Investor Q&A

What is paid search?

‘Paid search’ refers to the auction process for key search terms that search providers such as Google, Bing, Yahoo, etc. undertake and in which prospective advertisers compete in order to have their advertising or search results displayed.

What is online customer acquisition?

Online customer acquisition is when a company gains customers through the internet. When that process is outsourced to a company such as dgs, the outsourcer gets paid for each new customer they deliver.

Business seeking to attract customers online can do so by procuring advertising from search engines, such as Google, and other providers, directing consumer attention to its website or sales center, and then selling interested consumers its products or services. dgs provides outsourced solutions to businesses for some or all components of this set of online customer acquisition services.

As an outsourcer, dgs will procure paid search advertising, develop and manage branded web sales portals, and establish and maintain sales centers for its clients.

What are the processes behind online customer acquisition?

  • dgs enters into business relationships with companies on a fee per sale performance basis.
  • dgs then creates branded web sales portals and customized sales center scripts for these clients.
  • dgs then drives consumer action through fixed and mobile paid search advertising with providers such as Google.
  • The dgSmart proprietary technology platform determines the optimal price to pay for advertising to ensure effective advertising placement.
  • The process allows the conversion of interested consumers to customers through complete customer support in proprietary websites and sales centers.
  • Clients pay dgs for each customer acquired.
dgs’s proprietary technology touches all points of this value chain, delivering not only effective results, but also a cost-efficient platform.

Why would companies outsource that, why not just do it in house? They presumably have their own websites already.

dgs provides several benefits to corporations that seek to grow their online customer acquisition business process. First, dgs maintains and uses proprietary databases and algorithms that allow for cost-effective procurement of online advertising that drives customer action. Second, dgs has expertise in optimizing websites and sales centers for optimal levels of sales conversion. Third, dgs offers its solution to its clients on a fee-per-sale basis, by which clients pay dgs a pre-negotiated commission for each customer it procures. The Directors believe that this commercial arrangement closely aligns dgs’s economic incentives with those of its customers.

dgs’s evaluation of data provided by its largest clients indicates that dgs delivers customers with a higher customer lifetime value, higher ensuing installation rates, and a higher number of products per installation and hence higher average revenue per customer.

How does dgs know which search terms are the best to bid for? And at what price?

The company’s technology, the dgSmart Platform, uses proprietary algorithms coupled with its proprietary databases, comprising information on nearly 10 million search terms in over 6,000 geographic locations, to determine how much to pay for a particular search term, in a particular geography at a particular time. Competitors to dgs take a ‘bid to win’ approach, meaning they will pay any price to appear at the top of a search, whereas dgs only pays the amount that is profitable.

It is the Director’s belief that the dgs’s technology has enabled dgs to consistently outperform and disrupt competitors over the past four years while achieving a growth rate significantly ahead of its peer group. dgs’s technology, internally labeled dgSmart Platform, is a key driver of its success.

To whom does dgs provide its services?

Historically, dgs has focused on providing customer acquisition solutions to US corporations operating in the telecommunications sector; nine of the ten largest US cable telecommunications companies (as measured by subscribers) acquire customers through dgs. dgs later commenced operations in Canada and Mexico, and is pursuing further growth opportunities in Latin America, Europe, and Asia Pacific. dgs has also recently started providing its customer acquisition services to the electric utility industry and renewable energy sector, and is examining additional opportunities in insurance, retail banking, and consumer technology sectors.

What is driving dgs’ growth?

The Directors believe that dgs enjoys several advantages that will continue to benefit its growth and profitability. First, use of the Internet as a customer acquisition channel continues to grow as a proportion of all customer acquisition activity. Second, the proportion of online customer acquisition that is outsourced continues to grow. Third, the Directors believe that dgs’s proprietary databases and algorithms continue to lead the outsourced industry in driving efficient customer acquisition and, as a result, dgs continues to grow its market share.