Nanalyze

Mirriad – Native In-Video Advertising

While technological breakthroughs are happening left and right these days, society still seems to be grasping for interesting things to talk about. Look no further than a topic which made CNN’s front-page news this past week. Apparently, Southwest Airlines had a worst driver’s license contest and a paper airplane contest when a flight was delayed which – according to the article – made Kristen Dundas of Windermere, Florida (we have no idea who she is either) so happy, she uttered this typo-ridden tweet which is somehow considered “news.”

Some complete drivel that made its way into a CNN article

Credit CNN

The Columbia journalist who authored this hard-hitting piece goes on to say that “Although Dundas didn’t participate in the games herself, she called the experience awesome.”

Today, we’re going to talk about something equally as awesome – Native In-Video Advertising (NIVA).

Programmatic Ads for Video

In our recent article on how AR Advertising Gets into the Marketing Game, we looked at a number of ways that advertisers are able to use technology like augmented reality and computer vision to insert ads into movies, video games, and virtual reality. Inserting an ad into virtual reality is pretty simple to do, but what if you wanted to insert a different ad based on who was looking through the lens? That’s often referred to as “personalized marketing,” and it’s part of something much bigger called programmatic advertising, which refers to a software platform that’s used to “automate all or parts of the ad buying process.” We previously talked about a Chinese company called WiMi Hologram that’s inserting ads into video content and making a ton of money doing so. (Their +50% margins make this a very lucrative business to be in.) Today, we want to talk about a U.K. firm that’s trying to do much the same thing.

Mirriad

Click for company websiteImagine inserting corporate logos, advertisements, or even physical products into digital media post-production. Then, imagine integrating these ads into the content so seamlessly that it actually improves the viewer’s experience. That’s the idea behind the technology being developed by Mirriad (MIRI:LN), a U.K. company that uses artificial intelligence for “native in-video advertising” which involves inserting ads into video in real-time. Here’s an actual example of a Spanish car company, SEAT, placing an ad into a French TV series which appears just as it would in real life.

Native In-Video Advertising

Native In-Video Advertising – Credit: Mirriad

Companies spend billions of dollars interjecting ads to place in front of captive audiences for sporting events, so why not do the same for television series, movies, documentaries, or any other sort of video that’s displayed to large audiences? While you may think these ads will detract from the user experience, it turns out to be the exact opposite. Over 90% of Americans thought that these inserted ads actually “made the program appear more realistic.” That’s how inundated by ads we are these days. When they’re missing, something just seems off.

Since the customers don’t seem to mind native in-video advertising, the next thing to look at is how effective these ads are. Just going back to the example of Spanish car-maker SEAT, here’s how well their campaign performed.

Success of SEAT native in-video advertising campaign

Credit: Mirriad

These may seem like arbitrary numbers – and they kind of are – but for the marketing people over at SEAT, this campaign spelled success. Considering that some of the world’s top brands spend billions of dollars displaying their logos in sports arenas, it seems likely they’ll pony up some cash to plaster their adverts all over television shows, especially ones where the audience matches their target demographic.

A Pinch of Drama

“Businesses such as Mirriad that are looking to disrupt established business models require the ability to pivot their strategies to break through,” says the company’s Chairman in their latest annual report. That pivot is something that happened in both leadership and strategy for Mirriad last year. The company had consistently been unable to grow revenues at the pace that reflected its potential, something that becomes blindingly obvious when looking at revenue numbers that are so weak it doesn’t really matter what currency we use to show them.

Mirriad KPIs

Credit: Mirriad Annual Report

The company barely saw $1 million in revenues in 2017 and that number plummeted by half in 2018 – a year where they managed to burn through around $16.6 million in cash. For a company with a disruptive product on offer, a lack of revenue growth is particularly concerning.

In our recent article on How to Tell if a Cannabis Stock is Good or Bad, we discussed how companies selling a market-ready product into disruptive markets are absolutely required to demonstrate double-digit growth that at least matches the rate at which the disruptive industry is growing. In the case of Mirriad, they have an incredibly disruptive product – at least it would seem based on what WiMi Hologram has accomplished – yet they’ve been moving backwards when it comes to revenues. The company has faced their growing pains and brought on a man with a plan who has identified these three Key Performance Indicators (KPIs) as critical to the company’s success – cash consumption, revenue, and customers under contract.

In May of this year, Mirriad published an analyst presentation that provides the “key issues that prevented progress” which they should be commended for doing. Companies that spin their wheels or fail at doing something usually try and make excuses, while Mirriad has taken some accountability for what’s transpired here.

Key issues that prevented progress

Credit: Mirriad Analyst Report

The overarching theme here seems to be that the company lacked some proper leadership and direction. In the month following that presentation, Mirriad signed an agreement with one of the largest online video platforms in China, Tencent. Said an article by Sharecast:

The contract will immediately enhance 2019 revenues due to the fixed monthly fee and, at a minimum, will generate multiple millions of pounds of revenue for the AIM-traded company over the 24-month contract term.

If that’s the case, then Mirriad is off to a great start in 2019.

For Retail Investors

Over the years, we’ve looked at lots of small and micro-cap stocks that trade on foreign markets and have had more burnt fingers than home-runs. We’ve learned the hard way that diversification is critical. If a small chunk of your overall portfolio is dedicated to foreign micro caps and you’re looking for a diversified set of names to invest in, this might be one you would take a punt on. The reality is, there are probably many bag holders out there who sunk some serious cash into this thing after the December 2017 IPO, rode it to the bottom, and now don’t know what to do.

Mirriad Stock Chart

Credit: Bloomberg

(BTW, that “pop” you see denoted with the red arrow above is when the Tencent deal was announced). For current shareholders, just remember, you only take a loss when you sell. As for those who are thinking about opening a long position on Mirriad, you’re either an idiot trying to catch a falling knife or a brilliant genius who sees value and acts on it. This sort of uncertainty (remember, uncertainty equals risk) is precisely why we prefer to stick with dividend growth investing.

Conclusion

We’ve never been prone to think that displaying corporate logos to passive audiences has much of an effect, but it clearly does, otherwise Toyota wouldn’t spend hundreds of millions of dollars plastering their logos all over sports arenas. Now, think about how much Toyota might pay to insert their new Camry into a video being watched by someone who is trying to decide between that and a Honda Accord. The ability to dynamically insert advertisements into video is worth a lot of money, and companies like China’s WiMi Hologram are making loads of cash doing this sort of thing. That’s where this is all heading. For marketers, it’s just like when an airline holds a paper airplane contest during a flight delay – nothing short of groundbreaking.

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