Mytaste Group is a digital media house headquartered in Stockholm, Sweden. The company excels in constructing scalable and auto-generated web products. The concepts behind the products are language independent, which means they can be applied on a multinational level and are today represented in 48 markets spread out all over the world. myTaste was founded in 2003, and their share is traded on Nasdaq Stockholm First North. Mytaste Group has two divisions; Mytaste Shopping and Mytaste Food and Beverage. The Group has a focus on performance-based marketing and lead generation.
Mytaste Food and Beverage; myTaste is one of the world's largest food sites with social functionality. The primary source of income is advertising. The segment consists of the Group's food-related sites; myTaste, Matklubben, Vinklubben, and Bodegashop.com. The most notable competitive advantages of myTaste are the networking effect; through the food blog network, adding scalability and user-generated social content.
Mytaste Shopping; The segment has a focus on performance-based marketing within e-commerce with the prime assets of Kampanjjakt, AlltidRea and Outlet Sverige. The business unit also operates an e-commerce platform, Shopello, which promotes other web shops products and receives revenue through the mediation of traffic.
myTaste, within the segment Food and Beverage, is one of the world’s fastest-growing social networks for recipes and cooking. Every day, millions of people all over the world use myTaste to discover, save and share their favorite recipes. My Taste is available in over 40 markets around the world and has around 7,2 m recipes. The myTaste network can be accessed by either visiting their Website or use the apps. Adding social functions to the myTaste network and converting website users to the app is the most central objectives for the company in the coming years. Apart from the Food and Beverage division, the Group also consists of Shopping which has a focus on performance-based marketing within e-commerce. The prime assets are Kampanjjakt, AlltidRea, Outlet Sverige and Shopello, which is an e-commerce platform which promotes other web shops products and receives revenue through the mediation of traffic.
Mytaste has spotted a vast and fragmented market of e-commerce affiliates. These companies must often have limited resources when it comes to technical development and has a significant risk exposure to Google; these factors lead most often to a relatively low acquisition price for highly profitable companies. myTaste wants to create a portfolio of these businesses and thus reducing the direct google risk and leverage their technical know-how. The development capacity within the Group is large as the company has put significant resources behind the evolution of the myTaste platform.
The market for e-commerce is large and growing at high rates. The retail digitalization continues with unremitting strength, and an increasing share of sales is moving online. In 2016, total e-commerce increased by 16 percent, equivalent to SEK 57.9 billion. E-commerce now accounts for 7.7 percent of total retail sales and 13.6 percent of retail sales. E-commerce growth is expected to continue to be strong in the future, by 2017, the market is projected to grow by 17 percent, which means online retailing share will account for almost 9 percent of total retail sales.
So the market in Sweden alone will generate roughly SEK 70 billion and growing at yearly rates exceeding 15%, but how large is the market for lead generation? By using the assumption that referrals stand for 20% of traffic and that the lead generator can get about 15% of sales then the lead market in Sweden alone is worth roughly 2 billion SEK annually. As Mytaste Shopping will most likely focus on expanding in Europe we find it worth mentioning that the European e-commerce market is forecasted to reach about SEK 5 740 billion during 2017, the using the same logic as for the Swedish market the lead market opportunity in Europe would amount to roughly SEK 172 billion, a number almost too large to comprehend.
- Opportunity in the e-commerce affiliate market, a vast and fragmented market
- Small lead marketing companies have development and significant risk exposure to Google; these factors lead most often to a relatively low acquisition price for highly profitable companies
- Mytaste Group wants to create a portfolio of these businesses and thus reducing the direct google risk and leverage their technical know-how
- The key factor behind the investment case of the myTaste platform is the continued growth of the app user base and subsequently the evolution of a true social network for online recipes
We find that the investment case in Mytaste Group rests on two pillars: Opportunity in the e-commerce affiliate market within the Shopping segment and the evolution of Food and Beverage into a social network for online cooking and recipes. We view the myTaste network as a more long-term opportunity, and will focus our case summary on Shopping and performance-based marketing within e-commerce.
A market up for grabs - Mytaste Shopping
The company has identified a vast and fragmented market of e-commerce affiliates. Most of the smaller lead marketing companies today have limited resources when it comes to technical development and has a significant risk exposure to Google; these factors lead most often to a relatively low acquisition price for highly profitable companies. Mytaste Group wants to create a portfolio of these businesses and thus reducing the direct google risk and leverage their technical know-how. The development capacity within the Group is large as the company has put significant resources behind the evolution of the myTaste platform.
In short, the opportunity for Shopping is:
- A market driven by the structural forces that today is only starting out, in Sweden the e-commerce stand for roughly 8% of the total retail market
- Identify acquisition targets through Shopello's affiliate network; the company has already identified over 50 in Sweden
- Reduced google risk through a portfolio leading to higher valuation of the whole than separately (The casino affiliate market is a prime example)
- Synergies in the Shopello network, i.e., better rates. When the can offer e-merchants larger volumes
- Cross marketing and merging email databases both existing email lists on Shopello but also the myTaste platform
- Cost cutting from implementing the Shopello affiliate network when acquiring the sites.
- Geographical expansion, the business model is extremely scalable, and new sites in other countries are relatively easy to set up.
- Leverage technical knowhow to develop apps, browser plugins and the like to improve the customer experience
- Data gathering where e-commerce vendors has a high willingness to pay
Bear points (Counterarguments to our thesis)
- The app market is highly competitive, and the need for more than one recipe app per user is low. The rise of competitive apps could leave myTaste behind. The company’s focus on social functions is what differentiates them from their peers.
- Acquisitions in general most often need a healthy financial market, a downturn could lead to less possibilities to acquire more exiting companies within the Shopping segment.
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