Tradedoubler has announced cash flow has been hit hard this year. The relatively healthy SEK 55.7 M of last year has drastically dropped to -.0.26 in 2012. Net sales were down 8% from SEK 1,911.2 M in 2011 to 1,740 M this year and gross profit has also decreased from 459.3 M to 406.9 M, a decline of 10%.
The company’s latest interim report, which covers the period of January to September 2012, doesn’t make for rosy reading, especially when you look at third quarter specifics. Between July and September this year net sales fell by 16%, gross profit by 17% and operating profit slipped to SEK -7.8 M from 31.3 in 2011.
Optimism about new management structure
CEO Rob Wilson was encouraged by some of the adjustments he and new CFO, Jonas Ragnarsson, were making. Wilson revealed in his presentation to analysts that management changes, one of the causes for Tradedoubler’s decline, would be completed by the end of the year.
Previous CEO Urban Gillström was a high-profile change that allowed Wilson to step up and replace him. The role of Chief Commercial Office was abolished by Tradedoubler and Elaine Safier fell prey to this, and has now left the company. It’s unclear whether the change was made simply as a cost-cutting exercise.
The past strategy of expanding into search and display was discussed by Wilson. It’s a trend that has been noticeable amongst other networks. Commission Junction has MediaPlex and Rakuten LinkShare recently acquired mediaFORGE, both are display solutions. However, according to comments made by Wilson, this is no longer a priority for Tradedoubler.
“In recent years we have sought to develop our business by expanding into non-core areas such as display advertising and search,” he said. “We are now re-focusing on our core proposition – performance marketing - in order to take advantage of the sector growth.”
Dwindling network reliance
Some larger Advertisers appear to be moving away from a reliance on the traditional network model, which has had an effect on Tradedoubler’s bottom line. Apple severed ties with the network and has since been seen using Performance Horizon Group’s ExactView performance marketing platform.
Wilson provided a glimpse of Tradedoubler’s future plans when he alluded to the company’s latest threat. “Our market is maturing and the ability to offer a technology solution that allows advertisers to manage their own private network is becoming increasingly important,” he noted.
The Tradedoubler CEO lauded the network’s ability to potentially go head-to-head with PHG and its ilk in the future. “We are in a unique position to take advantage of this market opportunity as, unlike our competitors, we already offer both well-established technology and network solutions,” he said.