" As we scanned through MEET financial statements and realized that ~86% of the company's revenues are derived from advertising, we fell out of our chairs. When we further realized that dozens of credible family-friendly brands are advertising on MeetMe's website, we were outright appalled.
We found ads on MeetMe properties that included Target (NYSE:TGT), AT&T (NYSE:T), P&G (NYSE:PG), Kimberly-Clark (NYSE:KMB), General Motors (NYSE:GM) and Coca-Cola (NYSE:KO). We reached out to some of the aforementioned advertisers (through their Media contacts) for comment on their relationship with MeetMe. As of publication, only Coca-Cola responded with "Thank you for bringing this to our attention. We are looking into the matter".
These six are only a sampling of the companies we found advertising on MeetMe. There are at least a dozen other household names that we will not mention by name in this report purely because we chose to only name companies whose ads are actually shown in this report.
Later in this report, we included a page of "brand partners" that MeetMe itself lists in an IR presentation from 2014. In other words, there appear to be many other Tier 1 advertisers that are placing ads on MeetMe's app and desktop pages. We did NOT cherry pick these ads - we note that articles published by a bullish Seeking Alpha contributor in February 2016, June 2016, and July 2016 include screenshots of MeetMe's app that include well-recognizable brands (including GM).
To present a balanced case, we think it is important to discuss general issues surrounding social media content upfront. There are obviously unsavory things that are posted all the time on social media given that social media leaves users in control. For example, last year Twitter found itself embroiled in a scandal involving ads on pornography postings. The article included the following quote:
The CEO of one mobile advertising network found it shocking that Twitter still faces this kind of problem. "Our brands freak out at any hint their ads show up in situations like this," the CEO said.
In the same story, a SunTrust analyst is quoted saying the following:
Robert Peck, a SunTrust Robinson Humphrey analyst, wrote a report warning that Twitter ads were appearing near pornography and that brands would pull back on spending if the problem became more widely known. Peck estimated there could be as many as 10 million Twitter accounts dedicated to sharing pornography and that Twitter needs to do a better job of blocking them.
MeetMe partners have also taken issue with MeetMe in the past. For example, from MeetMe's FY15 10-K, we found the following statement relating to AAPL:
On more than one occasion, for example, Apple has rejected our applications because of user generated content and other concerns. In response we devoted additional resources to image review, and changed some of our content allowance policies.
Later on in this article, we provide actual examples of content on MeetMe's network that was a) readily accessible, b) objectionable in nature, and c) includes advertisers that are of the same caliber as those that reacted negatively to Twitter's 2015 scandal.
In our view, there is something else that separates MeetMe from Facebook or Twitter. MeetMe was described by government lawyers as a "tool of choice for sexual predators". Its app was featured in a Wisconsin Department of Justice podcast about protecting kids from sexual predators online.
It was also recently linked to a child sex trafficking arrest from November 2015.
Source: Department of Justice Website
Finally, to help provide context to this entire article, Common Sense Media, a non-profit devoted to helping parents make smart decisions about their children's media viewing, rates Facebook at 4-stars, Twitter at 4-stars, and MeetMe's mobile-app at 1-star (NB: the desktop version, which is now ~10% of the business, is rated at 2-stars).
In this report, we aim to clearly define the reputational risk associated with displaying ads on MeetMe and show that there is obvious precedent for websites such as MeetMe to get "blacklisted" by advertisers. We also show that given the "dark pool" nature of programmatic ad buying, most advertisers are likely not even aware that their ads are being displayed on MeetMe. Finally, we show how MoPub, a company owned by Twitter, appears to have been instrumental in helping MeetMe grow its advertising revenues over the past few years. This is despite us finding plenty of content on MeetMe that we believe violates MoPub's terms of service rules."
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