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November 28, 2007

HipCricket's IPO raises money for wireless play

Posted by Tricia Duryee at 3:39 PM

Earlier this week, I drove to Bellevue to sit down with Ivan Braiker and Eric Harber, HipCricket's chief executive and president, respectively.

We gathered in Braiker's office, which was surprisingly bare of any decorations, artwork or anything.

Turns out everything is packed up. The company is expanding so fast it needs to move to a larger office. Braiker even joked that as soon as he takes off for a sales trip, the employees celebrate -- up to three employees can fit and work in his office.

They'll have about 50 employees by the end of the year and are expecting to add about four or five a month, Braiker said.

What's HipCricket doing that's driving so much growth?

It helps radio and TV stations make their one-way media become interactive by allowing listeners and readers to send text messages to the station in response to advertising. At the same time, the system is used to increase the effectiveness of the ads. In doing so, the stations' can charge more.

It's good to step back every once in a while and hear examples of what is actually successful and making it in these frothy wireless days, where everyone has an idea for cellphones.

HipCricket seems to be addressing something spot on.

In a report published Tuesday by Seattle-based M:Metrics, 94.9 million mobile subscribers said they sent a text message in the three months ended September, or about 44 percent of U.S. cellphone users.

Here's some of the examples of how HipCricket is being used:

-- KUBE 93.3, the radio station in Seattle, regularly uses the system. For instance, it aired a McDonald's commercial that asked listeners to text a five-digit short-code to get a two-for-one coupon for cheeseburgers.

-- In Los Angeles, a local coffee shop offered a coupon for two-for-one iced lattes.

-- In yet another market, a company holding a job fair said if people sent a text message, they would get a text reminder the day of the fair.

Braiker said that these offers are generating a response rate of about 40 percent, a much greater rate than traditional means of advertising.

"TV and radio has struggled over proving accountability [that people are indeed listening and watching]," he said. "By the end of the day, they now know how many people have replied."

In the case of the L.A. station, Coffee Bean became a HipCricket customer so it could use the technology across all radio stations in all of its markets, not just the one in L.A.

Braiker said this is why HipCricket is growing so fast. Sister radio stations, TV stations, newspapers and even the brands themselves are using its technology.

The company, almost 4 years old, has about 200 customers and has managed 16,000 campaigns.

HipCricket charges a flat rate and provides a number of ways for the stations to make money. The station usually charges an advertiser a premium to add a text message to its commercial, but ads can also be added at the bottom of a text message. For instance, people can text in to get a list of the last three songs that played on the radio. On the bottom of the reply would be a sponsorship ad.

HipCricket can also be used to boost a station's audience. People may be willing to sign up for alerts, telling them to tune in when a prize is about to be given away.

The company has been backed by a number of private investors, and is profitable. But for now, Braiker said profitability is not a goal -- it makes more sense to invest and grow.

"We are in the middle of a land grab," he said.

UPDATE: Late Monday night, HipCricket went public on the London Stock Exchange's AIM. It raised about $17 million and has a market capitalization of $155.4 million. In this press release here, Braiker said: "The additional funding puts us in an excellent position to capitalize on the increasing opportunities ahead of us, providing a strong base to grow the company organically and also fund expansion in US markets. Our AIM listing will significantly enhance our ability to serve our existing UK investors."

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Tricia Duryee
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