Mobile advertising spending is set to reach $100 billion this year, and SITO Mobile’s success is indicative of the sector’s strength. Investors, take note.
The mobile advertising market is hot right now. This year, the global market is expected to surpass $100 billion, and for the first time in history will account for more than half of all spending on digital ads.
Those numbers are impressive, and can be seen playing out in the mobile ad space right now. Case in point: SITO Mobile (NASDAQ:SITO), a small-cap mobile engagement platform, saw an 87-percent year-over-year increase in revenue in its most recent quarterly results.
What is SITO Mobile?
Most of us only have only experienced mobile app marketing and social media marketing from a consumer point of view. It’s therefore helpful to take an inside look at one of the innovators in this space. Enter SITO Mobile — it provides a mobile engagement platform that allows brands to increase awareness, loyalty and sales. Specifically, the company specializes in location-based mobile advertising and mobile messaging.
What that means is that SITO helps businesses connect with their audiences on mobile devices by pinpointing consumers’ locations. That helps brands provide location-specific ads and messages, targeting customers at the times and places where they’re most interested. The messaging function helps companies develop a more personal connection with customers.
On February 9, SITO released its results for its first fiscal quarter of 2016, which ended on December 31, 2015. According to a press release, the company’s revenue totaled $7.2 million, representing an 87-percent year-year-increase. Media placement revenue was $5.3 million, a sequential increase of 77-percent over Q4 2015; meanwhile, wireless app revenue was $1.6 million, a 20-percent sequential increase.
During the period, the company also formalized its partnership in the Canadian market with a commitment from Cieslok Media to deliver at least $2.1 million in media placement revenue for the 2016 calendar year.
Commenting positively on the results, SITO CEO Jerry Hug said, “we’re off to a great start in 2016.“ He explained that the company’s “performance was driven by increasing momentum in our Media Placement business and during the holiday season we saw increased demand for our proprietary mobile location-based Verified Walk-In product which continues to deliver excellent ROI to advertisers.”
Since last Tuesday, when its quarterly report was released, SITO has seen an 8.69-percent bump in share price, suggesting that investors are taking note of the company’s growth. Furthermore, on Sunday, Zacks Investment Research upgraded the company’s rating from “sell” to “hold.”
Future for mobile app marketing
The mobile advertising industry is expected to continue expanding over the next five years. Indeed, 2016 is just the beginning of a booming mobile ad market. According to eMarketer, by 2019 the mobile ad space is expected to account for 90.1 percent of all digital ad spending. What’s more, global ad spending will almost double to reach $195.55 billion.
Those statistics indicate that this sector is one to watch for keen social media and app investors. Growth is already taking off, and it it could be a smart idea to get on board now.
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.