Sep 1, 2023
We love businesses that, on the surface, appear to be one thing but when you get under the hood, reveal that their success comes from something completely different.
It’s a bit of magic that you have to believe stems from finding product market fit, exploring expansion that sits along the same consumer supply chain, all to realize that these new verticals may be even more profitable than the first.
Think of a car dealership that actually earns the bulk of their profits from their loan business. Or the idea that Costco isn’t a big box retailer, it’s a subscription business. Or Charles Schwab, an investment company, that actually makes more revenue when you leave your capital in cash.
Instacart’s recent S-1 filing highlighted yet another example of these magical businesses. Underneath the surface, Instacart is an ad business that happens to sell groceries. The company did $740 million in advertising revenue in 2022 or 31% of their total revenue.
Instacart is essentially shelling ‘virtual shelf space’ and big brands are buying it in bulk.
Instead of competing against 30 different brands in the notoriously crowded chip aisle, Frito-Lay can buy the top result when you type “potato chips” into the search bar. The brand can increase conversion by double digits and Instacart can re-invest their high margin advertising profits back into the cost intensive logistics business.
Suddenly, delivery can be the loss leader that acts as the lead gen for their advertising business. A camouflaged profitability engine for unlocking growth.
Some might argue that many of the largest tech platforms in the world are media companies in disguise. Amazon booked $10 billion in ad revenue last quarter and Uber’s expected annual revenue for its ad business is projected to grow to over $1 billion by 2024.
The lesson here? Brands will go where consumers take them and they will pay to play. A scaled business, with unique data, is incredibly valuable to advertisers and the business itself has real staying power. Of course, the advertising business is only as good as the underlying transaction volume.
But it’s impossible to ignore the fact that selling digital air is a heck of a business, if done right.
Have a great weekend,
— Your Titan Team
As of writing, AMZN, SCHW, and UBER are holdings in Titan Flagship.
© Copyright 2023 Titan Global Capital Management USA LLC. All Rights Reserved.
Please refer to Titan's Program Brochure for important additional information. Certain investments are not suitable for all investors. Before investing, you should consider your investment objectives and any fees charged by Titan. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested, including principal. Brokerage services are provided to Titan Clients by Titan Global Technologies LLC and Apex Clearing Corporation, both registered broker-dealers and members of FINRA/SIPC. For more information, visit our disclosures page. You may check the background of these firms by visiting FINRA's BrokerCheck.
Various Registered Investment Company products (“Third Party Funds”) offered by third party fund families and investment companies are made available on the platform. Some of these Third Party Funds are offered through Titan Global Technologies LLC. Other Third Party Funds are offered to advisory clients by Titan. Before investing in such Third Party Funds you should consult the specific supplemental information available for each product. Please refer to Titan's Program Brochure for important additional information. Certain Third Party Funds that are available on Titan’s platform are interval funds. Investments in interval funds are highly speculative and subject to a lack of liquidity that is generally available in other types of investments. Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. Liquidity and distributions are not guaranteed, and are subject to availability at the discretion of the Third Party Fund.
The cash sweep program is made available in coordination with Apex Clearing Corporation through Titan Global Technologies LLC. Please visit www.titan.com/legal for applicable terms and conditions and important disclosures.
Cryptocurrency advisory services are provided by Titan. Cryptocurrency trading is provided by Bakkt Crypto Solutions LLC ("Bakkt Crypto"). Bakkt Crypto is not a registered broker-dealer or a member of SIPC or FINRA. Cryptocurrencies are not securities and are not FDIC or SIPC insured. Bakkt Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. Cryptocurrency execution services are provided by Bakkt Crypto (NMLS ID 1828849) through a software licensing agreement between Bakkt Crypto and Titan. Please ensure that you fully understand the risks involved before trading: bakkt.com/disclosures.
Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.
Contact Titan at email@example.com. 508 LaGuardia Place NY, NY 10012.