DGTL Reports on the State of the Digital Media and Adtech Sector During COVID-19

- September 15th, 2020

DGTL Holdings Inc. reports that the predominant research from the Digital Media and Adtech sector indicates that the growth of digital adoption, the new “gig-economy” and first-user driven content models have been accelerated by the COVID-19 pandemic.Firstly, recent research from McKinsey Digital estimates that the global gig-economy has vaulted five years forward in the adoption of digital media innovation in just …

DGTL Holdings Inc. (TSXV: DGTL) (“DGTL” or the “Company”) reports that the predominant research from the Digital Media and Adtech sector indicates that the growth of digital adoption, the new “gig-economy” and first-user driven content models have been accelerated by the COVID-19 pandemic.

Firstly, recent research from McKinsey Digital estimates that the global gig-economy has vaulted five years forward in the adoption of digital media innovation in just the past eight weeks. McKinsey cites digital capability as vital to maintaining and growing productivity output and critical to maximizing operations in the post-COVID-19 normal.[i]

McKinsey states that, “The post-coronavirus world has forced companies of all sizes to map their digital strategies in a matter of days, or weeks, instead of months, and years. The post-COVID digital gig-economy is expected to revolutionize operational business models via: ‘supply chain transparency, remote workforces and [process] automation'”.[ii]

A recent KPMG report also identifies the pandemic as a major accelerator of digital transformation and widespread digital adoption, highlighting: “rapid scalability, real-time decision making, zero marginal cost of expansion and enhanced productivity”, as long-term effects.[iii] Digital adoption has been further accelerated through the growing accessibility to artificial intelligence (AI) and machine learning (ML) technology, providing online business with enhanced competitiveness via streamlined operational platforms.[iv]

This trend is consistent with sector research in the Digital Media and Adtech sector. According to research projections by Mordor Intelligence, the online advertising market was valued at US $304 billion in 2019 and is estimated to reach US $982 billion by 2025, growing at a compound annual growth rate (CAGR) of 21.6%.[v] More recently the US Department of Commerce reported more than 20% of all retail transactions in Q2 of 2020 were online, the highest e-commerce penetration of any quarter, or year, on record.[vi]

A recent IAB.com research report, titled “COVID Advertising Spend Impact”, identified that the global media buyer community expects digital spending to increase in 2020-2021. Key growth areas among digital media buyers include; Paid-Search at (+26%); Social at (+25%); and CTV (Connected-Television) at (+19%). These buyers estimate an annual decline for traditional media spend (-8%), and most notably, DOOH (Digital-out-of-Home) at (-43%), Linear Television at (-24%) and traditional OOH (Out-of-Home) at (-46%).[vii]

Evidence of pervasive global digitization is also evident within the global capital markets. According to the Canadian Venture Capital and Private Equity Association (CVCA), venture capital investment within Canadian companies hit a record high in the second quarter of 2020, with AI technology as a major driver. The second quarter of 2020 saw $1.66 billion in venture capital invested, a 23% year-over-year increase, and more than double the amount invested in Q1 of 2020. This is the highest amount of venture capital invested in a second quarter since the CVCA began collecting data.[viii]

McKinsey reports that companies are adopting new and innovative digital technologies early, and at scale, with increased allocation of resources deployed for digital initiatives and M&A. This trend has led to companies shifting to a “design-thinking” model (reverse engineering operational workflow to digitize end-user needs and experience). As valuations of digital media solutions may have been impacted during COVID-19, research identifies this as an opportune time to identify under-valued assets for future acquisition.

Research suggests that the major investments associated with this large scale digitization of the new gig-economy will not be reversed post-crisis, due to the newly advantaged cost structure of remote operations. Furthermore, this trend has put new demands on companies to maintain competitiveness by catering to the new digital gig-economy.

Secondly, rapid migration of the workforce towards the new gig-economy has also been accelerated by the global pandemic. Prior to COVID-19, six million workers entered the gig-economy in the USA, a 15% rise from the previous decade.[ix] Today, online media consumption research reports that three quarters of all first-time digital media users have indicated that they will continue this usage trend beyond the pandemic recovery.[x]

McKinsey estimates up to 75% of the workforce in the Information Technology, Media, and Telecom, Business and Financial Services sectors are now operating remotely, and are expected to continue to do so, post the COVID-19 recovery. Research identifies that “what we are witnessing what will be remembered as a major inflection point in the global gig-economy as a historic level of remote workers are being deployed”. Fully digitized business operations has become a pervasive trend across every active domain.[xi][xii]

From a consumer behavior perspective, media consumption on mobile and tablet platforms surpassed that of linear television back in 2019. This historic point in the evolution of the digital media sector first led to the adoption of the new first-user media content model.[xiii] This new content model is faster, more cost efficient, drives better performance and, most importantly, is endemic to the new mobile first environment.

