Internet marketing giant Tradedoubler’s plummeting profits are ‘not acceptable’, according to its CEO Rob Wilson.
The Stockholm-based company, which helps advertisers worldwide drive profitable growth in new markets, held a conference this morning to reveal its Q4 results and annual report.
In the key period from October to December, net sales, adjusted for changes in exchange rates, amounted to SEK 567.7 million - a fall of 17% compared to the same period last year.
There was also a decline of 17% in gross profit, to SEK 134.6 million, adjusted for changes in exchange rates.
Despite the year-on-year decline, Q4 demonstrated the anticipated seasonal improvement on Q3. Net sales were up 8% from Q3 and gross profit increased from SEK 119.7 million to SEK 134.6 million.
Wilson, who said the company had been guilty of ‘naval gazing’, perhaps implying they had focused too much on a single issue at the cost of ignoring other important issues, said the fourth quarter losses could also be attributed to restructure costs.
In Q4, a total of SEK 10.9 million accounted for ‘change-related costs’ and consisted mainly of costs for closing offices and removing certain managerial positions.
Future Growth Ahead
Wilson stressed that he was unhappy with the company’s poor performance, yet despite his ‘underlying dissatisfaction’, he said the business expects between 3-7% future growth in the performance marketing sector.
“Both the management team and the organisation as a whole have worked tirelessly to bring a strong performance marketing focus back to Tradedoubler, and have implemented key measures to ensure that Tradedoubler has a strong platform on which to strengthen its leadership position,” Wilson said.
Wilson said the Swedish business, which was founded in 1999 and is listed on the Stockholm Stock Exchange, will focus on prioritising key clients in key markets, will improve its service and product offering to become clients’ first choice, and stressed that the restructure of the business will better serve the needs of its clients.
Operations to Cease in Russia
In Tradedoubler’s quest to increase its focus on performance marketing, it is now in the process of closing its operations in Russia. Performance marketing did not take off in Russia as well as anticipated.
Tradedoubler’s performance marketing ‘road map’ for 2013 will target mobile, billing/payment and automation. A specialist client support administration team has also been set up in the UK, which will free up international and local account teams – allowing them to focus on driving improvements in its clients' performance marketing programmes.
The company, which has a network used by 2,000 advertisers and 140,000 publishers, will focus less on campaigns, as the performance marketing sector is showing such good growth.
The business will also concentrate on different types of traffic within mobiles and hopes to integrate Facebook more with its clients.
In relation to performance marketing, Wilson stressed that the US market had taken full advantage of Facebook, but said that people in the European market ‘don’t really get it’. He said the social network had either been dismissed, or was just not properly understood by advertisers – something Tradedoubler will seek to remedy this year.
Wilson, who says Tradedoubler will focus particularly on technology and the affiliate network, also anticipates that travel will continue to be a significant area of growth.
Despite the overall year-on-year lag, Wilson said the work done in 2012 has put the business in a good position going into 2013.