We humans are pretty predictable. We live our lives in certain
patterns and according to certain preferences.
There was a time when no one knew what those preferences were. The
guy taking my order at a restaurant might remember I like Diet
Coke, or the mechanic might remember something about my car, but
these observant people were the exception, not the rule. And they
didn't talk to each other. There was no network.
That has changed.
When my wife and I moved to West Virginia, we had a number of
things we needed to find, fast. A grocery store. A dry cleaner. A
gas station. A barbershop. A pharmacy. And do you know that at each
one of those places, the first thing they asked for was personal
information, data they they used to tie in to a loyalty card. We
use the cards to obtain better pricing. That's the quid. The pro
quo is that they use the loyalty card to track exactly what my wife
and I buy.
Not long ago, we got a letter from
, our usual grocer. In the letter was a series of 10 or a dozen
coupons. Each one was for products we had bought before:
store-brand dry-roasted peanuts, unsalted butter, Nutella, and Diet
Coke, to name but a few staples.
Now, this exact same grocery store puts a circular in the
newspaper and mails one once a week or so. I have never opened
either. But I used eight of the coupons from the letter.
That's called targeted marketing. Unlike the circulars and print
ads, which target certain seasonal items to a general audience,
what I received in the mail was laser-focused -- tailored to an
audience of one customer, based on typical buying pattern.
Now, I don't know a lot about marketing, but my guess is that if
of Kroger looks at the results of the campaign and sees that I used
80% of the coupons I receive, he's going to keep sending them just
to get me into his store, where I'm likely to buy other
This is the sort of program that
Augme Technologies (
designs. But it doesn't use the post office, which is expensive,
slow and unreliable. Instead, it builds offers like these and sends
them out through another channel entirely -- the cellphone.
Some 240 million Americans (out of more than 300 million) have a
cellphone, which is pretty much everyone but the very, very poor
and young kids. The mobile sector is also adding tablet computers,
which were the must-have for this holiday season. The variety of
mobile devices in consumers' backpacks, purses and briefcases
creates a staggeringly complex problem: What should the ad look
Augme solves this problem with a patented device detection system
-- part of its Ad Life software -- that determines the specs of the
phone or the tablet and then formats the ad to fit perfectly.
Problem solved. This system lets Augme solve the bigger problem
right out of the gate: 30% of all Internet searches are done on
mobile devices, but only 2% of the web is optimized for mobile. In
other words, 98% of websites assume that they will be viewed in a
computer web browser, which is wrong. And if you've ever tried to
view a web page on your smartphone that wasn't mobile-device ready,
you know how poorly the site is delivered and how difficult it is
On top of determining the device and formatting the content, Augme
adds in tons of other features that brand managers and marketers
can use: Coupons, bar codes, UPC codes -- any
, special or traffic-driving content can be added in. The
technology here is so good that other major high-tech companies,
among them Oracle, Hewlett-Packard, Sun Micro and IBM, have alluded
to it in their own patent filings.
Great technology in a hugemarket
Mobile marketing is already a major industry, and forecasters say
it will get even bigger, doubling from its 2009 level to nearly $17
billion in 2015, according to Forrester Research.
A subset of the mobile marketing business -- called interactive
marketing -- is a smaller piece of the pie, but it's growing at an
even faster annual rate. Interactive mobile marketing, using a
phone or tablet of some kind to facilitate a specific customer
interaction, is Augme's main business. This $145 million company is
a David staring into a Goliath
-- and my take is that the outcome is going to be the same: Augme
might be a small player looking at a big market, but given its
competitive position, there's no reason it can't win.
While the industry is seeing some significant
, as niche players morph and meld into larger, more capable
enterprises, Augme offers a competitive advantage in that it
already has all of the pieces in a
. This puts the company in the cat-bird seat and should allow it to
capture a disproportionate share of that massive $17 billion
market. Being first has a distinct advantage: It gives a company
time to establish a customer footprint with basically no
And indeed, Augme is already showing signs of domination. Its
revenue has very nearly doubled in the past year, a feat that few
companies can match, especially in a down
Risks to Consider:
As with any small, startup-like company, you should be willing
to tolerate a fair degree of volatility if you buy this stock.
Also, note that it trades over-the-counter, which goes to say that
it does not (yet) trade on a major exchange. That shouldn't push
you away from investing, necessarily -- plenty of stocks with
amazing growth stories started out on the OTC markets -- but it is
something to keep in mind if you consider buying
. Consult with your broker if you have any questions.
Action to Take -->
I recently brought Agume to the attention of readers of my
. It's exactly the kind of stock my readers want to know about…
it's an up-and-coming company that could turn the web ad market on
The market isn't getting any smaller, and as more and more web
customers embrace mobile marketing -- which they ultimately are
going to have to do to survive -- the better Augme should do. I
think the stock is a major growth story just waiting to
Andy Obermueller does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC does not
hold positions in any securities mentioned in this article.