Investment Case
LBG Media (‘LBG’) has firmly established itself as a leading global digital entertainment business, focused on engaging and empowering young adults.
Our mission is to give the young adult generation a voice by building communities that laugh, think and act. As one of the world’s largest publishers focused on young adults, we are at the intersection of two significant trends: the continued rise of digital advertising and the increasing influence of Gen Z as a consumer demographic. We operate in the largest and fastest growing sector of the advertising market and continue to leverage our expansive distribution network, unmatched audience engagement, deep insights, and the power of our diverse portfolio of brands to drive exceptional growth.
The combination of;
- the macro shift to digital advertising and growth of Gen Z purchasing power;
- our scale, relevance and unmatched engagement;
- a growing U.S. footprint; and
- diversified revenue streams driving strong financial performance;
all give LBG an unrivalled competitive edge as we build an entertainment powerhouse for young adults with a clear line of sight to £200m of revenue.
MACRO SHIFT TO DIGITAL
AND THE RISE OF GEN Z
LBG operates within the increasingly dominant digital advertising market, which continues to capture an even larger share of global advertising spend.
The global digital advertising market will account for 70% of total global advertising spend by 2025, up from 50% just five years ago.1 This growth significantly outpaces traditional media
and, for the first time in 2024, social media has become the largest global advertising channel, underscoring the rapid evolution and dominance of digital platforms in the advertising landscape.
1. WARC, Global Ad Spend Outlook 2024/25.
2. NIQ, A Report on Gen Z Spending Power.
As a major player within this expanding digital ecosystem, LBG is perfectly poised to capitalise. This is further supported by our ability to connect with young, digitally-active audiences, particularly Gen Z, who are expected to become the wealthiest generation globally by 2030.2 Gen Z’s growing spending power and digital engagement present a substantial opportunity for LBG to capture an increasing share of advertising spend from brands eager to engage this valuable cohort.
LBG is a direct beneficiary of these market dynamics with positive signs already flowing through in our current financial performance, and the substantial future opportunity.
SCALE, RELEVANCE, AND
UNMATCHED ENGAGEMENT
At the core of LBG’s success is a
growth cycle fuelled by highly engaging
content, growing audiences, and
increasing advertising revenues.
Our ability to consistently create
content that resonates with young
adults – combined with our extensive
distribution channels – drives high
levels of engagement. This attracts
the biggest blue-chip brands and
top A-list celebrities, who are also
attracted to the rich understanding we
have of our audience and the data and
insights we can provide. This leads to
stronger partnerships and increasing ad
revenues. As our advertising revenues
grow, we continue to reinvest in content
creation, distribution networks and data
tools, further enhancing our capabilities.
This cycle of growth, where each step
reinforces the next, is central to our
ability to scale rapidly and sustainably.
A GROWING U.S. FOOTPRINT
Our U.S. expansion is a core component of our long-term strategy. As a reminder, our business is split between our Direct and Indirect segments, with expansion in the U.S. supplementing both these revenue streams. The acquisition of Betches Media in 2023 has provided a springboard for the Group in the world’s largest and most lucrative advertising market. With its complementary audience focused on millennial and Gen Z females, the acquisition is already yielding some impressive results following significant new blue-chip client wins in the year and a promising pipeline. This strategic acquisition and expansion of our U.S. presence positions LBG Media to capitalise on growing opportunities and further accelerate our success in the world’s biggest ad market.
DIVERSIFIED REVENUE
STREAMS
LBG has an increasingly diversified revenue base. The broadly even split between our two core routes to market – Direct and Indirect – reflects the effectiveness of our business model. Direct revenue is where we provide content marketing services to blue-chip brands and media agencies and have a direct relationship with the advertiser. Indirect is where we generate revenue on social platforms and from our owned and operated websites.
Direct revenue accounted for 53% of total revenue for the 9 months ended 30 September 2024, up from 41% at FY21 – the first set of public results >following listing on the London >Stock Exchange in December 2021. This growth is driven by strong, long-term partnerships with major brands as we continue to take share from traditional media players. Within Indirect revenue, we have seen strong growth in our Web programmatic offering, which for the 9 months ended 30 September 2024, now accounts for 49% of Indirect revenue, up from 30% at FY23. While social platforms remain a key contributor, the expansion of our Web operation and its high levels of engagement and monetisation have provided greater diversity, enhancing our resilience to market fluctuations and reinforcing the sustainability of our growth.
This robust top-line performance is supported by a solid balance sheet and a healthy cash position of £27.2m as at 30 September 2024. Our strong levels of cash generation provides the financial flexibility to pursue strategic M&A opportunities, enabling us to continue scaling and delivering long-term growth.
LBG AND OUR
COMPETITIVE EDGE
LBG has established itself as a leader in the digital entertainment industry, driven by our unmatched scale, audience engagement, and strategic positioning in the rapidly growing digital advertising market. Our ability to create highly engaging content, combined with our expansive distribution network, sets us apart in this market and the acquisition of Betches has strengthened our U.S. presence, unlocking significant growth potential in the largest advertising market in the world. With a diverse revenue model and a strong cash position, we are well-equipped to continue scaling our business and providing our shareholders with significant MACRO SHIFT TO DIGITAL long-term value.