This Small Tech Stock has Big Upside Potential in the Data-Driven Marketing Megatrend of the Century

Covid-19 derailed the advertising industry in 2020.

Long story short, the pandemic brought the economy to a screeching halt. Shops closed and consumers stopped going out. Against that backdrop, businesses cut back on advertising to consumers who weren’t doing anything, let alone buying new products.

In total, most market research firms predict that U.S. ad spending fell by somewhere between 5% and 10% last year.

Needless to say, it was a rough year for the ad industry.

Except for one bright segment of this struggling industry: Programmatic advertising.

Spend on programmatic advertising – otherwise known as data-driven advertising, and which essentially involves using data and algorithms to power ad campaigns – rose by 84.5% in 2020.

You heard that right. In the same year that the broader ad industry collapsed, data-driven ad spending nearly doubled.

This speaks to the unwavering growing importance of data in the marketing world.

By leaning into data, marketers can run campaigns and sell products and services more quickly, more efficiently, and at lower costs.

In essence, data is a panacea for marketers. It took a world-changing pandemic for the entire industry to realize this. But now, every marketer out there is on the data-driven advertising train.

The stage is therefore set for data-driven ad spending to grow at breakneck speeds over the next decade. Ultimately, this megatrend won’t stop until programmatic advertising has taken over the entire trillion-dollar marketing industry.

Today, we will tell you about one way to play this explosive data-driven advertising megatrend. It’s by buying stock in a small, hypergrowth marketing data analytics company that has clear visibility to turning into the future data backbone of all IT marketing campaigns.

 

The Hyperscale Ad Tech Leader in a Well-Defended Niche

If you work in IT, then you know how cumbersome, complex, and extensive the IT sales cycle can be…

This isn’t kids buying sneakers, after all. It’s often multi-billion-dollar corporations signing multi-year, multi-hundred-million-dollar contracts – and those decisions require a lot of prep work before being made.

Thus, the IT sales cycle takes a long time, requires a lot of back-and-forth, and often involves multiple parties.

It is a process which is primed to be disrupted by data – since data could quickly help IT vendors optimize the inefficiencies in the marketplace.

One company that is pioneering this data-driven disruption in the IT marketing world is TechTarget (NASDAQ:TTGT).

TechTarget is a $1.9 billion tech company that provides data-driven marketing analytics and sales-enablement solutions to IT vendors, with the ultimate goal being to help those IT vendors optimize their sales cycles and efforts.

Sounds like a mouthful, sure. But the process is actually relatively straightforward. TechTarget simply:

  1. Creates and produces a bunch of IT content – like articles and reviews – and publishes that content on the web (the company uses a team of 175 full-time editors to produce 75,000 pieces of content annually, across over 140 owned and operated websites).
  2. Generates a treasure chest of proprietary data on the research behavior of the visitors on its websites (the company’s websites have over 20 million registered members, and millions more visitors, all of whom TechTarget tracks closely to build intent data graphs).
  3. Leverages and synthesizes that unique data to deliver actionable insights to IT sales vendors (the company provides a suite of software solutions, all under the “Activity Intelligence” umbrella, which help IT vendors optimize their sales efforts).

The net result? A data-driven intelligence platform which helps IT vendors decide who to call, when to call, and what to say.

It’s a paradigm shift in the IT marketing world. And one that is exceptionally value-additive.

TechTarget is the undisputed leader in providing trusted insights to IT vendors. All the major IT software research firms – like Forrester, G2, and Gartner – have consistently named TechTarget as the leader in this space.

It should be no surprise, then, that TechTarget’s leading Activity Intelligence product – its Priority Engine – has grown revenues by more than 80% per year since 2015. Nor should it be any surprise that essentially every IT vendor in the world uses TechTarget, including Oracle, Cisco, IBM, Microsoft, SAP, VMWare, Amazon Web Services, Google Cloud, Adobe, Salesforce, ServiceNow, and many more.

Importantly, TechTarget has a very wide moat – comprised of 20+ years of proprietary consumer intent data, its 140+ websites, and countless partnerships which allow for seamless integration of its solutions into existing tech workflows – which should enable the company to sustain unrivaled leadership in the data-driven IT marketing space.

But TechTarget isn’t happy to just sustain leadership. The company wants to expand its dominance.

That’s why TechTarget is expanding functionality of its core Activity Intelligence platform to win a bigger share-of-budget among existing customers, and launching new products like its lower-priced Priority Engine Express to on-board new, smaller customers.

It’s also worth mentioning that TechTarget provides all these services through a hyperscalable subscription software business model that has a ton of revenue predictability and very high, 75%-plus gross margins.

Big picture: TechTarget is a hypergrowth company at the forefront of a hypergrowth industry, with a very wide moat, a promising expansion strategy, and a hyperscalable business model that should yield enormous profits.

Sound like a winner?

It does. And there’s a lot of runway left, considering this is a sub-$2 billion company attacking a near $50 billion industry (marketing spend on data is expected to surpass $46 billion by 2022, and will likely keep growing quickly thereafter).

Needless to say, TechTarget stock deserves to be on your buy radar today.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

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Article printed from InvestorPlace Media, https://investorplace.com/hypergrowthinvesting/2021/01/this-small-tech-stock-has-big-upside-potential-in-the-data-driven-marketing-megatrendof-the-century/.

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