In this article, we will discuss the 10 best advertising and ad tech stocks to buy now.
Global Advertising Market, How Much Is It Worth?
According to the Global Advertising Market report, the global advertising market was valued at $647 billion in 2020. According to Magna, a leading global media intelligence agency, global media companies’ advertising revenues went up by 22% from 2020 valuations in 2021, amounting to over $710 billion. Advertising sales from TV, radio, print, and cinemas saw a 9% upside from 2020 levels and were valued at $268 billion, while digital advertising formats generated revenues of $442 billion in 2021, up 31% from 2020 levels.
Digital Marketing Revenues
A major factor driving the growth of the global advertising industry is the benefits of digital marketing and how it has accelerated and optimized the way businesses reach consumers. According to Statista, global spending on digital advertising was valued at roughly $378 billion in 2020 and went up to $455 billion in 2021. Alphabet Inc. (NASDAQ:GOOGL) reported digital advertising revenues of $146 billion in 2021 while Meta Platforms, Inc. (NASDAQ:FB) and Amazon.com, Inc. (NASDAQ:AMZN) generated digital advertising revenues of $84 billion and $31.2 billion, respectively, in 2021.
The Future Of Advertising
Businesses are working on finding new ways to gauge consumer interest and deliver targeted content without the use of third-party cookies. Contextual advertising is becoming increasingly popular in the industry as businesses shift toward an advertising strategy that sits well with consumers’ privacy concerns. According to a GumGum report, 61% of U.S. advertising companies are spending on contextual advertising, and 24% of them have increased the spending budget for context-based advertisements.
The rise in popularity of first-party data, the integration of artificial intelligence in digital marketing, and data-driven connected TV are some of the key contributors to the lucrative future the advertising industry holds. According to GlobalData, advertising technology will catapult the advertising industry from a billion-dollar industry in 2021 to a trillion-dollar industry by 2030.
Major tech giants such as Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOGL), and Amazon.com, Inc. (NASDAQ:AMZN) are working on innovative solutions to drive the growth of internet advertising. Read on to learn about more companies active in the space.
Photo by Joshua Earle on Unsplash
Our Methodology
To determine the 10 best advertising and ad tech stocks to buy now, we studied industry analysis reports published by accredited market intelligence agencies. We identified key players in the advertising space and looked into the technological advancements they are working on to reshape internet advertising, in addition to studying their business models and financial reports. We also gave weight to the analyst and investor sentiment for each stock.
10 Best Advertising and Ad Tech Stocks To Buy Now
10. PubMatic, Inc. (NASDAQ:PUBM)
Number of Hedge Fund Holders: 20
PubMatic, Inc. (NASDAQ:PUBM) develops online advertising software and strategies for the digital publishing and advertising industry. This February the company reported earnings for the fiscal fourth quarter of 2021 in which the company beat EPS estimates by $0.23. PubMatic, Inc. (NASDAQ:PUBM) reported revenues of $75.56 million, up 34.34% year over year from $56.24 million, and reported earnings per share of $0.50 for the quarter.
On March 16, 2022, RBC Capital analyst Matthew Swanson lowered his price target on PubMatic, Inc. (NASDAQ:PUBM) to $38 from $46 while maintaining an Outperform rating on the shares. The analyst believes that the company’s recent quarterly earnings and market positioning are undervalued and the stock is bound for profitable growth. As of April 10, 2022, PubMatic, Inc. (NASDAQ:PUBM) has gained 8.21% over the past six months.
By the end of the fourth quarter of 2021, PubMatic, Inc. (NASDAQ:PUBM) was found on 20 hedge fund portfolios that held combined stakes of $109.75 million in the company. This is compared to 15 positions in the third quarter with collective stakes amounting to $33.81 million.
Renaissance Technologies initiated a position in PubMatic, Inc (NASDAQ:PUBM) in Q4 2021. PubMatic, Inc. (NASDAQ:PUBM) are worth $23.17 million, making Renaissance Technologies the most prominent stakeholder in the company.
