The mobile advertising company dominates the US SMS market, delivering some 400 million text messages each month (its monthly rate has roughly doubled from early 2010)— but Thet is tired of his crown, or rather, he’s eyeing a different one. 4INFO is trying to position itself as the largest mobile advertiser, SMS and beyond, and the company is ready to acquire other players to get it there.
“The way we look at it now is let’s be the best damn mobile company in the world,” Thet says. “[We want to] be the only mobile media platform that works with top tier publishers and advertisers to deliver the highest value per interaction…That means across every mobile channel (SMS, display, apps, etc.) and every type of mobile interaction.”
The first part of this (some might say overly ambitious) campaign is its acquisition of Butter, a company that specializes in creating customized mobile solutions and ad campaigns for the iPhone and Android platform. The cash and stock deal, announced this Tuesday, is a modest takeover— a source believes Butter’s valuation didn’t break seven-figures— but it embodies 4INFO’s major shift in strategy.
Butter is not incredibly unique in its basic products, a few other companies are trying to create rich mobile ad experiences (like Medialets, Apple iAds) but Thet says he was drawn to their team, the roster of clients, which includes Coca-Cola, and especially their approach:
“The thing that we found very interesting about Butter was the fact that most of their advertising buys that they were getting weren’t coming from the mobile ad budgets. For viewers who are not familiar with the way that media works, there’s typically line items in each different advertising plan, for how they’re going to spend their money, x amount goes to TV, x amount goes to the web…what Butter had done is they had been able to break out of that bucket of just being an experimental, mobile ad budget line item… That meant to us that there’s something valuable there beyond just the technology, which was interesting, but the actual relationships and the network that they built in a very short amount of time.”
From Butter’s website:
As I noted above, this will be the first of many acquisitions for 4INFO, as the company tries to create a one-stop shop, mobile ad destination. Thet has a decent purse to work with, the company has raised approximately $40 million since 2005 and revenues are climbing at a feverish pace. According Thet, revenues will likely quintuple—possibly sextuple— this year. So they have the money, but will it work?
They’ve certainly proven themselves in the SMS category, the company boasts a network of roughly 3,000 publishers, with some of the biggest publishers paying as much as $75,000 per month to use the platform. For those unfamiliar with their B2B product, the main backbone of 4INFO is a publishing platform, “msgHaven,” which helps publishers manage their SMS content and delivery. The company also features an advertising platform, called “adHaven,” which includes an ad network for mobile ads. The company has expanded beyond SMS, notably moving into mobile display ads in 2009, but it definitely has a lot of ground to cover.
Of course that ground has also become more challenging. Now that Google and Apple have rushed onto to the scene with their recent acquisitions of AdMob and Quattro, their shadows loom over the market. Noah Elkin, a senior analyst at eMarketer, says 4INFO had a better chance of dominating the market 6 months ago (pre-Google/Apple takeovers), but he says their fundamental strategy of building a comprehensive mobile ad house is sound, as more companies look for rich ad experiences and one-stop shops: “SMS has had the greatest reach but it’s probably the most unsexy form of advertising there is— as more and more consumers buy smart phones you can see the tide shifting… It’s not too late for his peer group to get in the game.”
Thet discusses the value of Butter, his acquisition strategy, and potential suitors in the video above.