Saturday, July 30, 2005

a new long position! Aptimus (APTM)

I picked up some shares of Aptimus (APTM) last week in the $17's. The co. reported on Thursday and took down 2005 guidance pretty significantly and finished the week at $15.99. Note that APTM is a microcap stock (market cap ~ $100 million) and avg. daily volume is around 30,000 shares. This isn't SONT type speculation but it is speculation nontheless.

I would describe APTM as an online direct marketing lead generation company. I'll try to illustrate what this means. Suppose you were to visit Zeb's Cooking Supply website and decided to purchase some pots and pans. After you complete the online transaction, an ad for the Culinary Arts Institute appears on your screen. It might ask you for your name and address so that the Institute could send you a DVD that covers their chef program. In this situation, the Institute (advertiser) would pay APTM for generating a lead. And APTM would share a portion of that revenue with Zeb (publisher). APTM has a process called Dynamic Revenue Optimiztion to figure out the best place to place advertisers ads in it's network. This model seems pretty simple and scalable. The trick is for APTM to attract high powered advertisers and publishers into their network. To that end, APTM has made some key personnel moves recently. They hired the founding CEO of Ask Jeeves (Wrubel) as an EVP, a former VC guy into Business Development (Benz) and added another Business Development guy (Mayor) that used to work with email marketing networks. If you look at the pr (link above), the taking down of EPS guidance might be due in large part to bringing these big hitters on board.

I've spent the past 3 years in the direct marketing industry and can tell you that advertising dollars are making their way online. My company mails an unbelievable amount of catalogs to our housefile and also utilize prospect mailings quite heavily. I know that as we continue to grow, new customer acquisition efforts will make their way online. The stated ROI's are just too compelling not to test into this area (APTM type networks).


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