9. Magnite Inc. (NASDAQ:MGNI)
Number of Hedge Fund Holders: 25
“Magnite provides an advertising supply side platform for publishers. The technology helps publishers such as network television stations or cable news providers automate the sale of digital advertising inventory across different formats and channels, like desktop, mobile, video, audio, connected TV and over-the-top TV. Publishers monetize their digital advertising inventory by using Magnite’s platform to access a global market of ad buyers, including advertising agencies that use supply side platforms. Magnite also helps sellers decrease costs and protect their brands and user experience. Magnite receives ad inventory from sellers and optimizes publishers’ revenue yields by processing the highest buyer bids. Currently, Magnite keeps approximately 10% of ad spend as revenue (i.e. take rate) and passes on the remainder of the ad spend to publishers. Magnite’s clients include many of the world’s leading publishers of websites and mobile applications and the company believes that its platform reaches approximately 1billion individuals globally.
Shares of Magnite underperformed in the second quarter due to the growth market selloff and slower-than-expected growth in connected TV during the first three months of this year. We believe the 32% growth in connected TV was below expectations and due to a one-time issue with one of the company’s publishing partners that ran out of advertising inventory. Management noted the issue has been fixed and the company saw strong reaccelerating growth in April. Additionally, we believe Magnite’s recent acquisition of video advertising company SpotX will significantly bolster the company’s positioning within connected TV, a high-growth area of the digital advertising market that is taking share from linear TV ad budgets.”
8. Digital Turbine, Inc. (NASDAQ:APPS)
Number of Hedge Fund Holders: 31
Digital Turbine, Inc. (NASDAQ:APPS) is a digital marketing company that delivers end-to-end products and solutions for mobile operators, original equipment manufacturers, and third parties to enable the monetization of mobile content. 31 hedge funds were bullish on Digital Turbine, Inc. (NASDAQ:APPS) by the end of the fourth quarter of 2021. The total stakes of these hedge funds amounted to $246.19 million, up from $209.15 million in the preceding quarter with 19 positions.
For the fiscal third quarter of 2022, Digital Turbine, Inc. (NASDAQ:APPS) generated revenues of $375.49 million, up 323.84% year over year, and outperformed market consensus by $22.28 million. The company reported an EPS of $0.49, beating estimates by $0.06.
On February 9, 2022, Maxim analyst Allen Klee lowered his price target on Digital Turbine, Inc. (NASDAQ:APPS) to $108 from $132 but reiterated a Buy rating on the shares after the company’s quarterly earnings outperformed the market. The analyst commented that Digital Turbine, Inc. (NASDAQ:APPS) has grown into a billion-dollar annual revenue company, boasting a diverse portfolio of mobile ad-tech solutions and competitive advantages with SingleTap, customer data, and independence with limited exposure to Apple Inc.’s (NASDAQ:AAPL) IDFA privacy rule changes.
Greenhaven Road Investment Management is the dominating shareholder in Digital Turbine, Inc. (NASDAQ:APPS). The fund’s stakes in the company came to $85.38 million, which covers 19.23% of its Q4 2021 investment portfolio.
Digital Turbine, Inc. (NASDAQ:APPS) is innovating in the digital marketing space. Other key players in the advertising industry include Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOGL), and Amazon.com, Inc. (NASDAQ:AMZN).
GreenWood Investors, an investment management firm, mentioned Digital Turbine, Inc. (NASDAQ:APPS) in its fourth-quarter 2021 investor letter. Here’s what the firm had to say:
“A great example of a combined growth, value and quality stock is a recent addition to the portfolio, Digital Turbine (APPS). The company has made two acquisitions which nearly tripled the revenue of the company while only increasing the shares outstanding by 11%. Its core technology, installed directly on 0.8 billion Android devices (soon to be 1.6 billion), allows it to truncate the multi-step process of installing a mobileapplication from an ad into one seamless step. Not only is the technology better than what vertically-integrated Apple can offer, but it significantly improves advertiser outcomes, by a factor of 2-5x. Most of those improved economics will begin accruing to Digital Turbine in the year ahead.”
7. The Trade Desk, Inc. (NASDAQ:TTD)
Number of Hedge Fund Holders: 32
Trade Desk, Inc. (NASDAQ:TTD) operates a cloud-based platform that allows buyers to create, manage, and optimize data-driven digital advertising campaigns across various ad formats and channels, including display, video, audio, native, and social. On March 2, 2022, Guggenheim analyst Michael Morris initiated coverage of Trade Desk, Inc. (NASDAQ:TTD) with a Buy rating and a $108 price target.
This February, Trade Desk, Inc. (NASDAQ:TTD) reported Q4 2021 earnings for which the company beat on both EPS and revenue. The company reported revenues of $395.60 million, up 23.66% year over year, and beat revenue estimates by $5.96 million. The company reported earnings per share of $0.42 and beat expert EPS estimates by $0.14.
