Adgorithms battles online ad slump with Albert hopes still high

Adgorithms saw sales slump amid continued subdued conditions in the first half but it cut losses and has moved its senior team to New York as its looks to drive greater acceptance of its 'Albert' online advertising campaign management software.

Since the Israeli company floated on AIM in June last year, it has faced what it said has been "a dramatic shift in the online advertising market", as a clampdown on fraudulent traffic by some of the major advertising exchanges resulted in a sharp decline in volume, which have not since recovered.

This year has also seen somewhat of a general advertising slump, as has been seen at ITV, with advertisers "recalling their online media budgets for evaluation", which Algorithms said its Albert artificial intelligence product should benefit, as it automates the process of media planning and buying, execution, optimisation and analysis to maximise the return on investment for brands.

Chief executive Or Shani has looked to diversify the indirect business, which transacts on undervalued inventory on advertising exchanges and provides the bulk of revenue while the Albert business builds up, and added more than 50 partners during the period.

As a result, revenue fell 29% to $8.7m, with adjusted operating losses of $2.7m versus $2.6m last year, even with investment in research and development almost doubled to $2.1m.

There was still more than $28m cash left in the bank at the period end.

Shani and his CFO have moved to the US and recruited a 13-person sales and marketing team and relaunched Albert 2.0, which "can run thousands of variables in micro-seconds thus enabling brands to drive revenue, reduce costs and make more informed investment decisions at a pace and scale not previously possible".

Shani added: "We believe there is a significant market opportunity for Adgorithms with Albert at the heart of our business as the marketing industry continues to seek out data-driven solutions in an increasingly cluttered data world. The collection and aggregation of data from multiple sources is only useful if you are able to draw correlations, such as the conversion of a Facebook ad versus an email campaign, and ultimately improve your customer offering."

Shares in Adgorithms, which were floated at 133p, were down 21% on Monday to 20.5p with just over an hour before trading closed.