Image via PhotoAteller/Flickr CC
Jinglz, Inc., (the “Company”), a growing ad tech firm based out of Boynton Beach, Florida is poised to become the largest disruptor to the mobile and online ad markets in the history of the industry. After the successful market testing of their flagship service, a mobile app designed to gamify the ad experience, Jinglz is positioned to become one of the largest players in the $45 billion and growing mobile ad market space. Mobile and video advertising, which has recently come under fire for being irritating to users and ineffective for advertisers due to the rise in ad blocking and ad skipping features, is ripe for disruption. And Jinglz is uniquely positioned to lead in this rapidly expanding industry for several reasons:
- Massive size and projected growth of the online and video ad marketplace
- Currently ineffective methods for reaching consumers
- User validated and market tested product
- Robust revenue and gross profit forecasts
- Inherently valuable intellectual property
- Digital business model with essentially limitless scalability
- Prime candidate for acquisition or IPO
According to eMarketer’s latest forecast, digital ad spending will reach $83 billion by 2017 in the U.S. alone, an increase of 16%. Mobile ad spending makes up approximately $45 billion in 2017, and is projected to nearly double to $86 billion by 2020. According to Ad Age, total digital ad revenue surpassed TV for the first time in 2016, growing by 22% over the previous year and keeping with an 8-year trend of consistent growth. Research compiled from several reports by V12 Data show that mobile advertising is expected to make up 70% of all digital ad spending in 2017, with mobile ad spending alone surpassing TV by 2019. To quote their offering page on StartEngine, “The writing is on the wall: The future of advertising is digital.”
However, the online mobile and video advertising market is facing some serious problems right now. According to a study by IPG Media, 65% of people skip online video ads as soon as they get the chance. Another study done by ORC International, in conjunction with Miriad, found that 76% of people surveyed reported blocking ads online and skipping traditional TV ads. Video advertising is even worse, with 90% of people skipping pre-roll ads appearing before the video began. Experts estimate that in the U.S. alone, most people are exposed to between 4,000 and 10,000 ads per day. But despite the overwhelming amount of exposure, surveyors found that 68% of people can recall no more than 5 ads they’ve seen in the past week. Juniper Research calculated that approximately $27 billion of ad spending will be lost by 2020. Online ad publishers are clearly struggling to find ways to make their advertising dollars more effective, and Jinglz offers the solution to their problems.
What makes Jinglz so unique is their novel approach to delivering ads. After downloading the app, users are prompted to sign in using an email or social media account and provide basic demographics. Once in the application, users can watch a short ad, usually around 30 seconds and will be entered into a drawing to win cash prizes. The prize drawing system is extremely transparent, displaying the dollar amount of the reward and the number of users in the drawing. Users will be able to redeem in-game currency in exchange for gift cards, cash rewards or a donation to their charity of choice, which Jinglz will match. Users can enter additional drawings by watching a new ad every hour. And because each viewer has an account, Jinglz can collect valuable market data that can be used to further increase value for both the viewer and the advertiser. This gamified approach to viewing advertisements increases viewer engagement, making it fun for the user and delivering greater product recognition for advertisers.
The key difference between how Jinglz will initially generate ad revenue as opposed to other digital ad networks is a function of price and quality of engagement. Jinglz app technology utilizes the facial recognition features found in most smartphones to verify whether the user actually watches the ads, and pauses the video if the user looks away, turns down the volume, or puts the phone down. The user knows they are going to see an ad, they want to be a part of the ad experience, and they are rewarded for their time and attention. Instead of “tricking” the viewer into watching an ad, Jinglz users are willing participants in the ad experience and thus delivers a better quality of engagement to their users and a premium price to their advertisers.
To determine how users would respond to this new method of ad delivery, the Company conducted proof-of-concept test in 2016 which yielded overwhelmingly positive results. With a test user base of approximately 15,000 users, Jinglz delivered upwards of 1.4 million video ads with verified views. Users were willing to watch several videos per day during the proof-of-concept phase, and actually hit the ceiling on the ads the Company could deliver to them daily, proof that the model was in fact something consumers wanted.
The proof-of-concept phase was also critical in creating the Company’s financial projections. The test phase data was used to create conservative financial projections based on $0.15 in revenue per view.
Management calculated the cost to acquire a user to be $1.00, and is projecting $0.15 per view in revenue. Since the average user watches 10 videos per day the Company can recoup its customer acquisition costs inside of a single day.
Operating costs, like salaries, wages, and customer service would be very low due to the Company’s model shifting those expenses to the ad agencies. The Company is also planning on generating future additional income by implementing their patent pending emotion detection technology, building data products by collecting feedback and reaction data, and developing a more diverse network of mobile apps that utilize their technology to deliver ads.
The Company’s intellectual property is if considerable value as well. Once implemented, their emotion detection technology will be able to detect the emotions and reactions of the viewers watching their ads, a huge value boost for both users and advertisers. When the patent clears, technology could be licensable, and management has stated they are willing to explore the shareholder value in licensing.
Due to the disruptive nature of Jinglz’s business model and explosive growth of the digital ad industry, there are three potential exit strategies for shareholders:
1. Private Marketplace
A listing on a private marketplace such as StartEngine Secondary, SharesPost, or Nasdaq Private Market would provide semi-liquidity for shareholders. Billions of dollars in shares of tech companies like Facebook (FB), Uber, and Snapchat (SNAP) have traded or continue to trade on private marketplaces prior to their IPOs. See “StartEngine’s new Secondary Market™ extremely disruptive to capital markets”.
2. Initial Public Offering
Once Jinglz becomes more widely known and sales are high, the company would be in a great position to IPO. An IPO has the advantage of retaining existing management and product development teams, and generating dividends for the original investors. The disadvantages to an IPO are company’s financial reports being made available to competitors, and equity valuation being exposed to the whims of the stock market rather than fundamental revenue or asset-based calculations.
3. Acquisition or Merger
Based on sales performance and/or user base growth, Jinglz could be acquired by a larger media such as Facebook (FB), Google (GOOG), Yahoo (YHOO), or possibly a gaming publisher. Media companies such as Valpak (Cox Media) and Publishers Clearing House could also be a potential acquirer.
Presently, Jinglz is raising $1 million at $1.00 per share, a post financing valuation of $17 million. The funds are to be utilized for working capital and preparing for the further scaling of Jinglz app and business. The modest current valuation is critical for comprehending the potential returns Jinglz could generate. In the event of an IPO, shareholders could expect to see their positions increase by multiples of 50x or more as most large investment banks don’t do IPOs at less than a $1 billion valuation. In the event of an acquisition by a tech giant or major media company, similar valuations could be expected.
The video below entitled “Jinglz is a Billion Dollar App” which was produced by Trophy Investing contains additional information about Jinglz. To invest at least a minimum of $100 in Jinglz and additional information including ongoing research coverage of the company is available at Trophy Investing.
Trophy Investing is a member-based investing community which excels in identifying the shares of startups and early stage companies that have the potential to multiply in price within three to five years after investment. Membership to Trophy Investing is FREE.
Read Next
