.

According to industry sources WARC and Zennith, the sector could reach US$84 billion this year which would account for 65% of all financial expenditure on advertising in digital media.

By 2020, Zenith forecasts advertisers will spend US$98 billion on programmatic advertising, representing close to 70% of digital media advertising spend.

‘Breathtaking’ opportunity

Authorised Investment Fund first invested in AIM in April last year after acquiring a 25% stake.

The purchase reflected Authorised Investment Fund’s business strategy of accelerating its growth in emerging disruptive digital technologies.

Authorised Investment Fund chairman Ben Genser said it was wonderful to have the opportunity to increase that investment and be part of Ambient and AIM’s new joint venture.

“The combined force of AIM and Ambient under the current service provider relationship between AIM and Ambient is already making major inroads into this highly specialised and lucrative market place through the Travel Elite platform launched by AIM in January 2019,” Mr Genser said.

“To now have the benefit and potential to be included in a much bigger and broader series of targeted marketing and programmatic campaigns and initiatives to capture a potential significant portion of the immense shift toward multi-billion dollar digital and programmatic ad spend in other programmatic sectors is nothing short of a breathtaking opportunity.”

“We look forward to potentially broader, more lucrative and positive outcomes from Authorised Investment Fund’s 30% investment in the AIM/Ambient/Authorised Investment Fund initiative,” Mr Genser said.