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PubMatic Offers Ample Opportunities for Growth, Find Out How!

05 Feb PubMatic Offers Ample Opportunities for Growth, Find Out How!

PubMatic, Inc. (NASDAQ: PUBM), a Company providing cloud-based programmatic advertising transactions, raised $118 million through a successful IPO in December 2020. The Company intends to maximize the reach and potential of their clients digital advertising strategy and improve their ROI by helping them engage with the right customers across formats and devices.

PubMatic Inc (NASDAQ: PUBM)

Market Cap: $2.40B; Current Share Price: 50.22 USDChart
Data by YCharts

Company
The Company generates over 134 Billion daily ad impressions and more than 1 Trillion advertiser bids per day by using a differentiated approach to delivering monetization and greater ROI for its clients. PubMatic develops and creates omnichannel monetization opportunities though purpose-built solutions that leverage proprietary algorithms and valuable insights across devices and ad formats.

PubMatic’s programmatic advertising solutions for Publishers include enterprise management tools for header bidding, private marketplace management solutions, real-time bidding technologies and ad-quality monitoring that are customizable according to customer requirements. The Company is emerging as a front runner for digital media buying strategies through a plethora of solutions such invalid traffic vetting, setting up targeted and controlled campaigns ensuring high match rates and improved ROI on advertising.

The growth of digital advertising has revolutionized the scale and reach of marketing, compelling publishers and ad-developers to seek advanced solutions for reaching their target audience and maximizing monetization opportunities. PubMatic understands this need and offers support in the form of PMP and PMP-G, troubleshooting and optimization strategies.

On the Product front, the Company’s OPENWRAP: PREBID As Service is pre-integrated with Identity Hub and is one of PubMatic’s leading ID management tool being used by more than 100 clients globally. PubMatic is seeking to revolutionize OTT, through its programmatic OTT solutions, which can maximize yield, optimize advertising and deliver TV-like experience by reducing latency and buffering. OpenWrap SDK, a header-bidding solution is lightweight and supports Prebid. One SDK can help integrate with demand partners, is scalable, runs auctions in under 200 ms and most importantly use cloud-based User interface to manage demand partners.

The Company’s Audience Encore is a data a platform that brings together first-party data publishers and advertisers. The data is uploaded by data providers on the platform, using a deal id and can transact programmatically in private or open marketplaces.

Image Source: Company

Industry
The advent of the smartphone, growing internet penetration, digitalization of the economy and more importantly the COVID-19 pandemic, have resulted in an increase in the time spent online by individuals. Mobile phones are now omnipresent, and many people are increasingly using them not only for entertainment but also for work and essential services. This has led to the creation of a humongous marketing opportunity for advertisers. Facebook and other social media platforms have demonstrated the potential of targeted digital advertising, and the trend is here to stay as the world moves towards rapid digitalization. According to Statisca, the Global programmatic advertising market was valued at USD 106 Billion in 2019, and will reach nearly USD 147 Billion  by the end of 2021.

Programmatic advertising helps advertisers maximize their spend by targeting a specific set of audience who are more likely to engage with a brand. They facilitate the creation of effective campaigns that convey relevant messages to their targeted subset of audiences. In addition, companies can buy and bid for advertising in real time and create customized advertising to appeal to their audience, based on the insights obtained from understating customer preferences.

A report by ResearchandMarkets estimates that Real Time Bidding will reach US$33.7 Billion by 2027, growing at a CAGR of  30.7%  from US$5.2 Billion in the year 2020, while Private Marketplace segment is likely to grow at 28.6% CAGR for the next 7-year period. In the U.S alone the market for programmatic advertising is projected to be worth US$1.6 Billion in the year 2020.

Long-Term Prospects
PubMatic is experiencing significant tailwinds in the form of rising global digital ad spends, which are likely to grow from $325 billion in 2019 to $526 billion in 2024, at a 10 percent CAGR (Source: eMarketer, Magna Global report commissioned by PubMatic). Two main factors driving this growth are an increasing number of customers who are joining the digital bandwagon and the rising amount of time spent on their devices. The report also shows that the global mobile programmatic ad spend will increase from $102 Billions in 2019 to $175 Billion in 2025, registering a 11 percent CAGR.

The Company believes that the burgeoning demand for programmatic header bidding, the growing popularity of OTT/CTV and rising concerns over consumer data privacy will drive its growth. Furthermore, PubMatic uses cloud-based infrastructure for all its digital advertising solutions and has adopted a transparent business model with utmost importance to security and privacy. The Company has emerged has a leader in buyer ad spend consolidation based on its attributes such as superior monetization and omnichannel platform.

PubMatic caters to leading global organizations such as abc, ebay (NASDAQ: EBAY), Chegg (NYSE: CHGG), Microsoft (NASDAQ: MSFT), Nasdaq, Forbes, Quora, WebMD, Dictionary.com and Verizon (NYSE: VZ) to name a few. The Company is also experiencing strong momentum in its Mobile and Video segment through its OPENWRAP SDK and OPENWRAP OTT.

Financials
In Q3 2020, the company generated $127 million in revenue with a 33% y-o-y growth. The Company has been generating positive cash flow from operations for four consecutive years. PubMatic reported a 110 percent net dollar-based retention for Q3,2020. Its usage-based model results in greater revenue predictability. The Company has consistently delivered cash growth through investment in automation, optimizing the usage of its infrastructure, leveraging its offshore R&D and by investing on capturing market share.

PubMatic is focused on profitable publishers and ad impressions that is helping the Company achieve higher customer retention and spend consolidation on its platform. This provides additional opportunities to upsell various other formats such as video, mobile, CTV.

In Q3,2020, One of the Company’s biggest account was Verizon, which contributed to nearly 63 percent of mobile and video advertising impressions and revenues. The company reported revenues of $93 million in the first nine months of 2020, an increase of 16 percent Y-o-Y.

Key Takeaways

  • PubMatic has a strong global presence with operations in North America, Asia Pacific, and Europe, the Middle East, and Africa (EMEA) and intends to expand it further through investment in relevant sales, marketing and infrastructure. In Q3,2020, the Company served nearly 1100 publishers and app developers, including clients such as Verizon Media Group and News Corp and reached over 68,000 advertisers per month in 2020. A strong net dollar retention rate of 110% for Q3,2020 shows the strength of its relationships with existing clients.
  • Connected TV(CTV) spend is estimated to be worth over 14 billion USD by 2023 as per statista. CTV advertising spend is gradually increasing, with CTV now viewed as the future of digital advertising. Pubmatic is staking its claim with an increased focus on differentiated products that cater specifically to this market. In June 2020, the Company launched a new programmatic OpenWrap OTT that enables OTT and CTV ads to run seamlessly and provide a “TV-like” experience. The product also fixes ad-pod challenges with frequency capping, competitive exclusions and back-to-back ads.
  • Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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    References

    https://www.statista.com/statistics/275806/programmatic-spending-worldwide/#:~:text=Programmatic%20ad%20spending%20worldwide%202019%2D2021&text=According%20to%20recent%20estimates%2C%20programmatically,by%20the%20end%20of%202021.

    https://www.businesswire.com/news/home/20200828005210/en/Global-Programmatic-Advertising-Platform-Markets-2027—ResearchAndMarkets.com

    https://investors.pubmatic.com/static-files/6228f979-5cff-4e12-abbe-84fd9abd05e7

    https://www.exchange4media.com/digital-news/pubmatic-is-serving-close-to-63000-individual-domains-and-apps-worldwide-110462.html

    https://www.adnews.com.au/news/pubmatic-releases-ott-and-ctv-solution-to-enable-better-video-streaming-ads

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