Butter Acquisition to Spread Mobile Marketing Consolidation

Mobile Text-Message Company 4info to Buy App-Ad Firm, Signaling Industry Shift Toward One-Stop Shops

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NEW YORK (AdAge.com) -- In a sign that the mobile-ad industry is trending toward consolidation, text-message mobile firm 4info said it will acquire Butter, a mobile-marketing firm that connects brands and apps for content sponsorships.

"The exciting evolution is what we learned online: Great sellers of advertising deliver campaigns; they don't deliver ad units," said Julie Shumaker, senior VP-sales and marketing. Ms. Shumaker is leading the expanding services push for the San Mateo, Calif.-based company, which counts Gannett Co. and NBC Universal as investors.

It's also a good bet that agencies and brands will increasingly look to one-stop shops as the mobile market matures. "It's always easier with a one-stop shop," said Alexandre Mars, CEO of Phonevalley, a Publicis Groupe mobile-marketing agency. "The fact that companies are trying to extend into other segments shows we're coming from a nascent market to a maturing one."

Apple and Google, with their recent and high-profile mobile ad network acquisitions and ad products, have re-invigorated marketer interest in the medium. But the attention is changing a traditionally fragmented market that's been ruled by small, highly specialized players aligned with media such as mobile video, text messaging or in-app advertising.

The industry has grown up in a segmented, siloed way, said eMarketer analyst Noah Elkin, but the walls are coming down. "As each area starts to bleed into each other, the smarter companies have seen the writing on the wall: We have a good business today, but we need to start thinking about tomorrow," he said.

With this latest deal, 4info is looking beyond its core business of text messaging, the highest-reach mobile media, to expand into branded apps that have become popular on smartphones such as the iPhone. Mr. Elkin points out that as more phones get access to the internet and smartphones continue to gain market share, investing in app advertising makes sense for a text provider.

4info plans to take its newly acquired app expertise to its 300 brand partners, which include USA Today and other Gannett newspapers, the NBA, Yahoo and Evite. Today, 4info sends nearly one-third of all content-based texts in the U.S., said Ms. Shumaker, adding up up to about 100 million texts per month. Butter, on the other hand, is on track to bring in 5% of app content-sponsorship ad revenue, she said.

"The next frontier is the opportunity within this ecosystem to be a single-source platform that's third-party, meaning agnostic for device, carrier and [operating system]," she said.

The details of the deal were not disclosed. Butter's four employees will join 4info's New York office. The deal is expected to close in July.

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