The Weekend Edition is pulled from the daily Stansberry Digest.

This Powerful New Technology Is Revolutionizing the Advertising Industry

By John Engel, editor, Stansberry Innovations Report

While walking the streets of Baltimore, I usually ignore the panhandlers...

As I'm heading to and from our headquarters in the city, I usually just put my head down and avoid eye contact as I pass. And it's not just in Baltimore...

For as long as I can remember, I've stuck to this informal social policy. Even when I travel to conferences in cities like San Francisco and New York – places with some of the highest homeless populations in the country – I follow the same simple guideline in the streets.

It's not because I'm a cold-hearted jerk...

I'm not against giving handouts to folks who really need them. If someone is hungry, I would be happy to buy him a sandwich or a burrito at a nearby fast-food restaurant.

I'm just not comfortable handing over cash for nothing more than what's likely an empty promise that he'll use it for food. I don't want to feed anyone's alcohol or drug addictions.

But late last month, I broke my own rule for the first time in forever...

Everyone reading today's DailyWealth has come across a homeless person at some point. As you know, these folks often hold cardboard signs with handwritten messages. They include... "God bless you"... "Anything helps"... "Down on my luck"... or even simply, "Hungry."

Again, I've seen these refrains many times over the years, so it's easy to keep walking. And let's face it... As a society, we've become hardened to all the requests for handouts.

As a homeless person, if you want to get any money, you need to be different. You must grab people's attention as they scurry by, looking at their phones or talking to one another.

That's exactly what one man did as I went to get lunch recently...

He looked a lot like most homeless folks I come across. He was about 45 years old. He had a thick, scruffy beard and long, greasy hair. His clothes were tattered and dirty.

Judging from his appearance, this man had likely been living on the streets for months. Regardless, he proudly held his homemade sign and smiled at everyone who passed.

That's when the message on the man's sign caught my eye...

"Too ugly to be a stripper."

When I saw the man's sign, I couldn't help but stop and laugh. The man laughed with me. It was funny. So I dug down into my pocket and handed a couple of dollars over.

I also noticed that I wasn't the only one who was amused by his message...

Other people laughed, too. A young woman beside me snapped a picture with her phone. I watched at least two other bystanders drop change in his cup. The man's sign was working.

Now, this story might appear to be meaningless to you. And maybe you think my sense of humor is offensive. But before you go tossing this essay aside, hear me out...

I'm sharing this story because it includes a critical point that we can use as investors. You see, this homeless man's unique cardboard sign speaks to the power of advertising.

He needed money. His sign called public attention to his need. And most important, he used a clever message that made folks laugh... and hand over their loose change.

Coincidentally, before meeting this man, I had spent many hours researching the advertising space...

You see, one of my most recent recommendations in Stansberry Innovations Report is an innovative play on the future of the industry.

For weeks, I studied how companies entice you to click banner advertisements on the Internet. Like panhandling in Baltimore, this is no easy task. The variables that advertisers struggle with on the Internet are quite similar to the variables on the streets...

First, the type of messaging can make a huge difference. If you don't have a strong and creative message, you're just a panhandler with a sign that everyone has seen before.

A less obvious but more critical variable is targeting the right audience with your message. The most effective advertisements have a strong message... and the right people see them.

In today's digital world, targeting the right audience requires sophisticated tools...

Traditional advertising can only hit broad audiences. It's delivered through newspapers, magazines, and billboards. A panhandler's cardboard sign falls into this category, too.

In other words, with traditional media, it's hard to control who sees your messages.

According to market-research firm eMarketer, advertisers in the U.S. will spend about $110 billion on traditional media this year. That's a mountain of money. But as you can see in the following chart, advertisers won't be spending as much on these ads moving forward...

The Internet has taken its toll on the bygone days of traditional media ads...

Men in tailored suits who build expensive advertising campaigns in smoky boardrooms no longer control the industry. Now, technology firms like Alphabet (GOOGL), Facebook (FB), and Amazon (AMZN) hold all the cards. And together, they've changed the industry forever.

