If the Reddit vs Wall Street debacle has illustrated anything, it’s that the internet — and the meme-swinging hooligans that call it home — are perhaps more powerful than we thought. If a comparatively small group of retail investors can topple a multi-billion-dollar hedge fund, what else can be done with the massive number of people that frequent social media platforms?
Enter social media content marketing. It’s not a particularly new industry, in fact, advertising folklore suggests that the Queen and the Pope may have been the first “content creators” employed to endorse the use of medicine several hundred years ago, but in the context of social media, it’s relatively fresh. Fresher, however, are the strategies used by companies and brands to exploit the social media content marketing sector.
One of the most recent of these players to join the game is DGTL Holdings Inc. (TSX-V: DGTL, OTCQB: DGTHF, Forum), which, as a former capital pool company, completed its qualifying transaction to list on the TSX Venture Exchange on August 4 last year. The Vancouver-based company is looking to capitalise on the power of social media and the new gig economy — a labour market characterised by the prevalence of short-term contracts or freelance work as opposed to permanent jobs like, for example, social media content marketing.
Chief among its interests is #Hashoff, an advertising technology company designed to empower global brands and advertising agencies by “identifying, optimising, engaging, managing and tracking top ranked freelance social media content publishers for hyper-localised brand influencer marketing campaigns.” Its flagship products IAM and Create Marketplace enable brands to scan for and connect with social media creators in real time, and already serve a number of Fortune 500 companies like Amheuser Busch, Dunkin’ Brands, Pizza Hut, TGI Fridays, Nestlé and TJ Maxx and major new clients include Draft Kings, Door Dash and Shein.com
But, even with all this highly targeted software and thoroughly advanced data capabilities, how does DGTL Holdings stack up against some of the larger, more established players? And how much room is there to grow within an industry that is expected to reach $15 billion by 2022?
According to its second-quarter financials, published on February 1, the company has seen a revenue increase of 70% year-over-year, from $738,000 in the three months ending November 30, 2019, to more than $1.25 million in the corresponding period of 2020. This puts DGTL’s first SaaS acquisition on track for $5M revenue and at the current $20 million Marketcap, they are trading at just a 4x multiple on Price-to-Sales.
This was attributed largely to the successful execution of its three-year revenue growth plan, as well as the heightened market demand for content-as-a-service platforms (CaaS). DGTL said this demand has enabled both new and existing customers to operate large-scale digital and CaaS marketing campaigns remotely, and in a more effective and cost-efficient way.
“We are pleased with the continued revenue growth of our first SaaS acquisition,” said John Belfontaine, Founder and Executive Vice President of Corporate Development at DGTL Holdings. “We anticipate continued momentum from Hashoff LLC via new business development and customer acquisition.”
Compare these figures to more long-standing players in the same sector, like Nasdaq-listed IZEA Worldwide with a market capitalisation of more than $257 million, and it’s suddenly apparent just how well DGTL Holdings is primed for success. IZEA is the best apples to apples comparison.
For the three months ending September 30, 2020, IZEA generated just over $5.17 million in revenue, representing a marginal slide compared to the same period in 2019, which saw more than $5.65 million in revenue.
To cap off steadily sliding income, IZEA reported a net loss for the period in excess of $1.6 million — also an increase over 2019’s loss of just over $1.5 million.
While the company claims to have “created the modern influencer marketing industry,” it’s had since 2006 when it launched its first technology platform to make some real headway in terms of profit. In fact, annual profits for IZEA have so far failed to materialise at all.
IZEA is currently tracking for $21 million in annual revenue and trading at a Market capital of over $275 million, for an approximate Price to Sales multiple of 13 times revenue.
#Hashoff has been operating since 2013, but it’s only been under the jurisdiction of DGTL Holdings since August 2020. It would seem, then, that with existing companies like IZEA currently failing to gain any real traction, there might be a significant opportunity for a newcomer to enter the space with a truly unique product that not only uses social media to maximum effect, but bolsters its potential with the added power of Artificial Intelligence.
For more information about DGTL Holdings Inc. visit their website at DGTLinc.com.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.
