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Millennial Media, the first mobile network to go public, is feeling the pressure as giants including Facebook and Google move onto its turf.
The company announced a dissapointing first quarter that sent its stock spiralling downward, but said it would be relying less on app-download ads and more on programatic selling.
On Wednesday, the firm posted first quarter revenue of $72.6 million and losses of $12.9 million. It released guidance for the next quarter of revenues between $70 and $75 million, more than $20 million below expectations on Wall Street. Shares of the company's stock fell by 42% in after-hours trading.
It was the first full quarter for Michael Barrett, the CEO who took over in January. On an earnings call, Mr. Barrett, an ad-tech veteran, outlined the company's plan to reposition itself as a high-end, independent advertising network for major brands.
"We're very happy to be in the middle of this vibrant and fast-growing space," Mr. Barrett said, before adding: "But, I also realize that we have some significant work to do."
The company cited a heavy drop in app-download advertising. A sizable portion of its inventory goes to mobile game developers, like King.com. In its earnings call, the company stressed it would now be moving away from these single sources of ad buyers -- a shift, in Mr. Barretts words, from "home-runs" to "relying on single and doubles."
Lately, app downloads have been soaked up by Facebook, Twitter and Google, which all added product upgrades for the ad format. Without naming these rivals, Mr. Barrett hinted at their impact. "Clearly," he said, "a few big players entering the space are also taking a significant chunk of the advertising space."
He spent much of the call noting the network's upcoming shift in strategy, including its continued turn toward automated real-time bidding. The company began moving in this direction after purchasing Jumptap, a former competitor, last year.
As it faces growing heat from Facebook and Google in the mobile ad world, Millennial Media is also trying to depict itself to brand advertisers as a neutral partner, without its own publishing or data arms. "Brand advertisers love the fact that we are independent and open," Mr. Barrett said. "Our goal is to monetize content for our advertisers. Period."
The company admitted that its adjustments would take at least a "few quarters" before strong revenue growth returned.
On the earnings call, Michael Avon, the CFO, announced he was leaving the company for unnamed entrepreneurship work.