Zevenbergen Capital Investments is the largest stakeholder in Trade Desk, Inc. (NASDAQ:TTD) having stakes of more than $326 million in the ad-tech company. In addition to Zevenbergen Capital, 31 other hedge funds held stakes in Trade Desk, Inc. (NASDAQ:TTD) at the end of the fourth quarter of 2021. The combined value of these stakes came to $830.59 million, up from $499.10 million in the prior quarter with 19 positions.
Here is what Richie Capital Group had to say about Trade Desk, Inc. (NASDAQ:TTD) in its fourth-quarter 2021 investor letter:
“The Trade Desk (TTD – up 33.87%) – The bump in shares over the quarter was somewhat of rebound as the stock sold off in Q3 due to multiple concerns including Google eliminating their use of cookies and Apple’s move to “opt in” for advertisement identity on its devices. Additionally, the market was concerned that advertisers would cut their marketing budgets ahead of the Christmas season due to the global supply chain problems. The company reported a great quarter and alleviated concerns regarding all of the above. TTD has championed a new paradigm with UID 2.0 and their recently released Solimar product will provide the best solution to leverage that platform. The Trade Desk continues to take share and management emphasized their tremendous growth, and opportunity, internationally with 2/3 of the global advertising market being outside the US.”
6. Omnicom Group Inc. (NYSE:OMC)
Number of Hedge Fund Holders: 33
Omnicom Group Inc. (NYSE:OMC) provides advertising, marketing, and corporate communications services. This March, Omnicom Group Inc. (NYSE:OMC) announced that it has acquired TA Digital, a digital marketing company, to expand its digital transformation, content management, commerce, and customer experience capabilities.
This February, Omnicom Group Inc. (NYSE:OMC) announced that its earnings per share for the fiscal fourth quarter of 2021 came to $2.11, beating estimates by $0.40. The company generated revenues of $3.86 billion, up 2.63% year over year, and beat revenue estimates by $184.27 million. As of April 10, 2022, the stock has gained 3.51% over the past six months, and the company’s market cap stands at $16.12 billion.
On March 18, 2022, Argus analyst Kristina Ruggeri upgraded Omnicom Group Inc. (NYSE:OMC) to Buy from Hold with a $95 price target. The analyst sees Omnicom Group Inc. (NYSE:OMC) positioned to benefit from recent trends in e-commerce marketing and data analytics, also noting the company’s strategic acquisitions which will further accelerate its growth in the industry. The analyst further emphasized that the company pays attractive dividends, and as of April 10, 2022, Omnicom Group Inc. (NYSE:OMC) has a forward dividend yield of 3.59%.
Omnicom Group Inc. (NYSE:OMC) is becoming a popular stock pick among investor circles, and the investor sentiment for the stock is positive. As of the fourth quarter of 2021, 33 hedge funds held stakes in Omnicom Group Inc. (NYSE:OMC) worth more than $404.52 million. This is compared to 25 positions in Q3 2021, with stakes of more than $396.36 million.
As of April 4, 2022, AQR Capital Management is the most prominent shareholder in Omnicom Group Inc. (NYSE:OMC) having stakes worth $65.99 million. The fund upped its Q3 2021 stakes in the company by 55%, and as of Q4 2021, Omnicom Group Inc. (NYSE:OMC) makes up 0.11% of AQR Capital’s 13F portfolio.
Like Meta Platforms, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOGL), and Amazon.com, Inc. (NASDAQ:AMZN), Omnicom Group Inc. (NYSE:OMC) is one of the best ad tech stocks to buy now.
5. Clear Channel Outdoor Holdings, Inc. (NYSE:CCO)
Number of Hedge Fund Holders: 34
Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) operates as an out-of-home advertising company throughout the U.S. and the Caribbean. As of December 31, 2021, the company operated over 69,000 advertising displays in the Americas and 430,000 advertising displays in Europe.
On February 24, 2022, Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) reported earnings for Q4 2021 for which it beat on both EPS and revenues. The company’s earnings per share were valued at $0.14, beating estimates by $0.16, and it generated quarterly revenues of $742.71 million outperforming market consensus by $2.57 million. As of April 10, 2022, Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) has gained 57.43% over the past twelve months and boasts a market capitalization of $1.50 billion.
By the end of the fourth quarter of 2021, 34 hedge funds held stakes worth $330.36 million in Clear Channel Outdoor Holdings, Inc. (NYSE:CCO). This is compared to 28 positions in the preceding quarter with stakes of $257.52 million. The hedge fund sentiment for the stock is positive.
