Programmatic ad industry serves up additional integrations for engage:BDR

Engage:BDR (ASX: EN1) has issued an interim trading update as the advertising company continues to extend its programmatic integration spree, which now stands at 191 for the year.

The addition of new partners means the company is continuing on the incremental expansion strategy it established earlier this year, with the likes of Admixer, Advenue, AMLI Media, Axonix, Clean Media, Criteo, Inmobi, LoopMe, Mediaforce, Mintegral, SomeSpider, Velis Media and Vidstream, now added.

The successful run means the company is just three integrations away from the 2019 annual milestone set by its management team in February this year, achieving 88% of its ultimate annual goal and more than doubling its own Q2 2019 target.

Cornerstone AdCel performance

One of the key highlights in the interim update was the performance of AdCel, a company engage:BDR acquired in July 2018, in a bid to create synergies with the company’s products and mobile performance strategies.

As a unit, AdCel’s daily revenue has “more than doubled” at a rate of 230% since April 2019’s figures. The recent increase in revenue is attributed to new partnerships which have gone live over the past week.

According to AdCel chief technology officer Denys Kravchenko, the lean team and expense structure has allowed the revenue to rapidly increase without an associated significant cost hike.

The company is now targeting its revenue to “double again” by the end of June given the fact that the current revenue increase is based solely on test traffic, at 10% scale of each publisher.

Once that goal is reached, AdCel will also be “run-rate profitable”.

AdCeL’s light-weight software development kit (SDK) integration enables publishers to protect their users with smart logic, thereby preventing auto-redirects and accidental clicks.

Another important feature allows publishers to track every ad and manage and report ad quality issues to their buyers.

Mr Kravchenko said the platform was now a “one stop solution for publishers of all sizes”.

“Now existing and new publishers can utilise our ML powered algorithms to monetise their supply through their own direct deals on top of existing 60-plus demand sources AdCel has.”

“The current combination of our sophisticated ML models and smart header bidding allows us to build the most effective ad session publisher planned for the users. Meanwhile, publishers can focus on what they are doing best – creating great products users will enjoy,” Mr Kravchenko added.

Incremental technological improvements allow engage:BDR to maintain its growth rate as part of a mushrooming programmatic advertising industry.

Industry research company eMarketer states that the company’s addressable US market size will be approximately US$70 billion (A$101 billion) and reach US$98 billion (A$141 billion) by 2020 on a global basis.

These estimates refer to programmatic ads delivered via desktop, mobile and TV screens – platforms, which engage:BDR is focusing on first and foremost on its sequential expansion drive.

Additionally, Mediakix has estimated that engage:BDR’s addressable market size for influencer marketing will reach US$10 billion (A$14 billion) by 2020 with use of artificial intelligence and influencer marketing being a “rare and key differentiator”, according to the influencer marketing agency.

Technical supremacy

As part of the interim trading update, engage:BDR and AdCel have also revealed a key avenue to achieve what they call “hyper-growth” in the coming months that will enable the pair to seize market share away from competitors.

According to engage:BDR, it is currently evaluating term sheets for debt facilities which would enable the company to pay publishers immediately upon receipt of their invoices.

In other words, to prepay their forthcoming business transactions that will save time and generate immediate cash flow.

“This would significantly improve publishers’ cash flows and prompt migration away from their existing platforms, bringing volumes of incremental revenue to engage:BDR,” the company said.

Engage:BDR has declared that “this game-changing opportunity will initiate hyper-growth stage for the company and enable it to seize market share away from its competitors in 2019.”

More publishers and buyers are expected to compound revenue and profitability with the new debt facility expected to “broadcast aggressive payment terms to the industry through the company’s own programmatic and social media influencer platforms.”

Financial improvement

In terms of financials, engage:BDR has likewise reported incremental growth with mid-month revenue scaling up to A$48,000 per day.

The company is aiming in the next phase to be achieving A$65,000/day by the end of June with gross margins forecast to remain consistent at around 40%.

Furthermore, operating expenses have been reduced significantly with EBITDA figures published last week proving that engage:BDR’s financial improvement is running in parallel to its technical expansion.

Engage:BDR’s US-focused business generated an EBITDA figure of A$56,000, an 85% improvement over the same period last year for the month of April.