Paging Mr. Morgan: Investors Tracking Programmatic

Programmatic media-buying has helped marketers be more efficient with their money, and it’s now a key factor for investors trying to be efficient with theirs.

J.P. Morgan has released its 2014 Global Internet Investment Guide, and it’s evident that how a company utilizes ad technology now influences the outlook it receives from investors.

As 2013 saw a plethora of ad technology companies going public -- and even companies like Twitter, which uses ad technology -- this is the first yearly outlook report for investors in which programmatic plays a large role.

The report notes that while Twitter offers “basic” retargeting and programmatic tools, it does not yet offer real-time bidding (RTB). However, J.P. Morgan cites Twitter's MoPub deal as evidence that the company will accelerate efforts in RTB.

As such, J.P. Morgan believes there will be “strong demand for Twitter’s RTB products from direct response advertisers but also from brand advertisers over time.”

The “other” social media giant, Facebook, is mentioned in the report as well. It says that “Facebook continues to witness strong demand for FBX (Facebook Exchange) ads both in the desktop News Feed as well as its desktop Right Rail.” The investment guide suspects "FBX [will] to soon move to mobile.”

Amazon, and the Amazon Web Services (AWS), is also touched on in the report.

“We think the AWS stack is increasingly being adopted by companies in the ad technology and real-time bidding space,” the report reads. “We believes Amazon is increasingly looking to move further up the technology stack. The inset image is from the report, and shows how AWS products are being used for RTB.

The report notes that Yahoo has “significant work” to do “to successfully compete in an increasingly competitive display environment that is shifting towards programmatic buying.” The report theorizes that Facebook’s FBX “could also be putting pressure on Yahoo’s display business.”

However, it’s not all gloomy for Yahoo. J.P. Morgan expects Yahoo's display advertising, which has struggled of late, to be “driven by improving engagement metrics.” The report notes: “We believe the improving engagement metrics are likely to help display ad revenues going forward.”

Criteo, a company that didn’t file for an IPO until later in 2013, “is well-positioned to benefit from the shift in display ads towards RTB and programmatic buying in general,” J.P. Morgan wrote. But the financial services firm doesn’t think Criteo will just ride the wave -- it notes that Criteo is “differentiated within the ad-tech space” because it “delivers strong ROI at large scale.” The report also notes how Criteo helps the eCommerce, travel and other transactional-based industries by making display more like search.

J.P. Morgan’s year-end price target for Criteo is $42 with an estimated net revenue of €239M ($324.6M).

This report can also serve as a benchmark. Will the use of programmatic technologies become more significant to investors in future years? We’ll have to wait and see.

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