The world of advertising is evolving rapidly. Advertisement revenue across major markets has been on a northward trajectory. The COVID-19 pandemic has only accelerated this trend, with advertisers focusing more on targeted and contextual advertising.
To put things in perspective, Allied Market Research expects the global internet advertising market to reach $1,089 billion in 2027, clocking a compound annual growth rate (CAGR) of 17.2% from 2020 onwards.
While larger behemoths such as Google (GOOG) and Facebook (FB) command a larger share of the market pie, we bring to you two key players that may offer significant opportunities.
Let us have a deeper look at two key names- The Trade Desk (TTD), and Digital Turbine (APPS), which analysts believe may offer potentially outsized returns to savvy investors.
The Trade Desk
TTD’s cloud-based platform helps buyers of advertising in creating and managing ad campaigns across formats and devices. TTD’s enterprise application programming interfaces (APIs) offer custom development on its platform as well.
Revenues have grown like clockwork from $661 million in 2019 to $1.2 billion in 2021. The company is expected to generate revenue of $2 billion in 2023. It saw total ad spending of $6.2 billion on its platform in 2021, registering a 47% year-over-year growth.
In 2021, TTD grabbed a higher market share in the data-driven advertising market on the back of the launch of its new platform- Solimar, coupled with progress in CTV, identity, and retail data. Notably, Solimar packs features such as advanced goals-based media buying, easier first-party data onboarding, and an innovative measurement marketplace.
Consequently, in 2021, TTD made it to FORTUNE’s Future 50 list as well as its list of 100 Fastest Growing Companies for 2021.
Susquehanna analyst Shyam Patil has reiterated a Buy rating on the stock alongside a price target of $125. TTD has partnered with Walmart (WMT) to launch a new demand-side platform (DSP) based on its platform that will offer advertisers access to unique Walmart shopper data and sales measurement data in a self-service platform.
Patil views the development favorably and anticipates that other retailers will also join TTD’s platform to gain new insights on advertising performance.
Overall, the Street is Bullish on TTD based on nine Buys and two Holds, with a Strong Buy consensus rating and a price target of $104.50, implying a potential upside of 58.72%.
Moreover, the stock scores on other key metrics as well. Both Blogger and News sentiment are Bullish for TTD and insiders have lapped up TTD shares worth $14.1 million in the last three months indicating key personnel in the company are optimistic about its future prospects.
Digital Turbine
The second name on our list, Digital Turbine, is an independent mobile growth platform. The company offers end-to-end solutions catering to mobile operators, application advertisers, original equipment manufacturers (OEMs), as well as third parties.
Revenue has increased from $103.6 million in 2019 to $313.6 million in 2021. The figure is expected to reach $1.62 billion in 2023. Moreover, in its recent third-quarter showing, the company witnessed a 3x jump in revenue to $375.5 million.
Notably, in 2021, Digital Turbine strategically repositioned itself to leverage its on-device competitive advantages.
Roth Capital’s Darren Aftahi has reiterated a Buy rating on the stock alongside a price target of $83. The Street has a Strong Buy consensus rating on the stock based on four unanimous Buys. The average Digital Turbine price target of $94.50 implies a massive potential upside of 143.87% for the stock.
Moreover, TipRanks data points that both News and Blogger sentiment are Bullish on Digital Turbine. Just as in the case of TTD, insiders have bought Digital Turbine shares worth $511,700 in the last three months.
Closing Note
As consumers’ digital lives intertwine more and more with their daily activities, the upward surge in digital advertising will continue. As a result, advertisers will focus more and more on grabbing eyeballs at the right moment. Both these stocks are at the forefront of providing much-needed solutions in the markets they cater to.
These names have been delivering robust business performance, and the outsized returns expected by analysts on their shares should definitely put these stocks on your radar.
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