Marin Software Inc (MRIN), Tremor Video Inc (TRMR): Is Google Inc (GOOG) Really to Blame for Weak Ad-Tech IPOs?

The IPO priced 7.5 million shares at $10, or slightly below the original range of $11 to $13. The proceeds provided the company with a current cash balance of over $100 million. The decline, though, didn’t stop at the IPO pricing as the stock quickly plunged to $8.50 on the opening day. Eventually, the stock hit a low of $6.81 before rebounding to around $8 now.

Digital videos
YuMe Inc (NYSE:YUME) forecasts Q2 2013 revenue to be around $34 million, providing for a 35% increase from last year. The digital technology enables the company to reach 257 million monthly unique viewers around the world. Gross margins are expected to be flat around the same 46% from last year. The company expects a small-adjusted EBITDA profit, though down from the $1.6 million reported last year.

The company uses proprietary technology geared for brand advertisers and professional digital media property owners producing content and applications. The YuMe Inc (NYSE:YUME) software development kit is embedded in websites and applications to enable the delivery of video ads, customized interactive ads, and rich media experiences.

The company had the weakest of the IPOs in the group with a pricing of 5.1 million shares at $9 that was substantially below the original pricing range of $12 to $14. In the first week of trading, the stock has held slightly below the IPO price, becoming the best performing stock in the group.

Bottom line
With all three firms showing growth of at least 30%, the theory that Google Inc (NASDAQ:GOOG) is impacting the smaller firms in the group appears false. If anything, independence from AOL or Google should help these companies gain traction with brands not wanting to deal with a behemoth that controls other aspects of the market such as online search advertising. The group provides substantially better valuations than Google and other recent tech IPOs that ironically the market doesn’t care whether those stocks are profitable. Typically, 30% growth is enough to warrant valuations of anywhere from 5 to 10 times revenue.

The misconception continues to be that Google dominates in any ad segment outside of search or its own websites such as In mobile ads, Google only controls roughly 29% of the third-party market and according to comScore, the company struggles with serving commercials in higher-quality video ads.

Investors can buy Tremor Video Inc (NYSE:TRMR) for the higher growth or Marin Software Inc (NYSE:MRIN) for a platform that incorporates the surging growth in mobile and social as well. Either way, the threat of Google is highly exaggerated, as Tremor has exclusive deals and Marin helps advertisers work better with Google.

The article Is Google Really to Blame for Weak Ad-Tech IPOs? originally appeared on and is written by Mark Holder.

Mark Holder and Stone Fox Capital Advisors, LLC own shares in Tremor Video. The Motley Fool recommends Google. The Motley Fool owns shares of Google. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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