If today’s gold is data, and the data of each individual is worth at least $175, then a content management company reaching 100 million people is sitting on a ‘human resource’ of ~$20 billion in proved reserves.
No, it’s not Google.
It’s not Facebook, either.
It’s the future of publishing designed to bypass these digital giants.
It’s the biggest thing in data that you’ve never heard of.
That’s because it operates in the shadows of some of the biggest mainstream news outlets in the United States … such as CNN.
Publishers are struggling. They’re not growing. They’re just surviving. And it’s all because of the mountains of first-party data that they’re not collecting because they don’t have a platform to monetize it.
They’re under immense pressure to grow ad revenues, yet they are beholden to the likes of Google.
And their survival depends on the quiet (until now) rise of new content management and data-collection platforms that can rewrite the rules of who gets rich off of advertising.
That’s where a small, little-known company called Frankly Inc (TSX:TLK, OTCQX:FRNKF) enters the fray, with a data solution that could give the biggest Western publishers the tools they need for digital advertising independence.
Media companies now have a new weapon in their arsenal thanks to Frankly’s innovative digital platform. Offering everything from Big Data style analytics to new methods of monetization, Frankly is the only digital platform of its kind on earth.
There is a $100-billion market for advertising in the U.S., 75% of which goes to Google and Facebook. Frankly aims to shift that percentage by slipping in through the back door of this lucrative market, through the biggest mainstream publishers.
The shroud over data-collection is about to be lifted, and Frankly is the reason why.
#1 This Market Is Ripe Because Publishers Are Desperate
Consider this: The revenue of the global digital advertising market is set to reach nearly $665 billion by 2026. And publishers aren’t getting a piece of this pie. This is the pie that would not only allow them to survive in a world where they have been crushed by giant tech companies like Google—but it would allow them to actually grow, exponentially.
As of Q1 2019, digital ad spending is bigger than print or TV.
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So where do the big mainstream publishers fit into this blowout picture? Nowhere, really. In 2018, Google made $4.7 billion in revenue from news content without actually writing anything.
That same year, the entire news industry together only made $5.1 billion. That’s over 2,000 news publishers united.
And Google doesn’t even produce any news. So, it’s a tough pill for publishers to swallow.
What’s not likely to happen is that some sort of legislation is enacted to level the playing field and make Google give back ad revenue to publishers.
Instead, Frankly Inc. is stepping up to the plate to give publishers of all kinds the tools they need not only to create their ad revenue, but to follow the upside with massive, first-party data collection that, when you add it up, is worth at least $175 per person. That’s a gold mine for publishers who barely stay afloat while Google gets rich on their content.
Are publishers desperate enough to take on Google?
That’s why Newsweek just signed a deal with Frankly that’s designed to help the news major turn the tables.
But it’s just as big a deal for Frankly because it means that Frankly will be running all the information capture operations on Newsweek and doing all of Newsweek’s ad sales. It will grow Newsweek’s ad revenue by tens of millions of dollars, which all goes through Frankly in the end.
For Frankly, this is a $50M, multi-year service agreement with one of the biggest news producers in the world. But it also means first-party data access to Newsweek’s 40 million monthly active users.
This is a milestone in the industry because it’s the first partnership of its kind—ever—to demonstrate the value of leveraging a fully integrated multi-media platform such as Frankly’s.
And it’s not just Newsweek, either.
CNN has jumped on the Frankly bandwagon, too.
#2 Capturing First Party Data, Frankly
Frankly is all about this new-age gold.
No one understands the value of first-party data better than these guys.
If you read between the lines in the Newsweek press release, you’ll see that Frankly has over 100 million monthly active users (MAUs) in its network.
Frankly also has 1,200 digital news, information and entertainment properties across the United States.
That’s exactly why its first-party data capture is so coveted. Essentially, this level of data capture could rival Google and reshape the digital playing field.
There’s data collection, and then there is first-party data collection. They are by no means equal.
First-party data capture is crucial to success in the digital age.
What is it, exactly?
