Influencer Marketing Networks — Daisy WYNTB

Thesis

1. Influencer marketing is on a similar growth trajectory to the mobile gaming industry.
2. An ads network purpose-built for influencers can be at least as valuable as one for mobile games.
3. Daisy has proven early product–market fit and shows network effects with influencers in <1 year.

AppLovin Overview

AppLovin is the leading ads network for mobile games with two core products:

• AppDiscovery (demand): helps games acquire users by placing ads in other apps.
• MAX (supply): helps games monetize users by auctioning off in‑app ad space.

As of Q4’24, AppLovin generated roughly $1B in quarterly advertising revenue with a 78% adjusted EBITDA margin. The stock (APP) has appreciated about 5× over the past year to a $110B market capitalization, implying ~35× run‑rate adjusted EBITDA, with revenues growing >75% YoY.

Founded in 2012, AppLovin focused early and exclusively on mobile games—serving a small but rapidly growing developer community with tools to acquire and monetize users. It rode a decade of massive industry tailwinds (>10× growth) and only recently began expanding beyond gaming—reaching profitability early on with <$5M of venture capital raised.

Ad networks turn attention into intent. In 2012, AppLovin bet that mobile games would command outsized attention; today, we believe a similar opportunity exists for social media influencers as generative AI and AR deepen creator–audience intimacy. Everybody becomes an influencer; in revenues, influencer marketing today is roughly where mobile gaming was a decade ago.

Refs: APP, Mapendo, Daisy

How Moats Form in Ad Networks

AppLovin’s moat is owning both supply and demand in a single, high‑growth channel—mobile games. Owning both sides compounds data and optimization advantages and increases switching costs.

For every brand dollar spent, roughly $0.55 reaches publishers/content owners after paying an agency (~$0.10), demand‑side aggregator (~$0.10), supply‑side aggregator (~$0.10), and the marketplace (~$0.15).

The Trade Desk (TTD) is a large, public ads business that operates primarily on the demand side and across many channels. Without owning supply, its margins and valuation are structurally lower vs. a dual‑sided network focused on one channel.

Refs: TTD

Daisy’s Opportunity

Social media is a larger opportunity than mobile gaming by user base, time spent, revenue per user, and total revenues. It’s also more diversified in platform risk (5–10 global social platforms vs. two mobile operating systems).

Yet influencers capture only ~10% of total social media ad spend. To underwrite a $5B+ outcome for Daisy, influencers must capture a growing share of economics vs. platforms. The trend is favorable: influencer marketing growth has outpaced overall social spend since inception.

We believe:

1. A growing share of social users will monetize their profiles by becoming influencers.
2. Feeds will rely more on influencers to curate amidst a deluge of AI‑generated content.
3. Social feeds are the most valuable real estate in the attention economy.

Bottom line: Influencer marketing is likely to become a $100B+ industry.

Refs: SensorTower · Statista (Social Ads) · Influencer Marketing Hub 2024 · SlashData (Devs) · Storybox (Influencers) · Newzoo · Datareportal · Statista (Time in Games) · SOAX (Time on Social)

Disclosures

This material is for informational purposes only and does not constitute investment advice or an offer to sell or the solicitation of an offer to purchase any securities. Past performance is not indicative of future results. Any projections, forecasts and estimates are necessarily speculative and subject to change.