SITO Mobile Capturing Market Share in Location Based Mobile Advertising

According to a report in Enterprise Apps Today, location-based mobile marketing provides big opportunities for businesses and benefits for consumers. The report, citing Mobile Marketing Association CEO Greg Stuart, notes that mobile marketing works and yet most marketers have not yet capitalized on the opportunity. Indeed, despite this, mobile marketing has grown at a brisk pace over the years. If marketers realized the full potential of mobile marketing and specifically location-based mobile marketing then the growth could be even more significant then we have seen so far.

The main driver of growth for mobile marketing has been increasing use of smartphones. Greg Stuart notes that smartphone penetration worldwide is around 2 billion. However, in countries like China and India, there is still significant room to grow. According to Cisco, smartphone usage are expected to grow at a CAGR of 66% over the next five years. This augurs well for the location-based mobile marketing industry.

Enterprise Apps Today, citing Cisco, notes that 61% of application users have a better opinion of a brand when it offers a good mobile experience. The impact though is even higher when it is tied with location-based uses, the report notes.

Sito Mobile Ltd. (NASDAQ: SITO) is an emerging player in the location-based marketing space. In recent months, SITO has made significant progress.

Sito Mobile does not have any direct competition but there are some interesting players in the digital advertising space. One such company is TeleNav Inc. (NASDAQ: TNAV). Based in Sunnyvale, California, TNAV is providing location-based platform services consisting of map and navigation platform, and advertising delivery platform.

The Rubicon Project Inc. (NYSE: RUBI) is another player in the digital advertising space. The company is based in Los Angeles, California and focuses on automating of the buying and selling of advertising. TubeMogul Inc. (NASDAQ: TUBE) is another major company in the digital advertising space. TUBE is based in Emeryville, California and provides a platform that enables customers to launch digital video advertising campaigns onto any digital device.

What separates SITO from other players in the digital advertising space is the company’s offerings. SITO offers location-based advertising and mobile messaging. In location-based advertising, SITO offers a number of features such as geo-fencing, verified walk-ins, behavioral targeting, and analytics and optimization. The other offering from SITO is mobile messaging. In mobile messaging, the company builds and controls tailored programs, which include messaging, customer incentive programs etc.

SITO has made significant progress this year on the corporate as well as the operating front. The most important development for the company has been uplisting to NASDAQ. SITO listed its shares on the NASDAQ stock market after completing a reverse stock split (1-for-10). The NASDAQ listing is crucial for the company as it creates awareness about it in the institutional investor community by increasing visibility.

On the operating front, SITO has completed the acquisition of Hipcricket’s mobile advertising business, a move that will significantly boost its top-line. Even without the impact of the acquisition, SITO had reported impressive results in the June quarter, with revenue and margin improving.

For the quarter ended June 30, 2015, SITO had reported total revenue of $3.68 million, representing an increase of 72% on a year-over-year basis. The improvement in revenue was driven by substantial continuing growth in its Media Placement revenue. SITO’s Media Placement revenue jumped more than 15 times to $2.154 million in the June quarter. On a sequential basis, Media Placement revenue rose 32%.

On the margin front, SITO saw a 400 basis points improvement on a year-over-year basis. Going forward, SITO’s financials are expected to benefit from the acquisition of Hipcricket’s mobile advertising business.

Apart from improving its financial performance, SITO has also been strengthening its IP portfolio. Late last month, the company announced that its subsidiary SITO Mobile R&D IP LLC was granted two patents, U.S. Patent Nos. 9,135,635 and 9,135,636, by the U.S. Patent and Trademark Office (USPTO).

CEO Jerry Hug said recently that SITO’s dedication to driving shareholder value lies in its ability to generate growth and strengthen its IP portfolio. Interestingly, SITO has received investment from Fortress Investment Group, a leading global investment firm that has been involved with many IP financing clients such as Netlist and Andrea Electronics. Fortress provided debt and equity financing to SITO Mobile last year. SITO secured a $10 million credit facility and a $1 million equity investment from Fortress Investment Group.

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