Hidden within Digimarc's Q1 2024 earnings transcript lies a revelation with the potential to catapult the company to billion-dollar revenues: the ability to track the hybrid consumer journey. While most analysts focus on the "Big Three" – Digimarc Recycle, Digimarc Validate (Media), and Digimarc Retail Experience – a keen observer will notice a subtle yet transformative shift in the company's consumer engagement strategy.

Digimarc Engage, traditionally a tool for enhancing physical product interaction, is quietly being re-engineered to track consumer engagement across both the physical and digital realms. Imagine a world where brands can seamlessly track a consumer's journey from scanning a product package in a store to clicking on an online advertisement, to ultimately making a purchase, either online or offline. This is the power of the hybrid consumer journey, and Digimarc is poised to be the leading enabler.

Riley McCormack, Digimarc's CEO, hints at this game-changing functionality during the Q1 call. He reveals that while no deals have been officially signed yet, discussions with both customers and partners are actively underway, highlighting the intense interest in this groundbreaking capability.

McCormack emphasizes the role of partners in driving this initiative. Pre-media and printing partners, the gatekeepers of packaging design, are eager to offer this comprehensive service to their customers. Imagine a packaging design firm not just designing a physical package, but also crafting a digital strategy that seamlessly integrates with it, all enabled by Digimarc's technology. This expands their service offering, creating stickier customer relationships and potentially unlocking new revenue streams.

Advertising agencies also stand to gain tremendously from this hybrid approach. They can now design campaigns that transcend the traditional boundaries between physical and digital, delivering a truly integrated consumer experience. Crucially, this allows for precise measurement of campaign effectiveness, finally answering the age-old question: "Which half of my advertising budget is wasted?"

McCormack alludes to the "holy grail" of advertising: the ability to connect online activity to physical behavior. By bridging this gap, Digimarc empowers agencies to deliver highly targeted campaigns, maximizing return on investment and potentially disrupting the advertising landscape.

But the impact of the hybrid consumer journey extends far beyond advertising and packaging. This capability has profound implications for product authentication, consumer insights, and supply chain management. Brands can gain unprecedented insights into consumer behavior, allowing for more effective product development and targeted marketing strategies.

Let's consider a hypothetical scenario: a global beverage company, currently utilizing Digimarc Validate for anti-counterfeiting, is presented with this new functionality. They can now track consumer engagement with their products across both physical and digital channels, gaining invaluable data on purchase behavior, brand loyalty, and campaign effectiveness. The potential for increased revenue and brand value is enormous.

While it's still early days for this initiative, the potential for Digimarc is staggering. The global digital advertising market alone is projected to reach $876 billion by 2026. By capturing even a fraction of this market, Digimarc could see its revenue multiply several times over.

This is not just a story of incremental growth, but a potential paradigm shift in how brands engage with consumers. The hybrid consumer journey is the next frontier in digital transformation, and Digimarc is uniquely positioned to lead the charge.

Digimarc's Growth: ARR and Commercial Subscription Revenue

The following chart, based on information from Digimarc's Q1 2024 earnings call, shows the strong growth the company has been experiencing in its Annual Recurring Revenue (ARR) and Commercial Subscription Revenue.

"Fun Fact: Did you know that Digimarc's technology was used to protect the authenticity of ballots in the 2020 US presidential election? Talk about high stakes!"