Tuesday, August 26, 2008 10:00 AM
Cambridge, MA.-based JumpTap, a white-label mobile search and advertising company, plans to announce today that it has raised $26 million in a fourth round of funding, bringing its overall total to $72 million. The latest round was led by Alliance Bernstein L.P., a publicly traded global asset management firm. All other existing investors, including General Catalyst Partners, Summerhill Venture Partners, Redpoint Ventures, Valhalla Partners and WPP, participated. JumpTap said the company is worth more following the round, and that the capital will go towards accelerating the company's advertising efforts and expansion plans in Europe.
The large bankroll will surely help the company grow and compete against several companies, including brand name online search providers, such as Google ( NSDQ: GOOG), Yahoo ( NSDQ: YHOO) and Microsoft, but also other white-label search companies, like Seattle-based Medio Systems. A report last week said the company laid off employees in certain areas (although JumpTap maintains that the report was untrue), and now it is unknown what will happen with Alltel ( NYSE: AT), one of JumpTap's main customers, since Verizon Wireless ( NYSE: VZ) has acquired it and been reported as being close to securing a deal with Google and Medio for its search and advertising needs. Yesterday, I talked to Paran Johar, JumpTap's CMO, who painted a rosy picture of a company that's expanding, adding staff, and even close to announcing a deeper relationship with AT&T ( NYSE: T). Here's excerpts from our talk:
Current customers: JumpTap works with 17 carriers in nine countries, including AT&T, Alltel, U.S. Cellular, Virgin Mobile USA ( NYSE: VM), Boost, Rogers, Bell Atlantic and Telefonica ( NYSE: TEF). As far as whether JumpTap will continue to work with Alltel: "They don't know, nor do we. I hope we can evolve it [our relationship], but we aren't seeing any change thus far."
Employee situation: The company has about 125 employees, and is expanding based on needs and skillset. As far as layoffs, "that's not at all true. The company is growing, and we are bigger now than we were a couple of months ago. We adjust our resources accordingly, and we have increased our sales group by 600 percent. We make adjustments of resources based on market, but the report was false."
On the Verizon-Google Deal:"I think what people forget is that this deal has been in the works for at least a year, and what they've been negotiating is what will Google's revenue share be, and who will have access to the rich customer data. And as more and more carriers recognize that they are a critical component, no matter how big the check Google writes, it's the Trojan horse knocking on the door."
Three business models: Johar said there's business relationships JumpTap has been entering recently. In the first scenario, he says carriers completely to Google, Yahoo or Microsoft, and become a bit pipe. In the second, he says carriers will hedge their bets and use a company like JumpTap to manage the relationship between themselves and Google, Yahoo or Microsoft ( NSDQ: MSFT). In the third, the carrier signs up for all three of JumpTap's services and involves them in white-label search, managing the customer's data and using their salesforce to monetize search and sell ad inventory. Johar: "In every single case, we have carriers moving up the food chain. We are expanding with AT&T and really restructuring that relationship and getting close to announcing industry-changing news." JumpTap has been working with AT&T for a couple of years, and currently provides white-label search on its MediaMall.
State of the Industry: Currently, the mobile advertising industry is a bit up in the air. Some people are speculating that prices have been artificially high, but now that there are more reporting standards starting to surface, prices are adjusting and unsold inventory is rising. Johar would not share the company's revenues; would not provide a range for how much mobile ads are selling for, but did elaborate a little on how well ad inventory is selling: "Being sold-out is difficult, and it depends on the market. In Spain, we have 90 percent sell-out rates, and in Sweden, it's lower, and in the U.S., it's lower. It's an evolution of the market." When asked if the U.S. sells more than 50 percent of its inventory, he said: "It's over that, but I don't know the exact numbers off the top of my head."
Forecast: CEO Dan Olschwang said in the release: "Internet advertising is currently growing at a compound annual rate of 18.3 percent and will reach $73 billion in 2011. What is really exciting about mobile advertising is its ability to eclipse Internet advertising." When asked to elaborate, and what kind of time table we should expect, Johar said: "If I could put a time schedule on that, I would be the richest man alive, but the amount of traction we are seeing is up across all fronts." He said that includes everything from operator interest?both new and existing customers increasing their relationships?to publishers and advertisers.