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December 26, 2012 5:34 pm
Digital Globe Services, a US online advertising group, plans to raise about £9m with a flotation in London early next year.
The Colorado-based group – which helps clients bid for “paid search” results on search engines such as Yahoo, Google and, increasingly, Facebook – will use the funds to aid the group’s expansion into Europe, Latin America and Asia.
Jeff Cox, chief executive and founder, said: “We believe [a London listing] could provide a credible home for our business, raising our profile internationally and supporting our launch into European and Latin America markets.”
DGS uses algorithms to help companies get the best deal when bidding for advertising space on search engines. These “paid search” adverts account for about half of the $90bn internet advertising industry, according to Publicis’ ZenithOptimedia.
Mr Cox said that DGS aims got clients’ online adverts in front of as many relevant customers as possible by carefully choosing the search terms that trigger the advert to pop up, rather than simply driving as much traffic on to the site as possible.
“There’s a lot of science, and a bit of art, that goes into determining the value of a keyword,” he said. “It’s not about the cheapest adverts, it’s about the most profitable.”
The group, which launched in 2008 and has been profitable since 2009, has seen particular growth in revenues from mobile advertising in recent years. This accounted for a quarter of all advertising revenue in 2011 and slightly more than half this year.
Paid-search on Facebook has also grown in recent years, although traditional search engines such as Yahoo, Bing and Google account for the bulk of DGS’s revenues.
“Candidly, [Facebook] not a significant source of revenue today, but there are pockets within Facebook that allow us to generate interest in a product,” said Mr Cox.
The float is another sign that the IPO market for technology companies in London might be improving. This month Fusionex, a Malaysian IT company, raised £12m in a float that was three-times subscribed.
Fusionex was only the fourth technology float of 2012, however, coming after WANdisco, Incadea and Blur Group earlier in the year.
In recent years, the City has struggled with a reputation that it is less friendly towards technology companies than other big markets, especially the US.
Mr Cox said: “We feel that the UK investors are looking for good quality technology businesses who generate cash. We’ve been profitable since 2009. The investment community in the UK is looking for those types of businesses.”
A float is not the only option available to DGS, according to its chief executive, however. “We’re looking at a variety of financing options,” said Mr Cox. The group have appointed N+1 Singer as adviser, which worked on Blur Group’s initial public offering this year.
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