When figuring out why SWM is worth north of $1.50 a share it's...

When figuring out why SWM is worth north of $1.50 a share it's worth looking at the massive digital investment and transformation the business has gone through and what the business will look like in the near future.

I will break down just a few of the recent digital transformation outcomes that are relevant and some of the reasons why BVOD completely changes the economics of SWM to the major benefit of shareholders.

Code7+ (Phoenix)
This is a $40m digital investment that SWM has undertaken over the last 2 years that will be the most advanced ad trading platform in Australia. Phoenix combines software technology from Salesforce and Imagine Communications to make buying converged advertising (BVOD, Metro, Regional) at the touch of a button a reality.

AVOD players such as Youtube have invested heavily in this concept- Right now you can purchase advertising space on Youtube far easier than any tv network. In terms of achieving strong AVOD/BVOD digital growth, being the easiest company to deal with isn’t just nice it’s a necessity!

An example of this is what the ad industry terms ‘make-goods’. Basically, if you buy a prime-time tv ad slot the network usually guarantees the ad will have exposure to a certain number of viewers. If the show flops make goods are offered whereby the ad gets shown in other ad slots to make up the audience short fall. Chasing up make goods with the networks is one of the most time consuming tasks media buyers currently have. Phoenix when it launches this year will mean the death of make goods effectively saving media buyers thousands of hours of work in the process.

This means that SWM will be the first tv network able to sell audiences at the touch of a button and through inventory optimisation and AI audience prediction engines will be able to deliver guaranteed outcomes to advertisers.

The returns for SWM on this $40m investment are staggering at over 60% ROI. This is achieved by Phoenix effectively driving dynamic revenue yield optimisation (more money for the same ad slots) and improving inventory utilisation by more effectively managing ad campaign goals and commitments (more of the ad slots available being sold) . In less than 18 months of Phoenix going live it will have paid back its entire $40m investment!

This is the sort of digital transformation that even 5 years ago wouldn’t have been possible and SWM shareholders can now excitedly look forward to the extra $26m in revenue Phoenix will bring in for them in FY25.

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