The COVID-19 pandemic has increased the demand for access and management of a remote talent pool of creative publishers to serve this “new content model”. This is mainly due to widespread employee layoffs in the creative community, the growing demand for more cost-effective freelance talent as well as pressure on operations from the mobilization of a global remote workforce. This global pool of online content creators continues to grow during the COVID-19 pandemic and has been further accelerated with new digital media platforms being introduced into the market. This trend has perpetuated the need for Fortune 100 level brands to seek solutions that serve the creation and deployment of first-user driven creative content in a market dominated by a remote workforce of publishers.

In addition, larger creative advertising agencies are not structured for remote operations, or able to keep pace with rapid innovation. This trend has accelerated the need for a crowd source strategy to serve the new content model. Buy side demand has led to the growth of new and innovative enterprise level software solutions that effectively identify, activate and manage a global pool of remote creative content creators. These software platforms accumulate and deploy multimedia assets, in real time, in a more cost efficient way, while measuring the return on investment with quantifiable business metrics.

DGTL’s wholly owned subsidiary Hashoff is an artificial intelligence driven technology that is designed to activate a remote creative workforce that activates and manages this new remote first user content creator model. Hashoff is an enterprise level Content-as-a-Service (CaaS) AI/ML solution that allows Fortune 100 level brands to source, manage, distribute and measure their digital marketing initiatives.

Hashoff empowers global brands to activate the new first-user content model, in all media formats, including social media engagement and paid content creative through a single cloud-based enterprise level software platform. Hashoff’s AI-ML software can identify and activate content creators within a specific demographic or a particular region through a real-time connection with more than 140 million freelance content creators online.

Moving forward, DGTL seeks to continue to support and accelerate Hashoff’s three-year growth plan. In addition, DGTL is evaluating new opportunities for accretive acquisitions of additional enterprise level SaaS companies across the key growth areas within the digital media and advertising technology sector (i.e. content, distribution, and analytics).

DGTL HOLDINGS INC.

DGTL Holdings Inc. incubates innovative and disruptive digital media and advertising technology companies, powered by Artificial Intelligence (AI). DGTL (i.e. Digital Growth Technologies and Licensing) specializes in accelerating fully commercialized enterprise level SaaS (software-as-a-service) companies via a blend of unique capitalization structures, including investment, M&A, earn outs and licensing structures. For more information, please visit https://dgtlinc.com.

Investor Relations

Email: IR@dgtlinc.com
Phone: +1 (877) 879 – 3485

NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES.


[i] https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/global-surveys-of-consumer-sentiment-during-the-coronavirus-crisis

[ii] https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/digital-strategy-in-a-time-of-crisis

[iii] https://assets.kpmg/content/dam/kpmg/sa/pdf/2020/covid-19-as-accelerator-of-digital-transformation-and-the-gig-economy.pdf

[iv] https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/five-fifty-digital-lipstick

[v] https://www.mordorintelligence.com/industry-reports/online-advertising-market

[vi] https://www.digitalcommerce360.com/article/quarterly-online-sales/

[vii] https://www.iab.com/insights/covid-ad-spend-impact-2020-2021-light-at-the-end-of-the-tunnel/?__s=a9bktxxo41frpi33szqq

[viii] https://betakit.com/canadian-venture-capital-investment-hits-record-in-q2-2020-despite-covid-19/?

[ix] https://www.adp.com/-/media/adp/resourcehub/pdf/adpri/illuminating-the-shadow-workforce-by-adp-research-institute.ashx

[x] https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/survey-us-consumer-sentiment-during-the-coronavirus-crisis

[xi] https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-covid-19-recovery-will-be-digital-a-plan-for-the-first-90-days

[xii] https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/global-surveys-of-consumer-sentiment-during-the-coronavirus-crisis

[xiii] https://www.emarketer.com/content/average-us-time-spent-with-mobile-in-2019-has-increased

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