We recently published a list of 11 Best AdTech Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where DoubleVerify Holdings, Inc. (NYSE:DV) stands against the other best Adtech stocks to buy.
As per Dimension Market Research, the Global AdTech market size touched US$1,066.8 billion in 2023 and should reach US$3,528.4 billion by 2032. The market is expected to compound at ~14.2% from 2024 to 2032. Some of the critical trends include a strong emphasis on privacy-centric advertising, growth fueled by AI-driven personalization, and dominance of video and mobile advertising.
Key Trends Defining the AdTech Market
Artificial Intelligence and Machine Learning continue to drive sophisticated audience segmentation and personalized ad experiences. As per Geomotiv, a software development company, these technologies can quickly analyze vast amounts of data, predict user behavior, and tailor ads in real time. Collectively, these features help to improve engagement and conversion rates. The benefits of personalization and the opportunities provided should drive the demand for these solutions and the growth of AI-oriented AdTech companies.
Market experts believe that advertisers continue to target Programmatic advertising. This space continues to expand beyond traditional digital channels. Adnimation, a software company, highlighted that CTV ad spending is expected to grow to $42.4 billion by 2027 in the US. Publishers that have video content should prioritize CTV and find for best supply-side platform (SSP) to tap into a rapidly growing market.
Advertisers have been leveraging programmatic to reach the audiences with targeted ads. Furthermore, programmatic continues to make inroads into the audio format, such as podcasts and music streaming services. Next, AdTech SaaS companies have been providing customizable solutions, which enable advertisers to tailor the tools and features as per the specific needs. The popularity of these products continues to grow among advertisers and publishers.
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Blockchain and Influencer Marketing Should Drive Growth
As per Adnimation, data-driven influencer marketing is expected to dominate the broader AdTech market. Furthermore, the publishers and their AdTech counterparts continue collaborating with micro-influencers to fuel engagement and conversions. Blockchain technology should also be key in ensuring transparency in digital ad transactions. By decentralizing ad transactions, blockchain can help reduce ad fraud, improve trust between publishers and advertisers, and enable accurate tracking of ad performance. This will result in more reliable revenue streams. Adnimation also believes that, by 2025, video is expected to dominate digital ad formats, making up 82% of all internet traffic.
Our Methodology
To list the 11 Best AdTech Stocks to Buy According to Hedge Funds, we scanned through online rankings and AdTech-focused ETFs. After getting the initial list of 20-25 stocks, we shortlisted the ones having high hedge fund holdings. Finally, the shortlisted stocks were arranged in ascending order of their hedge fund sentiment, as of Q3 2024.
At Insider Monkey we are obsessed with 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).
A digital publisher using the company’s predictive analytics to create relevant content on a webpage.
DoubleVerify Holdings, Inc. (NYSE:DV)
Number of Hedge Fund Holders: 33
DoubleVerify Holdings, Inc. (NYSE:DV) offers a software platform for digital media measurement and data analytics. The company focuses on ensuring the effectiveness, quality, and security of digital ad campaigns throughout multiple platforms.
Given its strong foothold in the industry, DoubleVerify Holdings, Inc. (NYSE:DV) has achieved a duopoly status. The company continues to focus on product innovation rather than sales expansion which has placed it favorably in a consolidating market. Wall Street believes that DoubleVerify Holdings, Inc. (NYSE:DV)’s growth momentum should be fueled by its partnership with Meta Platforms, Inc. (NASDAQ:META). The anticipated launch of prebid tools on Meta’s platform in early 2025 should unlock additional social revenue opportunities.
The partnership with Meta provides DoubleVerify Holdings, Inc. (NYSE:DV) access to Meta’s vast user base throughout a family of apps, such as Facebook, Instagram, and WhatsApp. This will allow the company to provide its measurement and verification services to a broader range of advertisers.
The company has also introduced the Inflammatory Politics and News category on Meta, which focuses on protecting advertisers from aligning with controversial content. This new feature is aided by DoubleVerify Holdings, Inc. (NYSE:DV)’s Universal Content Intelligence, an AI-powered engine ensuring precise content categorization throughout the platform. The company’s duopoly status was further strengthened by industry consolidation, such as Oracle’s exit from the ads business. This provides new client acquisition opportunities.
DoubleVerify Holdings, Inc. (NYSE:DV) demonstrated its competitive strength via high win rates in RFP processes, mainly in acquiring former Moat clients. The London Company, an investment management company, released a second-quarter 2024 investor letter. Here is what the fund said:
“Initiated: DoubleVerify Holdings, Inc. (NYSE:DV) – DV develops software platforms for digital media measurement, data, and analytics. DV sells a critical insurance-like product known as “ad verification,” designed to create transparency, eliminate fraud, and drive ad-spending optimization. Ad verification has reached a point of mass acceptance among digital ad buyers due to its measurable low cost/high reward value proposition. DV operates in a duopoly where it commands the leading market position (>50% market share), by focusing on product innovation rather than sales expansion. DV’s business should continue to benefit from secular tailwinds in digital advertising. Incremental revenue growth should be accretive to returns on capital, given the its high cash margins and minimal capex needs. We initiated our position following a pullback, allowing us to purchase an advantaged company growing at a double- digit rate, with high margins, at a market multiple.”
Overall, DV ranks 4th on our list of best AdTech stocks to buy according to hedge funds. While we acknowledge the potential of DV as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than DV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.