CrowdGather (CRWG: OTCBB) announced today that it has acquired the domain name, website, and assets related to PbNation.com one of the world’s largest online paintball communities according to Forbes and the Chicago Tribune.
PbNation generates 20 million monthly pageviews and approximately 1.9 million monthly unique visitors. On a combined basis, the CrowdGather forum network will generate 155 million monthly pageviews and 15 million monthly unique visitors.
As the only publicly traded company focused on forums, CrowdGather is quickly becoming the dominate consolidator of Internet forums, having already added Forumer.com , Freeforum.org, Lefora.com, Rapmusic.com, Pocketables.com, GoodandEvo,net, in the last year.
The Company currently generates its revenues by monetizing its swelling web traffic, through its relationships with a number of advertising networks. The advertising partners serve a key role by aggregating ad space from companies who want their products or services marketed on CrowdGather’s network of forum sites.
Advertising rates are measured in CPM, an Internet advertising term that stands for cost per thousand ad views. Major Internet sites such as ESPN and Huffington Post can get as high as $20 CPM. Forum sites like the ones CrowdGather operates generally are getting on average of less than $1 CPM.
Despite low CPM rates, CrowdGather is starting to see a dramatic increase in revenues comparisons quarter over quarter. Over the last 2 quarters revenues year over year comparisons have increased over 350%. Based on the growth of their projected forum traffic and potential acquisition the company has in the pipeline, the Company believes it may be profitable in the upcoming fiscal year.
The real story and what gets us very excited is the potential upside in CrowdGather’s CPM advertising rates.
Last June CrowdGather completed the acquisition of Adisn a next generation digital ad agency that uses relationship data from the social web to enhance ad targeting. Adisn negotiates advertisement rates with its customers and then purchases ad inventory from real time advertising exchanges and online publishers at a lower cost, keeping the difference as net revenues.
Adisn came with a big intangible assets, potential adserver technology that can provide analytics and tracking which is what is needed when the company is negotiating with advertisers to justify higher value advertising campaigns.We use the word potential because up until recently the company need to invest money, including hiring an engineering team to fully exploit its adserver technology. With the closing of its recent $7.85 million financing the company is now accelerating its plans to get a working adserver platform.
What the technology will allow CrowdGather to do is to target ads to demographic segments of it audience (ex. males 24-44) or target niche verticals markets (ex. paintball enthusiast). Being able to reach target niche verticles (men 24-34) and having massive scale (being able to deliver more than 50,000,000 ad impressions in a single advertising campaign) is the reason why major Internet sites like ESPN is able to command $20 per CPM.
CrowdGather expects to have its adserver platform working on its network of sites this fall. By the fall of 2012, CrowdGather expects to have the adserver platform available for non CrowdGather sites.
Assuming CrowdGather can deliver, they will be in a position to command significantly higher CPM rates starting this fall.
Advertisers want bigger and bigger online audience and reach, CrowdGather’s adserver platform will allow it to create channels out of a lot of small sites that currently go unmonetized. The Company expects to grow their CPM advertising rates and eventually make money. The potential for upside surprises in quarterly revenues due to rising CPM advertising rates is the real story.
CrowdGather is starting to attract “smart money” institutional investors, for example, John Hancock Small Cap Intrinsic Value Fund, participated in CRWG’s recent $1.10 financing..
CrowdGather is the leader in its market segment, is starting to get significant traction with consumers. On an enterprise bases CRWG is trading at a start up valuation despite being a growth stage company with the potential for huge upside surprises in revenue beginning with the fall launch of its aderver platform.
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