This morning, while skimming various news sites, I came across various "2012 Investment Prediction"-type articles. Of note to me, as an Augme investor (small by most of your standards - but very large as a percentage of my tiny portfolio - and @ approx $2.70/share), were a few references to 2012 as the year that we'll finally see "Mobile Advertising Really Take Off." In these articles, Velti, InMobi, Mitek, and Millenial Media were mentioned explicitly.
When reading these types of articles, I usually say to myself: "the mobile pie is big enough to share" or "they're just getting buzz because they may go public" or "I bet they are infringers..." - or any sort of self-validating statement I can come up with. But, after a look back at my portfolio's 2011 performance... I'm feeling a bit cynical.
In another article, the Hipcricket CMO was quoted as saying feature phone users were being neglected. This may be, but it made me squirm a little bit as it had me feeling we were on the cutting-edge of yesterday's technology versus where things are headed (somewhat like the fruition of the ominous required statement in their disclosures: "Future advertising and competition in the mobile device market may render our technology obsolete." I realize the Hipcricket feature phone business is but one facet of their model... but, nevertheless...
Is there some reason Augme gets no love (aside from a SA article that comes right before a dive, or an ever-declining analyst report)? I tend to gravitate toward the bulls here and believe the core business and IP will eventually be validated... but, wouldn't mind being re-assured every now and then.
"In another article, the Hipcricket CMO was quoted as saying feature phone users were being neglected. This may be, but it made me squirm a little bit as it had me feeling we were on the cutting-edge of yesterday's technology versus where things are headed...."
This quote does not elude that Augme is an old technology company and that we are relying on the feature phone existence for success BUT that it is simply stating AUGME can help advertiser unlike most others to reach out to what is over 50% of the current mobile market still while others have counted them as dead....this is a unique capability and one that our IPs address nicely. However, the power of AUGME is to address the "entire" mobile market as it transition rapidly from feature to smart mobile platform. We are by far the best positioned company among those that has been listed....although due our tumultuous past we have not been fully discovered by the market but only by those clients that we serve. The acquisition of HC will improve this quickly and greatly as their reputation is already known in the industry....now with the combined power of Augme and its IPs imagine what they can pitch to the customers with confidence....this obviously takes a bit time to come together. Just need to be patient.
Sirius - I agree with you. I think, between the focus on text messages and the Jagtag acquisition a while back, I became a bit concerned there was too much focus on the here and now. But, I agree that the moves and focus areas make sense and allow them to address the market as-is without neglecting future space/direction as well. Just a bit of a contemplative morning when I looked at the returns for this year. AUGT was only half of the story, I also had a large (for me) stake in STEC right when it took a dive from $16 to $9 in an hour or two back in Jul/Aug. That story didn't appear very compelling at that point and I switched over to Augme at its height. Hopefully, this year will allow for some redemption as my wife isn't very convinced with my stock-picking abilities as of late!
Worst of Times,
InMobi and Millennial Media are Ad networks and distinctly different from Augme. Mitek is actually a mobile commerce company. Velti is really the only company that could be considered a competitor albeit Augme runs into them infrequently and more often than not beats them head to head. There's a reason analyst Richard Feytko's recent report on Velti also focused heavily on Augme. You may want to go back and review his commentary which I perceived as very bullish on Augme. I expect he may also initiate coverage on Augme.
Most importantly, remember there is a distinct difference between the fundamental business of mobile advertising and mobile marketing.
Remember, Mobile Marketer, the industry digest for mobile just named Hipcricket the top mobile marketing company with their client Macy's being the number one mobile marketer because of their campaign with Hipcricket. Furthermore, the very respected Frost and Sullivan named Hipcricket the top mobile marketing company terming the combination of Augme and Hipcricket as an industry powerhouse. Frankly, there has been no shortage of reassuring commentary on Augme and Hipcricket as of late.
Looking at the Business Insider article you cited:
"Mobile advertising is still tiny compared to internet advertising, let alone all advertising, but it won't stay that way forever: smartphones are proliferating, outselling even PCs, and will soon reach a scale unseen in the history of computing. This isn't a bold prediction."
Ironically look who they cite on the graph: "Pandora"
Remember if there is one thing you understand, make it this: as smart phone proliferation continues to grow, brands will devote more of their ad spend on the mobile medium. Augme and Hipcricket have hundreds of clients consisting of many of the top Fortune 500 brands in the world. Those brands are now beginning to devote more of their ad spend to mobile going forward because the medium has now proven itself with unheard of roi on ad spend and conversion rates like nothing they've ever seen. Mobile is on the verge of making some traditional advertising mediums literally obsolete.
As these brands devote more of their ad budgets to mobile, they will do it with their existing mobile partner who they have come to trust and rely on during the exploratory and testing stage and that is the Augme/Hipcricket team. When you understand the true uniqueness and deep rooted value of combined technology offering and expertise of the Augme/Hipcricket team, you will understand exactly why and how they came to possess such an impressive client roster. Remember, the most sacred and valuable asset these large Fortune 500 clients have is their respective brand and they won't trust it to just anyone.
Last but not least, I know you said this investment is a very material part of your portfolio. If that's the case, you could always go visit the company in NY or Seattle and see what you actually own. I think doing this would materially enhance your own personal comfort level.
Feel free to ask any specific questions you may still have.
Arn, I am not trying to "suck up to you" in any way, but your reply to "Worst of Times" is one of the most concise and informative posts I have ever read. It is full of fact and not just opinion and it conveys the essence of why we are invested in Augme. Job well done!!!
King / Arn,
Thanks for the replies.
King - I do think an existing / "real" customer base is important and think the "reach" aspect Hipcricket referenced is important as this field is ripe for exploitation real-time.
Arn - Thanks for your input. You mentioned visiting Augme HQ. Which site have you been to - the 7th Ave HQ? I'm down in FL, but had thought about tying-in a family trip to an AUGT-related office visit. I suspect that would be NY or maybe HC in WA. Have you ever visited the "Mobile Center of Excellence" in Atlanta? That would be closer to home. My investment, again, is comparatively small to many of you - maybe ~20K shares...
I also noted the Pandora reference. Given the lawsuit and Pandora's reference to Augme by name in their disclosures... I was/am hopeful for some of those marketing dollars to materialize in Augme's coffers soon. I just hope Pandora is still around/solvent when the time to collect comes (if successful). Looking over Pandora is actually what led me to Augme.
Thanks again to all of you on this MB (Arn, King, XTJ, Cortiz, Warn, Ariel, etc...) for the dialogue. Sometimes I wonder what the motivation is for competent individuals to spend time pontificating on a MB - I am interested in that if you have the time to share your thoughts. Although, after talking smack on a Fantasy basketball MB for about 20 minutes... with absolutely no monetary incentive... I think I may understand.
thanks for the links...I like the hipcricket quote - it's on point about current reality in mobile marketing, not some yet-to-be proven gadget that has no current penetration or acceptance.