Originally posted by Ildsrud
Imo this was a buy or build decision. SW1 have the cashflow and means available to invest in the internal development of the ad platform and capability, but it would mean hiring a team, investing in the tech, establishing relationships with content advertisers and rolling out with customers. That all in all could be a multi-year, multi-million dollar commitment and wouldn't guarantee results right away.
The path they've taken is the buy approach. They get the team, the tech, established relationships and revenues, so it's ready to integrate with the broader Swift business and roll out. Fast tracks a few years of 'build' time.
Overall my impression is that the vendors have gotten themselves an extremely good deal here. The upfront consideration is reasonable, however the performance based milestones to me seem pretty weak relative to the large payout they will receive. It's hard to make an objective assessment of this acquisition without the full insight the management team have to both the potential of MM/it's integration with Swift, and the internal assessment of just how costly/time consuming/risky the 'build' approach would be. From my vantage point though this is another large issue of performance shares to an already shakey register that is continually under sell pressure.
I'm pleased they are advancing the business and really building a robust engine for growth, but given the transaction terms I would really like to see the management team engage with market participants to tighten up the share register so we can see some meaningful share price recognition for the strong performance of the business itself.
I dont think the purchase of MM can be viewed as the same objective of the advertising strategy. They are two very different things. The MM business exclusively advertises to a defined audience. Whereas the Swift advertising strategy aims to identify and categorise its audience and then target advertisements to individual viewers, much like what facebook does, showing you ads based on your viewing preferences. I dont think the purchase of MM is going to be used to fast track the advertising strategy, or even negate the need for a new team and development. Tow separate things IMO.
(20min delay)
