Why the Douugh (ASX:DOU) share price is jumping 12% today

Here’s why the Douugh Ltd (ASX:DOU) share price is pushing higher on Monday morning…

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The Douugh Ltd (ASX: DOU) share price has been a strong performer on Monday morning.

In early trade, the financial wellness app provider’s shares are up 12.5% to 22.5 cents.

Why is the Douugh share price rising today?

The catalyst for the rise in the Douugh share price today has been the release of an announcement.

According to the release, the company has appointed Rakuten Advertising to provide it with affiliate marketing services. Management believes this is a cost-effective and low-risk way to increase mobile app downloads and accelerate customer acquisition.

Douugh’s Founder and CEO, Andy Taylor, commented: “We’ve seen the unparalleled expertise and distinctive marketing solutions that Rakuten offers, and how they will help us to influence and activate audiences across the many paths and platforms of their digital journeys.”

“Rakuten Advertising creates unique opportunities to amplify our digital marketing performance, compared to other affiliate marketing companies because of its unrivalled audience scale, partner diversity, and technology innovation.”

Mr Taylor notes that Rakuten Advertising has a strong history of driving success for finance brands. It has 60 active clients in the vertical. These include five of the top 10 U.S. banks.

It has helped these clients acquire 10 million credit cards, 100,000 personal loans, and 55,000 mortgages. Though, it is worth noting that marketing such products for a well-established bank is far easier than an unknown wellness app with no competitive advantage.

What now?

Douugh hopes that by leveraging affiliate marketing, it will raise brand recognition, expand its customer base, and increase conversions and customer engagement.

The company also revealed that it intends to introduce new services and technologies in the future. This includes cash back rewards across international markets and Australia.

Management believes cash back rewards will be a central strategy for its affiliate program and expects it to accelerate the loyalty lifecycle of Douugh customers.

It also intends to integrate a member-get-member program, with a monetary incentive to Douugh users for inviting friends to sign up to the platform.

However, such programs are not cheap to run and are likely to lead to significant cash burn. So with a cash balance of $16 million at the end of December, another capital raising could be required in the near future.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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