In this article, we will look at the 10 Worst Marketing Stocks to Buy. Let’s look at where LiveRamp Holdings, Inc. (RAMP) stands against other worst marketing stocks.
Overview of the Marketing Sector
The marketing and advertising industry is a vital part of our economy, playing multifaceted roles in facilitating market efficiency, nurturing creativity and innovation, and driving growth. According to a report by Solomon Partners, global advertising growth for 2024 is expected to fall between 4.6% and 7.2%. This amounts to nearly double the anticipated growth rate of 2%- 5% for 2023.
The Paris Olympics and impending US elections are the primary reasons behind this surge in growth anticipation. The report further highlights that out-of-home advertising is expected to have the highest ad spending growth year over year, at 7.2%. Digital ad spending takes the second spot, at 6.3%. On the other hand, print ad spending is expected to fall by 4.6% year over year.
Trends in the Marketing and Advertisement Sector
Macroeconomic improvement in the second half of 2023 and a positive economic outlook for 2024 are further expected to drive this growth. Inflation is also cooling down in 2024. In addition, the Federal Reserve cut interest rates recently by 0.5 percentage points. Since economic instability is typically cited as a primary reason behind advertisers’ spending cuts, the expectation of rising economic stability and growth is highly likely to fuel advertising spend.
A study by Dentsu revealed that the top twelve global markets are highly likely to increase their advertising spending by 13% as a percentage of GDP in 2024. This suggests that advertising spending exceeds macroeconomic growth.
According to estimates from IBISWorld, industry-wide revenue in the advertising sector has been growing at a compound annual growth rate of 2.7% over the past five years. It is expected to reach $70.1 billion by 2024, increasing by 1.9%. Profit is also anticipated to grow by 6.6%. According to a report by Mordor Intelligence, the online advertising market is valued at $257.97 billion as of 2024. It is expected to increase to $431.76 billion by 2029, growing at a compound annual growth rate of 10.97% in the forecast period.
However, with the market becoming increasingly saturated with political content, the landscape is anticipated to become more challenging for non-political companies attempting to get their message across.
Artificial Intelligence and Marketing
Similar to other areas of life, AI is changing the marketing industry at unprecedented speed. According to a January 2024 Foundation AI Survey, nearly 84.8% of the marketing pros respondents claimed to use AI in their workplace. In addition, a significant majority said that they use AI to improve their performance on a daily basis. The most common usage of AI in the industry is content creation, as cited by around 87% respondents. Other popular applications of artificial intelligence among marketing respondents included keyword research (42%), email marketing (39%), social media (39%), and note-taking (36%). When asked about the importance of AI to their job, 32% voted in favor of it being “very” important. 33% claimed it to be “Moderately” important, while 9% said that it was “very” important.
According to a report by McKinsey, around 75% of the value delivered by generative AI use cases could fall across four key areas: marketing and sales, customer operations, software engineering, and R&D. A suitable marketing use case is the application of generative AI to generate creative content, including personalized emails. The measurable outcomes of this application are likely to slash the expenditure of generating such content, along with an increase in revenue by using specially curated creative content with high efficiency.
McKinsey identified 63 generative AI use cases across 16 business functions, calculating a total value of economic benefits in the range of $2.6 trillion and $4.4 trillion per annum when applied across industries. This is one of the primary reasons why marketers across the globe are scrambling to advance their AI capabilities. Marketers are increasingly leveraging AI-powered tools to personalize content for higher engagement, automate tasks, and expedite content generation, all adding to efficiency and cost-reduction.
Our Methodology
To list the 10 Worst Marketing Stocks to Buy, we used the Finviz screener, ETFs, and related articles to compile a list of 20 marketing stocks. Next, we narrowed our list of stocks by selecting those with high short percentage of float. Finally, we ranked the stocks in ascending order of their short % of float. We also included the number of hedge funds for each stock for additional insight.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Worst Marketing Stocks to Buy
LiveRamp Holdings, Inc. (NYSE:RAMP)
Short % of Float: 2.38
No. of Hedge Funds as of Q2 2024: 32
LiveRamp Holdings (NYSE:RAMP) is a marketing technology company that offers online marketing, digital transformation, data foundation, and analysis services. It services clients worldwide. The company’s enterprise platform provides data collaboration, allowing companies to share first-party consumer data with business partners in a privacy-conscious manner. It supports several data collaboration use cases within organizations, brands, and its global network of partners by offering collaboration flexibility where data lives.
The LiveRamp (NYSE:RAMP) data collaboration platform allows organizations to unify prospect and customer data, including first, second, or third-party. They can then build a single view of the customer, keeping consumer privacy concerns in view. First-party data refers to first-hand data collection managed through a company’s controlled channels. In contrast, second-party data collection is data directly shared by a company with a business partner. In contrast, third-party data is data sold or collected by a company by leveraging an online data marketplace. This is usually conducted with companies with which it does not share a direct relationship.
The company’s Q1 fiscal 2025 exceeded analyst expectations, becoming the second consecutive quarter of double-digit subscription revenue and total revenue growth. In addition, the company’s marketplace revenue also increased by 28%, showing strong consumer demand across digital advertising tactics, including CTV. These trends highlight its strong profitability model in an uncertain macro environment.
Two of the company’s key performance indicators were especially strong: annual recurring revenue and subscription net retention. Annual recurring revenue experienced an increase of $11 million quarter on quarter, making Q1 fiscal 2025 the third consecutive quarter of double-digital millions net new ARR. Subscription net retention also grew by 2 points quarter on quarter, reaching 105% and highlighting its strong standing among existing customers.
LiveRamp Holdings (NYSE:RAMP) also focuses on developing deeper relationships with system integrators and cloud hyperscalers. It is continuing to pursue its Embedded Identity, Activation, and Clean Room capabilities across all major cloud providers. It is also working with an array of specialized firms and full-service IT consultants with the SIs. The stock takes the eighth spot on our worst marketing stocks to buy list.
Meridian Contrarian Fund made the following comment about LiveRamp Holdings, Inc. (NYSE:RAMP) in its Q2 2023 investor letter:
“A holding that warranted an additional investment during the quarter was LiveRamp Holdings, Inc. (NYSE:RAMP), a developer of a data connectivity platform that sharpens targeted advertisement placements while shielding consumer data privacy. The company’s technology allows improved advertising targeting and measurement across internet-based, streaming, and traditional verticals while meeting the ever-shifting data privacy regulations being enacted globally. We initially invested in the first quarter of 2023 following a difficult 2022 in which advertising spending slowed and LiveRamp rolled out new products and brought on new salespeople—which all combined to drive down earnings. In addition to the investments in future growth, however, management also reduced legacy products, which has lowered costs and improved earnings and cash flow through the first part of 2023, despite a still-tough advertising environment. We added to our position during the second quarter as the company’s internally driven earnings turn appeared to take hold, emphasizing our approach to opportunistic value and gaining access to one of the fastest-growing advertising verticals such as streaming television.”
Overall, RAMP ranks eighth among the worst marketing stocks to buy now. While we acknowledge the potential of marketing companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RAMP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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