Strategy

Hecta Media’s core business model is to generate revenue through targeted text-link internet advertising, in which contextually relevant text advertisements are placed on websites and monetized using automated programs from Google, Yahoo and Microsoft. Google’s ‘‘Adsense’’ program is the market leader in this category; using Adsense, any website can automatically generate revenue for itself every time a person clicks on a pre-determined text link. Google sells the ‘‘click’’ and the website owner receives a share of the revenue earned. This system is very successful, and now accounts for approximately 34 per cent. of Google’s overall revenue.

In addition to automated website monetization programs such as Google Adsense, Hecta Media will look to further monetize websites using display advertising, video advertising, and lead generation, including pay-per-call leads. Hecta Media believes that because of the growth of Adsense and other components of the internet advertising market, this is an excellent time to build portfolios of vertically targeted websites.

Hecta Media’s strategy will be to acquire a widely distributed mix of domains and websites which the Directors believe can be profitably combined under the ownership of the Company, reducing overall technology, accounting and financial overheads and providing a focal point for online advertisers by the linking of sites which offer similarly specialized content (and thereby avoiding the need for advertisers to negotiate with several owners).

The Company may invest by way of outright acquisition of a site-owning company or by the acquisition of assets, including the intellectual property, of a relevant business. The Directors will where possible offer Ordinary Shares by way of consideration as well as cash, thereby helping to preserve the Company’s cash for working capital and as a reserve against unforeseen contingencies including by way of example, and without limit, delays in collecting accounts receivable, unexpected changes in the advertising environment and unforeseen operational problems.

Hecta Media intends to seek out investment opportunities amongst niche portals and established blogs with branded domain names. Such sites with established brands and Uniform Resource Locators would be already profitable, and are likely to be owned by single individuals and be independent of external funding. These sites would be capable of development beyond the scope provided by the original founder, particularly when brought under common ownership with other sites providing similar specializations. The Directors will, following Admission, focus on identifying and making a number of small acquisitions or investments whilst it develops and puts into effect its business processes.

The opportunities for offering shares traded on an established market such as AIM to sellers of the type of businesses in which the Company intends to invest do not exist in the US (due largely to the onerous requirements of the Sarbanes-Oxley Act and the negative perception of bulletin board companies) or in Europe, where very few internet companies offer scope for the development of general content site businesses.

The Directors collectively have considerable experience of investing, both in structuring and executing deals and in raising venture capital and other funds, and in particular, web-based companies. They will use this experience to identify and investigate investment opportunities, and to negotiate acquisitions. Wherever necessary the Company will engage suitably qualified technical personnel to carry out specialist due diligence prior to making an acquisition or an investment. For the acquisitions which they expect the Company to make, the Directors intend to adopt earn-out structures, with specific performance targets being set for the sellers of the businesses acquired, and with suitable metrics applied.

The Directors are currently reviewing potential investment and acquisition opportunities in line with Hecta Media’s strategy, but have not at this stage commissioned any investigations nor entered into any firm commitment in connection with any specific investments or acquisitions.

The Company intends to seek the consent of its Shareholders for its investment strategy on an annual basis (at its Annual General Meeting) in order to comply with the guidance to Rule 8 of the AIM Rules.

In the event that Hecta Media makes no acquisitions meeting its criteria detailed above within 18 months of Admission, the Directors will convene a general meeting of the Shareholders to consider whether to continue seeking investment opportunities or to wind up the Company and distribute any surplus cash back to Shareholders.

For more information please click here for the Admission Document