In the first deal of its kind, the world's largest advertising holding company is leaping into mobile marketing with the purchase of a San Francisco startup.
Omnicom Group's Diversified Agency Services has acquired Ipsh, a 26-person mobile-marketing shop that has crafted text messaging and other campaigns for more than two dozen marketers including Johnson & Johnson, Masterfoods, Warner Music Group and Sony Pictures. Terms were not disclosed, but one merger-and-acquisition expert, pointing to cooling prices in the post dot-com bust when interactive agencies fetched 12 to 15 times earnings, estimated the cost at below $5 million.
The move, however, may be more notable for its symbolism than its price. "The acquisition will give us a level of insight others don't have at this time," said Thomas L. Harrison, chairman-CEO of DAS.
Ipsh Co-founder and CEO Nihal Mehta said the acquisition underscores the emergence of mobile media as an important part of the marketing mix. Portio Research estimates SMS, or text messaging, alone will become a $50 billion market globally by 2010. "This acquisition means everybody realizes this is a serious media," said Mr. Mehta. "It's not just talk anymore."
Although many of its campaigns involved text messaging, Ipsh is expanding into mobile video and IVR (Interactive Voice Response, systems where customers respond to recorded commands with telephone keys) as well as ringtones, wallpapers and other premium content, that is, products or services sold over the phone and billed directly to a subscriber's mobile phone account.
Mr. Harrison acknowledged marketers are not yet demanding inclusion of the mobile channel in their advertising campaigns but they "are beginning to understand the importance and power of this as a medium." He added that Omnicom would consider other mobile marketing acquisitions, saying, "This is a future, a channel just like the Internet is a channel."
Industry executives, however, don't expect a rush just yet. Seth Alpert, managing director, AdMedia & Partners, New York, said that mobile marketing firms currently don't have substantial revenue to gain attention from merger and acquisition brokers.