Quite simply, it’s the behavioral, personal and subscription data that your audience shares with you. Behavioral data includes actions and interests demonstrated by your users on your website. There is also data on users stored in your CRM (Customer Relations Management system), and data your users have handed over for subscriptions.
It used to be easy enough to launch ad campaigns using third-party data harvested indirectly from social media platforms or elsewhere—in other words, not first-hand data from your own users.
But the digital space has grown exponentially more competitive, and third-party data is akin to shopping at Good Will, while the real revenue growers are wearing first-party data from Armani.
Publishers can’t really rely on the likes of Facebook anymore for engaging their audiences or driving new purchases.
Privacy scandals and new regulations have made third-party data less accessible.
Now, it’s first-party data or bust. This is the only way to drive personalized, targeted campaigns that build long-term customer loyalty rather than unsustainable one-time purchases. And unlike third-party data, it’s actually compliant with new regulations.
#3 Video Streaming Just Found Its Payday
There’s a ton of high-level, data-driven masterminding going on at Frankly, and one of the most recent saw the company acquire Vemba, which boasts both CNN and VICE as clients.
Imagine taking a video-on-demand asset such as Vemba and turning it into something you can syndicate and distribute to any touch point. Imagine being able to track, manage and monetize that asset …
That’s exactly what Frankly plans to do with the Vemba acquisition.
CNN was one of Vemba’s biggest customers, using it to manage 1100 affiliates. Now it’s Frankly’s.
Frankly will apply its full suite of products to this acquisition.
The significance is this: The entire media world is going streaming. They all need to connect to Apple TV, Amazon Fire, etc. And they’ve all got massive amounts of video footage generated through tons of affiliates and reporters around the world. But what they don’t have is this: A channel of their own to stream it to customers.
And it is gearing up to give them these capabilities at a fraction of the cost of spending millions to launch their own media network.
There’s upside, too. Not only will Frankly give them these capabilities, the company will also create unprecedented media revenue potential for its clients.
Again, all the while capturing that elusive, golden first-party data.
#4 The Tech Team Behind This Data Party
Getting out in front of first-party data and recognizing a gaping hole in the publishing world’s ability to squeeze revenues out of advertising dominated by tech giants such as Google, Facebook, Amazon and Twitter requires some pioneering—and courageous—vision.
Frankly has it.
The lineup of tech and digital media advertising veterans here is a long and impressive one, but you don’t need to go beyond the Chairman and CEO to see why Frankly is set for success:
Frankly’s chairman, Tom Rogers, is no stranger to the world’s biggest publishers. Not only is he a former Senior Counsel to the US House of Representatives Telecommunications, Consumer Protection and Finance Subcommittee, but he’s also:
- Former president of NBC Cable
- Former Executive VP of NBC, and its former chief strategist
- He oversaw the creation of MSNBC
- Former Chairman and CEO of Primedia (NYSE:PRM), the leading targeted media company in the US in the early 2000s
- Former CEO of TIVO…
And the list goes on to make him a major player across all the right fields from the genesis of cable to today’s first-data largesse.
Frankly’s CEO, the veteran digital media executive Lou Schwartz, is nothing short of a pioneer in internet video management and notably oversaw the development of digital platforms at WWE—which boasts the first over-the-top (OTT) 24.7 streaming network.
#5 100 Million Active Users And Growing
A data-hungry content management company that reaches 100 million people is a formidable force.
Now it will reach more.
It’s just signed a multi-year deal with media giant Newsweek that could boost revenues for the media giant by up to $50 million.
The well-timed acquisition of Vemba video streaming not only provides the missing piece of the puzzle for harnessing first-party data and channeling ad revenue for tons of media outlets with nowhere to turn, but it was also a bargain that could bring in $1 million in additional revenues.
It may well be time for Google to start worrying about this tiny data hog that no one’s ever heard of.
Five other companies looking to take advantage of the new digital world:
Industry giants like CBS (NYSE:CBS) are taking drastic steps to weather the storm. While it is a television staple in households across the United States, it has rapidly increased its digital footprint to offer users more content.