This year in particular marks a major milestone...

For the first time ever, marketers will spend more on digital ads than they spend on traditional media ads. And this transformation is here to stay... Based on industry forecasts, the gap between digital and traditional ads will expand for years to come.

While traditional media struggles to capture advertisers' budgets, digital advertising continues to thrive... According to eMarketer, within three years, two-thirds of all advertising spending in the U.S. will target the digital space. The same tenacious trends that we've seen playing out over the past two decades will only get stronger moving forward.

As proof, consider America's seemingly unquenchable appetite for the Internet...

Since the turn of the century, the average time a U.S. resident spends actively browsing the web every week has risen from 9.4 hours to 24 hours today.

You read that right... The average American spends one full day per week – 21% of the time they're awake – browsing the Internet.

You better believe advertisers know these numbers and use them to their advantage, too.

The Internet is the best place for companies to put a message directly in front of you. It's also the best way to avoid putting the wrong message in front of you...

Unlike traditional advertising – which casts a large net without knowing who's seeing the message – digital advertising is targeted and specific. That helps drive better returns.

As I said... Alphabet, Facebook, and Amazon dominate the world of digital advertising.

But if you look past the tech giants, you'll find some lesser-known winners, too...

Take Dataxu – a small technology company that you've probably never heard of – for example...

The company supports the digital advertising industry. It's like electronic brokerage firms E-Trade Financial (ETFC) or Interactive Brokers (IBKR), but for buying ads... Rather than tapping into a stock exchange like those firms, Dataxu taps into an "advertising exchange."

The advertising exchange is a relatively new development in the digital advertising world... It's the central location for the entire inventory of available advertising space. It's where the sellers meet the buyers... And it's all carried out through computer-driven auctions.

In late October, online streaming firm Roku (ROKU) acquired Dataxu for $150 million.

The move allows Roku to implement data-driven ad placement on its streaming platform... Rather than a generic advertisement that everyone will see when they watch their favorite shows, the technology allows Roku to customize its ads using customer-specific data.

Roku's deal for Dataxu is the latest evidence of a growing trend in the digital ad space...

The use of data and artificial intelligence to drive powerful and effective ad campaigns.

It's something called "programmatic advertising."

As I mentioned earlier, digital advertisers don't follow a "spray and pray" model like the old days of traditional media advertising. The most successful advertising doesn't just need to have a strong message... It also needs to hit the right consumer.

Today, digital advertisers use data to buy ads that target the right people... at the right time... and in the right place. And now, in a subsegment of digital advertising, advertisers are leaning on technology – the automated purchasing of ad space on digital platforms.

Every second, roughly 9 million digital ad spots are available for purchase across the Internet. No human could ever keep up with that type of inventory. Instead, companies employ computer algorithms to buy ads... in fractions of a second... based on piles of data.

Even better, the new technology being used can track the success of each ad placement – and allow companies to adjust their buying strategy on the fly. According to eMarketer, by 2021, roughly 88% of all U.S. digital display advertising will be bought this way.

It's the fastest-growing segment in advertising. It's the future... happening right now.

In the October issue of my Stansberry Innovations Report, I detailed the best pure-play opportunity in the space...

This multibillion-dollar company built the largest independent ad platform of its kind. It's developing technology that taps into ad exchanges. The company uses "machine learning" to place highly targeted ads that lead to higher clickthrough rates for its customers.

Best of all, the company continues to grow at an incredible pace... Its year-over-year revenue grew by 54% in 2018. And it's on pace to hit 40% revenue growth this year.

We sell Stansberry Innovations Report at an affordable price... Normally, it costs $199 per year. That's only about 55 cents per day. But today, we're offering an even better deal...

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Good investing,

John Engel

Editor's note: Today, we're extending a special offer to DailyWealth readers. It's by far the best deal we've ever offered on John's research in Stansberry Innovations Report. You can get his entire write-up about this company... three additional subscribers-only reports... and everything he publishes over the next year... for only $39. Learn more here.

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