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Acquisitions Put Company on Growth Fast Track

COMMERCETEL CORP.

CEO: Dennis Becker.

Revenue: Privately held until Jan. 13, 2011. $500,000 in sales in Q2 2011 vs. $200,000 in Q1.

Net income: Not disclosed.

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No. of local employees: 16.

Headquarters: Kearny Mesa.

Year founded: 2006.

Stock symbol and exchange: MFON on the OTC Bulletin Board.

Company description: Provides the technology to allow advertisers to interact with their customers via mobile devices.

Key factors for success: The company strategy is to grow through acquisitions, adding customers, sales and profits as advertisers look for ways to reach customers no longer watching television, listening to radio or reading the daily newspaper.

Five-year-old mobile advertising and marketing technology service provider CommerceTel Corp. has a big appetite for growth, through acquisition.

On June 13, the San Diego-based company said that it is acquiring text messaging marketing company BoomText from Chandler, Ariz.-based DigiMark LLC.

The deal, when it goes through later this summer, was CommerceTel’s third announced in this year, said founder and CEO Dennis Becker.

“They’ll bring revenues as well as 1,000 clients,” said Becker. “They’ve got the best of both worlds — a big brand customer but small store business market.”

During the quarter, the company said it acquired Txtstation Mobile Marketing and online event marketing and management service Mobivity.

BoomText provides advertising via text message on behalf of such customers as the 900 franchisees of Atlanta-based chicken sandwich purveyor Chick-fil-A Inc., plus Warren Buffett-owned International Dairy Queen Inc., fresh-squeezed juice retailer Jamba Inc. and Oklahoma-based drive-in restaurant chain Sonic Corp.

“We connect brands and businesses to consumers’ mobile phones,” said Becker. “There is an ocean of technical complexity involved in all that, so that’s where we step in.”

Projecting Sales Increase

On June 13, the public company said it projected sales of $500,000 for the second quarter of 2011, up 250 percent from sales in the first quarter.

The company went public in a reverse merger in early December with shares trading on the OTC Bulletin Board, market for thinly traded “small cap” companies.

Reid Carr, president and CEO of Red Door Interactive Inc., a San Diego Internet marketing firm, said that CommerceTel is well positioned to meet the demands of marketers in a world where almost every consumer is carrying a mobile device.

“Today’s customers constantly are on-the-go and their mobile device is always with them,” said Carr.

“Through that nearly attached device, we understand the critical variable of location in a marketer’s equation. You can deliver just-in-time messages and, increasingly, that device is becoming a gateway to commerce,” he added. “Being able to reach customers when they’re in a particular location … can help build a better relationship because the marketer can leverage the power of context in their media and messages to drive results.”

Big-Name Customers

Becker said his own customers include AT&T, The Walt Disney Co. and NBC

Universal Media LLC.

“We allow Disney or Sony Pictures or the NBA essentially to engage the consumer on their mobile device how they see fit,” said Becker. “You might be at a Dallas Mavericks basketball game and the (Sony) JumboTron is asking you to text in the answer to tonight’s trivia question. We facilitate all that.”

The service has been used to help Sony Pictures conduct marketing campaigns for recent movies “District 9” and “Virginity Hit.”

CommerceTel has helped to market new ringtones for Universal Music Group, he said. “They wanted a mobile website that consumers could go to so they can preview the ringtones,” said Becker. “We made the technology (for that campaign) work.”

He said his own company counts more than 1,000 customers.

To be sure, CommerceTel is not without competition. Google Inc. and Apple Inc., among others, also have units that do similar types of marketing via mobile phones.

But the market is huge. Becker said even very small businesses, like the local pizza store, are targets for this new technology. Using his company’s services, customers can send a text and receive a discount coupon while on the way to buy a pie.

Connecting With Consumers

Becker said his services have become even more important to advertisers as consumers abandon traditional outlets, such as radio and television.

The only way to reach them is through their mobile devices, which is the best way to interact with millions of today’s tech-savvy consumers, he said.

The technology facilitates audience interactions with television, radio, print, Web and outdoor advertising.

“We think we can take some of our competitors and our partners and fold them into one company, and then grow faster that way,” he said. “Being public gives us the resources to do that rather than being private.”

Becker, who studied computer science at the University of Oregon, was recently granted a patent on an invention that allows consumers to send a voice mail as a text message. He said the patent was granted in the fastest time ever from the U.S. Patent and Trademark Office — in just 79 days compared with three to five years.

Meanwhile, he said CommerceTel is well positioned to take advantage of the explosion in mobile devices.

Sources of Web Traffic

He recently read, for example, where more than half of the traffic coming to Google at its websites derive from mobile devices rather than desktops or laptops.

And he noted 4 billion adults worldwide have mobile devices.

Indeed, industry research outfit Gartner Inc. says mobile phone ads will reach $3 billion in 2011 compared to $1.6 billion in 2006, and is expected to explode to $20 billion in 2015.

“By 2015, 100 percent of the globe’s population will have mobile phones, and these mobile phones are opening up a whole new era of computing,” he said. “We have lots of room to grow.”

Tom York is a contributing editor for the San Diego Business Journal.

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