Omnicom Buys ipsh sms marketing

http://www.redherring.com/Article.aspx?a=13934&hed=Omnicom+Buys+Mobile+Ad+Firm#

Omnicom Buys Mobile Ad Firm

Advertising firm buys ipsh to help it send ads to cell phones.
October 10, 2005

Advertising company Omnicom said Monday it bought mobile marketing
company ipsh, signaling the growing use of cell phone ads in the United
States.

The companies didn’t disclose the price of the deal, but ipsh CEO Nihal
Mehta told RedHerring.com the price tag was in the “multimillions.”

‘We are still just scratching the surface of the medium.’

-Daren Siddall,

Gartner

- ADVERTISEMENT -

Mobile marketing, which consists of sending a text message or media clip
in the form of an advertisement to a cell phone, is a big business in
Western Europe and Asia. The mobile marketing industry took in $300
million in South Korea and Japan last year.

But only 20 percent of U.S. mobile phone users received an ad text
message on their cell phones last year, and the vast majority of that
group found the messages annoying or deleted them, according to research
firm Yankee Group.

With nearly 200 million cell phone subscribers in the U.S., mobile
marketing is inevitable as advertising dollars move away from
traditional media like television and newspapers.

The acquisition “highlights the growing importance of the mobile phone
as a viable marketing medium,” Mr. Mehta said.

ipsh created a mobile marketing campaign that printed a text-message
code on 50 million packs of candy like Starburst, inviting consumers to
text in order to get a promotion. Mr. Mehta said the campaign had a
“response rate ten times as high as an online ad campaign.”

Mobile Options

Advertising companies are looking at mobile options, either through
buying mobile marketing companies, or building mobile divisions within
the agencies (see Cell Phone Ads Are on the Way).

Thomas Harrison, the chairman and CEO of Diversified Agency Services,
the unit of Omnicom that is funding the deal, said the acquisition “will
give us a leadership position in the marketplace.”

Gartner analyst Daren Siddall said that deals of advertisers buying
mobile marketing firms are “an inevitable trend. But the market is still
tiny. We are still just scratching the surface of the medium.”

Mr. Siddall said the key is finding what the mobile companies will bring
to the big firms. ipsh is a creative company, not a technology play, so
the firms could likely learn mobile without buying a company, said Mr.
Siddall.

“If the deal was just a couple of million dollars, then the firm could
attract new clients with mobile and make back the expense pretty
quickly,” said Mr. Siddall.