Mason Capital Management was the top shareholder in Clear Channel Outdoor Holdings, Inc. (NYSE:CCO) at the end of Q4 2021. According to Insider Monkey’s data, the fund owned over 21.25 million shares of stock which amounted to a stakes value of $70.36 million covering 33.68% of Mason Capital’s Q4 2021 investment portfolio.
4. HubSpot, Inc. (NYSE:HUBS)
Number of Hedge Fund Holders: 58
HubSpot, Inc. (NYSE:HUBS) provides a cloud-based customer relationship management platform for businesses in the Americas, Europe, and the Asia Pacific. The platform helps bring businesses closer to clients by allowing a wide variety of functionalities for marketing and sales departments to manage data in one place. By the end of the fourth quarter of 2021, 58 hedge funds were bullish on HubSpot, Inc. (NYSE:HUBS) having stakes of more than $2.47 billion in the company.
This February HubSpot, Inc. (NYSE:HUBS) reported fourth-quarter 2021 revenues of $369.31 million, up 46.51% year over year, and beat revenue estimates by $11.79 million. The company’s earnings per share came to $0.58, beating expert estimates by $0.05. On February 11, BMO Capital analyst Keith Bachman raised his price target on HubSpot, Inc. (NYSE:HUBS) to $675 from $640 and maintained an Outperform rating on the shares after the company’s Q4 2021 earnings outperformed.
As of April 7, 2022, SCGE Management is the most prominent stakeholder in HubSpot, Inc. (NYSE:HUBS) owning over 1.3 million shares of stock. SCGE Management’s stakes in the company were valued at $904.05 million, which represents 10.25% of the fund’s Q4 2021 investment portfolio.
ClearBridge Investments, an investment management firm, mentioned HubSpot, Inc. (NYSE:HUBS) in its third-quarter 2021 investor letter. Here is what the firm had to say:
“Performance among our cohort of IT and Internet companies was mixed, with enterprise software makers thriving while more consumer-oriented stocks faced headwinds. HubSpot saw greater utilization of its marketing software by small and medium size businesses. We are attracted to the recurring revenue nature of these software companies that are increasingly delivering their products on a subscription basis through the cloud. Software business models also tend to avoid many of the inflationary issues facing companies with a physical product or service.”
3. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 209
Alphabet Inc. (NASDAQ:GOOGL) owns and operates Google which is the world’s most widely used search engine, and YouTube the leading online video-sharing platform. The majority of Alphabet Inc.’s (NASDAQ:GOOGL) revenues — over 80% — come from selling advertisement space on its various platforms. In 2021, the company generated revenues of $147 billion from Google Ads.
This February, Alphabet Inc. (NASDAQ:GOOGL) reported that its revenues for the fiscal fourth quarter of 2021 amounted to $75.33 billion, up 32.39% year over year, beating revenue estimates by $3.50 billion. Approximately $61.2 billion of these revenues came from Google advertising.
On March 18, 2022, Tigress Financial analyst Ivan Feinseth raised his price target on Alphabet Inc. (NASDAQ:GOOGL) to $3,670 from $3,540 and maintained a Strong Buy rating on the shares. The analyst commented that the company reported strong Q4 2021 results and its ongoing investments in Artificial Intelligence will enhance user and business experiences, therefore adding value to the stock. The analyst sees the company developing a stronghold in areas including Search, mobile, Cloud, data center, e-commerce, entertainment, home automation, autonomous vehicles, and health and fitness.
Investors and analysts are bullish on Alphabet Inc. (NASDAQ:GOOGL). By the end of the fourth quarter of 2021, 209 hedge funds held stakes in Alphabet Inc. (NASDAQ:GOOGL) which were worth $32.34 billion. This is compared to 195 positions in the prior quarter with stakes worth $28.55 billion.
Vulcan Value Partners mentioned Alphabet Inc. (NASDAQ:GOOGL) in its fourth-quarter 2021 investor letter. Here is what the firm had to say:
“In contrast, we made a different kind of mistake about a decade ago. Google, now Alphabet, performed very well for us while we owned it. The company kept outperforming our assumptions and we kept lowering them to be conservative. “Trees do not grow to the sky.” The stock kept going up and our value grew but did not keep pace with the stock. It hit our estimate of fair value and we sold it with a nice gain, patting ourselves on the back. We kept following the company and what they actually did over the next several years was roughly double the assumptions we used to value it. Therefore, our value was too conservative, and we sold it too cheaply, missing many years of compounding. Fortunately, we experienced some volatility several years ago that allowed us to purchase Alphabet (Google) again with a margin of safety.”
2. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 224
Meta Platforms, Inc. (NASDAQ:FB) is a key player in the social media and advertising industries. In 2020, more than 97% of Meta Platforms, Inc.’s (NASDAQ:FB) global revenues came from advertising. The company’s ad revenues amounted to over $86 billion in 2020. In 2021, this shot up to annual revenues of $114.93 billion from digital advertising.
For the fiscal fourth quarter of 2021, Meta Platforms, Inc. (NASDAQ:FB) reported quarterly revenues of $33.67 billion, of which $32.64 billion were generated from advertising. The company’s revenues went up by 19.95% year over year and beat revenue estimates by $230.6 million. The company reported earnings per share of $3.67.
On April 7, UBS analyst Lloyd Walmsley raised his price target on Meta Platforms, Inc. (NASDAQ:FB) to $300 from $280 and reiterated a Buy rating on the shares.
Meta Platforms, Inc. (NASDAQ:FB) was spotted on 224 hedge fund portfolios by the end of the fourth quarter of 2021. The total stakes of these funds in the company amounted to $31.84 billion. Of these, Ken Fisher’s Fisher Asset Management was the most prominent shareholder in the company, having stakes of $3.22 billion as of April 8, 2022.
Here is what Boyar Value Group had to say about Meta Platforms, Inc. (NASDAQ:FB) in its fourth-quarter 2021 investor letter:
“Corporate executives can have many different reasons for selling shares (anticipation of tax law changes, philanthropy, diversification, and much more), but the sheer number of billionaire founders who sold shares in 2021 should raise eyebrows and might well be signaling a market top. Bloomberg’s Ben Steverman and Scott Carpenter report not only that Mark Zuckerberg of Meta Platforms Inc. (formerly known as Facebook) sold shares in his company almost every day last year but also that the founders of Google sold ~$3.5 billion worth of stock (the first time either Sergey Brin or Larry Page has sold shares since 2017).”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 279
Amazon.com, Inc. (NASDAQ:AMZN) is the largest e-commerce company in the world by market capitalization. The company is leading in areas including e-commerce, artificial intelligence, cloud computing, and digital streaming. Amazon.com, Inc. (NASDAQ:AMZN) sells advertising space on its platforms to small, medium, and large businesses. The company is reported to have spent $16.9 billion in worldwide advertising and promotion in 2021. Moreover, the company generated over $31 billion in annual revenues from digital advertising.
Analysts and investors are exhibiting bullishness toward Amazon.com, Inc. (NASDAQ:AMZN) This March, Deutsche Bank analyst Lee Horowitz initiated coverage of Amazon.com, Inc. (NASDAQ:AMZN) with a Buy rating and gave the stock a $4,100 price target. Moreover, Insider Monkey identified 279 elite hedge funds that held stakes in the e-commerce giant by the end of the fourth quarter of 2021. The total value of these stakes amounted to $49.16 billion, up from $42.55 billion in the prior quarter with 242 positions.
As of April 8, 2022, Fisher Asset Management is the dominating shareholder in Amazon.com, Inc. (NASDAQ:AMZN), owning over 4.17 million shares of the stock. The fund’s stakes in the company were valued at $7.22 billion, up 13% from the fund’s Q3 2021 stakes. The investment covers 4.04% of Ken Fisher’s hedge fund portfolio.
Davis Funds mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its fourth-quarter 2021 investor letter:
“Within the traditional growth category, growing euphoria has led to bubble prices for many companies, most especially those with new and unproven business models such as those discussed above. In contrast, our research focuses on a select handful of proven growth stalwarts whose shares still trade at reasonable valuations. For example, because of concerns about future litigation and regulation, several dominant internet businesses, including Amazon, trade at steep discounts to many unproven and unprofitable growth darlings that, in our view, trade at euphoric prices. While we expect a continued barrage of negative headlines around the company, as well as increased regulation in the years ahead, we do not expect a significant decline in its long-term profitability.”
You can also take a look at 10 Technology Stocks that Pay Dividends and Billionaire Ken Fisher’s Top 10 High Dividend Stock Picks.
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Disclosure: None. 10 Best Advertising and Ad Tech Stocks To Buy Now is originally published on Insider Monkey.
