Led by sector luminary and chief executive Ben Langdon, digital direct marketing group DMG is delivering in spite of the wider media spending pinch.

Having joined AIM in 2006, DMG has swiftly developed, through a buy-and-build strategy, into the UK’s fourth largest digital marketing business.

Langdon is keen to stress that DMG is a digital communications specialist rather than a marketing services group, arguing that the boundaries between digital and direct marketing ‘are now blurred’ and that ‘good digital marketing is good direct marketing’. DMG is capitalising on the marked switch to digital marketing from traditional services, a trend accelerating as conditions tighten, through its ability to help clients deliver highly measurable campaigns. This is a key selling point, since advertisers are under pressure to deliver more bang for their buck from marketing budgets.

Its digital expertise enabled DMG to deliver exceptional growth for the year to March, with sales soaring 290% to £50.97m and pre-tax profits doubling to £2.15m. Adding back charges for amortisation and share options, ‘adjusted’ pre-tax profits danced 278% higher to £6.3m.

Acquisitions included Graphico and Hyperlaunch, adding important digital skills to DMG, whose portfolio already included the likes of search marketing specialist Cheeze, data services specialist Jaywing and Dig for Fire, the largest direct marketing agency operating entirely outside London.

With analysts looking for adjusted profits of £7.4m and 7.9p of earnings this year, DMG trades on less than ten times earnings. That looks an anomalous rating given growth prospects, with more to come from acquisitions, cross-referrals and new client wins, to say nothing of a cash-generative model, a robust balance sheet and broker Cenkos’s 160p share price target.

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Digital Marketing	AIM	£51.74m	76.50p	0.00p
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