Is Holy Grail Of Local Mobile Marketing In Sight?

| About: Mobivity Holdings (MFON)

Mobile marketing may be the "last frontier" of the internet left to conquer, but as of today it seems nobody quite understands how to do it. And while many flail about trying to figure it out, the vast profit potential that resides in that new, mobile "west" remains largely untapped.

Consider the following:

The growth of mobile users in the last half decade has outstripped the growth of conventional desktop users by a gigantic margin. The numbers for the period between 2008 and 2011 show growth in the percentage of adults accessing the internet increasing from 54% to 62%. By contrast, adults daily accessing the web via mobile devices over the same period grew from 4% to 26%.

Those are numbers for the U.S. only. When you add to the mix the full global shift to mobile, the numbers become truly mesmerizing.

Consider, too: there are nations that will in all likelihood bypass the PC altogether in favor of smartphones, tablets and other portable devices that allow individuals to roam while online. Forrester Research estimates that five years from now nearly 350 million Indians will be mobile users, 75 million Brazilians and over 700 million Chinese.

The BRIC nations may be the largest and perhaps wealthiest segment of the entire group of emerging market countries, but a great many other nations are not far behind. And the dynamic rate at which internet use is growing in these countries, taken together with the tremendous surge for mobile products in the west, gives you a sense of the explosive potential for mobile advertising the world over.

Will the West Abandon the PC?

Though it's impossible to know with any certainty, the move toward mobile raises the question of the eventual decline and perhaps complete demise of the desktop computer altogether. If that, indeed, is the trend, then the search for mobile revenue becomes paramount for any web-based business that hopes to have a future.

So how is this done?

That's the $64,000 question. And any number of models and methods are currently being employed in an attempt to carve a path toward mobile Shangri-la. Will any of them be successful over the long run? No one can be sure. But when the magic elixir is ultimately discovered of how effectively to reach mobile users and sell them the goods and services they desire at a location that's local to them, then the race for mobile marketing will have been won.

Bucking the Google/Facebook Tide

Internet marketing behemoths like Google (NASDAQ:GOOG), Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL), among others, are desperately searching for a formula that will capture this vastly expanding market. Google sells ads directly over the mobile platform, just as it does on PCs. But even assuming it knows where you and your smartphone are located, the best it can do is place a billboard ad on the corner of your device and hope that you act on it.

Facebook, on the other hand, can get a little closer to the real you. By scanning its database for demographics that it can then sell, say, to the local ice cream store, it can then act as matchmaker, setting you up with the closest Ben & Jerry's and, like Google, placing an ad on your handheld device that it hopes you'll be inspired to click on and perhaps follow through with a purchase. But again, it still amounts to throwing up a billboard that, however well focused, may or may not bring the customer to spend his money.

Direct-to-Client Mobile Marketing

There's another company, however, that's taking a different approach. It is just at the beginning of its effort to become part of the mobile marketing race, and by all accounts it's making healthy strides.

The company is called Mobivity (OTC:MFON), and its plan to conquer at least part of the mobile space is based on a bottom-up approach and a unique set of technologies that are proprietary to the company.

For a monthly fee, Mobivity sells a sort of "contact management" system to locally based businesses that allows the latter to build a database of customers. The database can then be used to contact individuals over their mobile device whenever they're offering a special or sale, or to invite them to partake in a contest, or just to get customer feedback on a recent purchase or a change in the product line or service, etc.

The strategy is working if growing revenue is the test. Under the CommerceTel moniker MFON recorded $919,000 in full-year sales for the end of 2010. That number grew by 150% over 2011, with the company booking $2,524,000 by year end. This year, Mobivity is projecting revenue of $4 million, a 60% increase over the previous year. And while it is not yet completely in the black, Mobivity's latest round of big name client signings and continued hunt for acquisitions should shortly get the company there.

Growth by Acquisition - From CommerceTel to Mobivity

Via a spate of intelligent acquisitions over the last few years, Mobivity has emerged as a genuine innovator in the local mobile marketing scene. The program started when CommerceTel, Mobivity's parent company, bought Txtstation, a provider of mobile solutions to broadcasters, sports franchises and event sponsors, that allows them interact with fans during an event.

That acquisition won it clients such as the NFL Network, AT&T, Univision, The Golf Channel, UFC, Miami Dolphins, Atlanta Falcons, Philadelphia Eagles, Utah Jazz and Raycom Sports, to name just a few. But more than that, it gave it a list of big-name subscribers to eventually cross sell the Mobivity platform - a company and brand name it would acquire just 30 days later.

The original Mobivity provided SMS solutions via a simple, user friendly platform that CommerceTel felt was lacking in its suite. With Mobivity under its belt, CommerceTel was also able to streamline and enhance the platform with its own technologies and at the same time lower both companies' base cost of operations.

In its last round of acquisitions a couple of months later, Mobivity purchased Boom Text, a provider of SMS marketing services to small and medium sized businesses that until the acquisition had been on a tear signing up new customers. Mobivity got Boom Text's rapidly growing client base, including national chains Dairy Queen and Chick-fil-A, as well as its expertise at marketing to smaller and mid-size businesses, thus rounding out the full package of offerings the company was able to sell.

All in all, the company is adding roughly 1000 new clients with each acquisition, and has now set its sights on Stampt, a unique customer loyalty app, developed by Sequence LLC.

Hunter or Hunted?

Mobivity could well continue down the road of acquisition in order to grow its client base, and if so, companies like Cellit, which offers a platform for classified advertising, Hipcricket or SoundBite Communications, Inc. (NASDAQ:SDBT) might find themselves on the table.

But there's also the possibility, of course, that Facebook or Google will recognize the synergies between Mobivity and their own local mobile marketing strategy and make an acquisition of their own. It would certainly fill a gap in both companies' local mobile efforts, and taken together with what they're currently doing, could even lead to the mobile marketing Holy Grail, the formula that all have sought and none has yet succeeded at attaining.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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