If today's gold is data, and the data of each individual could be worth $175, then a content management company reaching 100 million people is potentially sitting on a 'human resource' of $20 billion in proved reserves. Mentioned in today's commentary includes: CBS Corporation (NYSE:CBS), The New York Times Company (NYSE:NYT), salesforce.com, Inc. (NYSE:CRM), HubSpot, Inc. (NYSE: HUBS), AT&T Inc. (NYSE:T).
It's not Google. It's not Facebook, either. Or Twitter. 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.
That's where a small, little-known company called Frankly Inc (TLK, FRNKF) enters the fray, with a data solution that could give the biggest Western publishers the tools they need for digital advertising independence.
Frankly is a multiplatform engagement, monetization and data company that offers broadcasters, media companies and publishers a platform for managing their entire digital workflow and collecting targeted data from every single device.
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.
Here are 5 reasons to keep a close eye on the evolving world of digital media:
#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. As of Q1 2019, digital ad spending is bigger than print or TV.
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.
Even 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."
As publishers scramble to find solutions, Frankly Inc. is stepping up to the plate to give them 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 $175 per person.
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.
What Frankly (TLK, FRNKF) is doing is harnessing first party-data--the 21st Century gold.
#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.
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.
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.
Now, it's first-party data or bust. That's why CRM companies like HubSpot and Salesforce have become stock market legends.
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.
While the CRM business is becoming an investor favorite Frankly (TLK, FRNKF) is looking to set itself apart, offering even more than its competition.
#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, owned by AT&T (NYSE:T), and VICE as clients.
CNN was one of Vemba's biggest customers, using it to manage 1100 affiliates. 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.
Frankly (TLK, FRNKF) does. 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.
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, the leading targeted media company in the US in the early 2000s
-- Former CEO of TIVO
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 $50-million, multi-year deal with media giant Newsweek. The well-timed acquisition of Vemba video streaming 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.
The real cherry on the top of that deal for Frankly (TLK, FRNKF) was securing the broadcasting behemoths of CNN and VICE into its remarkable ecosystem.
By. Steven Greenwood
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