Many investors have difficulty understanding the changes occurring in advertising today. We know about Google, Inc. ($GOOG), we know about Facebook, Inc. ($FB) and we know via their soaring share prices and quarterly profits that the world is changing. But how these giants are making money is a mystery to most, and the new world of digital advertising is even less understood and more opaque.
Take a look at this Nestea Video and you will understand everything you need to know about digital advertising and how it works. More specifically, you will better understand how they create easy to use platforms to launch those annoying, unavoidable ads. No matter how much you hate them, the point remainsthat everyone is looking at them.
Shares of TubeMogul, Inc. ($TUBE) are rebounding today, up 12% as we head through the lunch hour. However, the ride has been painful for many investors over the last few quarters, as inconsistent revenue causes gyrations in share price, rallying shares into the end of 2014 and dumping all those gains back as we started 2015. In short, this is no place for the weak of heart or wallet.
TubeMogul operates as an enterprise software company for digital branding. It offers a cloud-based platform that enables advertisers to plan, buy, measure, and optimize video advertising from a single platform – a really cool concept.
A Choppy Market that Requires Bold Investing
Shares made a nice run in Q4 2014, trading higher from $9 to $24 into yearend, but went into a death spiral starting 2015 giving everything back in Q1 2015. This is very difficult to sit through if you are a retail investor, and even experienced portfolio managers would have difficulty not getting whipsawed around quarterly reports. This is completely normal for a new industry, but it makes it difficult to take the leap of faith needed to be in for the long haul.
The company provides its platform through two offerings: Platform Direct, which allows advertisers to run campaigns through a self-serve model; and Platform Services, which allows advertisers to specify campaign objectives. Thus, flexibility is growing for digital advertising, and I think this is an industry with an undersized growth multiplier.
Once they smooth the lumpy revenue and grab some acceptance from both retail and institutional investors, stocks like TubeMogul will eliminate the ups and downs that keep turnover high among shareholders and employees who have much of their future tied up in company shares alike. As I mentioned before…this is no place for the weak.
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