Despite its diversification efforts, however, CBS shares have still fallen by over 20 percent in a year’s time. And while its strong dividends have helped keep it appealing to investors, it will need to further embrace the digital realm if the company wants to power through.
The New York Times (NYSE:NYT), on the other hand, is a perfect example of old-school publishers adapting to the new digital reality. With a booming online subscription business, the company has found its footing, with its annual profits climbing modestly over the past 4 years.
The digital push has become a major part of the company’s business. Mark Thompson, CEO of the New York Times explained, “We’re making steady progress toward our goal of reaching 10 million total subscriptions by 2025.”
Salesforce (NYSE:CRM), for its part, went public at just $11 per share, and it’s currently trading at $153. This was all thanks to its ability to collect and organize data. Both for itself, and its customers. Not only has its CRM become one of the most widely used tools across multiple industries, it has made some major acquisitions to further secure its position as one of the top CRM companies in the business, including its 2011 acquisitions of crowdsourced data giants, Jigsaw and Data.com.
HubSpot (NYSE:HUBS) has followed a similar, if not more impressive path, with its share price climbing by 557% in just 5 years. With marketing tools ranging from social media to analytics, its customers are able to collect a massive amount of data to improve their relationships and profits. Not only has HubSpot secured its role as a go-to tool for marketers and publishers, it has grown its voice in the industry with its widely-attended annual conference, Inbound.
Blackberry Ltd (NYSE:BB, TSE:BB) This well-known cell-phone pioneer is engaged in the sale of smartphones and enterprise software and services. The Company's products and services include Enterprise Solutions and Services, Devices, BlackBerry Technology Solutions and Messaging.
Blackberry used to be a worldwide leader in phones, but Apple, Google and other Android manufacturers have rapidly acquired market share. Blackberry has since focused on software and is now developing systems for autonomous vehicles. Tech giants such as Apple and Google won’t be able to repeat Blackbery’s success in this sector that easily.
Kuuhubb Inc. (TSX: KUU.V) is a company active in the development and acquisition of lifestyle and mobile video game applications. Its strategy is to create sustainable shareholder value through its groundbreaking AI and big data applications suggest that its stock is currently undervalued, but it’s not likely this opportunity will last for much longer.
Though it’s focus is on mobile video games, Kuuhubb’s innovative technology makes it a likely target of acquisition and could be a key player in the mobile industry.
Kinaxis Inc (TSE:KXS) is a provider of cloud-based subscription software for supply chain operations. The Company offers RapidResponse as a collection of cloud-based configurable applications. The Company's RapidResponse product provides supply chain planning and analytics capabilities that create the foundation for managing multiple, interconnected supply chain management processes, including demand planning, supply planning, inventory management, order fulfillment and capacity planning.
Kinaxis is a growing company, but the company has already carved out a significant piece of the pie. As a leader in its field, Kinaxis is a force which investors are keeping an eye on.
Computer Modelling Group (TSE:CMG) is a software technology company producing reservoir simulation software for critical infrastructure. Computer Modeling Group LTD. Is a tempting trade for investors as it brings together two essential industries - tech and resources- which are going anywhere any time soon. Especially as the need for security grows, a tech company involved in the oil and gas industry has an incredible opportunity to offer other services.
While Computer Modelling Group focuses on the resource industry, its technology is definitely breaking ground. Founded nearly 40 years ago by Khalid Aziz, a renowned simulation developer, the company has proven that it has staying power. As the resource industry meets technology, this will be a stock to pay attention to.
Redline Communications Group Inc. (TSX:RDL): Redline is not a giant, but it does operate in more of a niche environment—in hard-to-access places, providing wireless for critical industries, including oil and gas, and anywhere from the rainforests of South America to the slopes of Alaska and the deserts of the Middle East.
While the company has struggled in the past, we expect it to improve its operations results. The company’s main challenge remains to expand and attract new customers for its new products.
By. Steven Greenwood
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