SITO carves out growing role in location-based mobile ad market
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By Anya George Tharakan
(Reuters) - A small U.S. advertising company is making waves in the tiny but rapidly growing market for personalized mobile advertising.
SITO Mobile Ltd uses location-based data to target ads to users of more than 250,000 mobile apps, including the Wall Street Journal, Pandora and Major League Baseball.
SITO collects data including a device's ID and location as well as the time an app is opened and uses those details to help paint a picture of a user's behavior and preferences.
The company combines this data with other information from companies such as Acxiom Corp's LiveRamp that can provide details such as age, gender and household income on an anonymized basis.
Users can opt out of ads delivered by SITO by turning off location services on their device.
Jerry Hug, SITO's chief executive, says his company's revenue could increase to between $35 million and $40 million this year, from $19.2 million in 2015.
Revenue could double next year, he said.
Analysts, on average, expect 2016 revenue of $37.7 million, according to Thomson Reuters I/B/E/S.
SITO, based in Jersey City, New Jersey, reported net income of about $725,000 in the second quarter, the first profit in its 16-year history.
"Consumers I think always like a deal and they are willing to be exposed to advertising that's relevant to who they are and their real world experience," Hug said in an interview when asked if concerns had been raised about privacy.
SITO, whose customers include Whole Foods, McDonald's and Coca-Cola, listed on the Nasdaq in August 2015.
The stock has risen almost 140 percent this year. At Thursday's price of $5.03, SITO is valued at about $100 million.
Location-based advertising is still a tiny part of the booming mobile ad business, but SITO expects the market to grow to about $18 billion in 2019 from about $6.8 billion last year.
The company says it gives advertisers access to more than 98 percent of U.S. mobile consumers.
"What ... differentiates SITO is their real-time attribution capabilities, where the company advertising can see in real-time how many people were served an ad and subsequently walked through the store," Brian Kinstlinger, an analyst at brokerage Maxim Group, told Reuters. Maxim has a "buy" rating on SITO.
Capitalizing on SITO's growth, Hug is looking for acquisitions in the $10 million-$20 million enterprise-value range. "We have two letters of intent out ... and we have one that we are in earlier-stage discussions," he said.
SITO, which plans to expand into the UK before the end of the year, competes mainly with several unlisted companies, including xAD, Verve and PlaceIQ.
(Reporting by Anya George Tharakan in Bengaluru; Editing by Ted Kerr)
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