Proximity Marketing Pioneer Gimbal Acquired By The Mobile Majority
The anticipated consolidation of the location marketplace appears to be gaining momentum.
Gimbal, the beacon hardware and software company that spun out of Qualcomm Retail Solutions in May 2014, has been acquired by integrated ad platform The Mobile Majority, GeoMarketing learned this weekend.
Executives from both companies confirmed the deal officially closed on Tuesday, November 29. A formal announcement is expected later today. Financial terms were not disclosed.
“The acquisition of Gimbal is a massive step toward realizing the promise of relevant advertising,” said Rob Emrich, CEO and founder of The Mobile Majority, in a statement. “By combining Gimbal’s location software, hardware, and data with our media buying platform, we can further realize the potential of true 1-to-1 targeting and attribution. There are hundreds of companies in this space, but there are only a handful that control a critical mass of source data. This acquisition likely puts our company as the largest non-public source location data owner in the space.”
Contact between The Mobile Majority and Gimbal began about a year ago when the two began partnering on a series of ad campaigns. As Gimbal considered another funding round, conversations with The Mobile Majority executive team on a possible merger began about two months ago, sources said.
“Joining forces with The Mobile Majority will enable our customers and partners to access not just to Gimbal’s engagement platform but a full-stack location advertising and data intelligence solution that offers new monetization opportunities,” said Chas Wurster, CTO of Gimbal. “We are excited to join the fastest growing technology company in Los Angeles and proud to continue representing Southern California’s growing tech base.”
The combined entity will employ 103 people, Matt Russo, The Mobile Majority’s COO told GeoMarketing. (Gimbal CEO Jeff Russakow, who succeeded Gimbal founding head Rocco Fabiano in the post in July 2015, will not be joining The Mobile Majority.)
As Santa Monica’s The Mobile Majority and Gimbal begin the integration process, executives will determine whether the Gimbal brand remains, Brian Dunphy, Gimbal’s SVP of Business Development, said. Dunphy, as well as Wurster will make the transition to The Mobile Majority.
Both of the company’s clients will continue to be served as normal for the foreseeable future, according to an FAQ about the deal on The Mobile Majority’s site. No major changes are anticipated for either company’s offering, executives from both Gimbal and The Mobile Majority said.
“The Mobile Majority’s CEO, Rob Emrich, sought out Gimbal as the leader in location and proximity- based technology and has an incredible vision in terms of how location can greatly enhance their core mobile advertising technology,” said Dunphy. “Rob is truly visionary in understanding the importance of location in being able to tailor experiences and target advertising that can be measured across mobile and other digital platforms.”
“Obviously we have a lot of ideas about what we expect our two sides to do,” said Russo. “Mainly, it comes down to combining Gimbal’s location accuracy for opt-in push notifications via the SDK with The Mobile Majority’s ability to use that data for better intelligence to serve better, more relevant mobile advertising via the media that our brand clients and agencies buy from us.”
Location Competition And Commodification
San Diego-based Gimbal — the name refers to the support system of a gyroscope, which is particularly useful for orienting a device for location and navigation —was incubated within Qualcomm starting in 2010.
Gimbal fully emerged just as the proximity marketplace was taking off following Apple’s release of its iBeacon platform with iOS 7 three years ago. By dint of its connection to Qualcomm, it had instant credibility and was chosen to power the beacons at Apple retail stores and at most Major League Baseball stadiums in its early days.
Over the past two years, Gimbal made a number of strategic acquisitions and product rollouts that expanded its services beyond in-venue beacons to include geofencing, location branding capabilities, publisher-facing ad sales tools, out-of-home services. It nevertheless concentrated on its core focus as beacon hardware and software provider by improving the efficiency and technology of its beacons as it refined strategies involving the use of proximity-based push notifications.
Along the way, in addition to Apple and AEG, Gimbal has worked on projects for The NFL and the Super Bowl, Broadway’s Playbill, Shazam, South By Southwest, Live Nation, the Metropolitan Museum of Art, GameStop, the US Open, the PGA Tournament, and Citibank. Gimbal has also worked with a variety of agency and platform partners including Razorfish, Ogilvy, ShopAdvisor, and Verve.
Despite Gimbal’s prominence and success as a proximity provider, it ran into the challenge that many SaaS companies run into: generating recurring revenue. For something like a Salesforce marketing cloud, thousands of marketers and tech vendors rely on that software every day. It’s practically like a utility like water or lighting — a Salesforce provides necessary marketing and transactional lifeblood across a spectrum of businesses.
But beacon hardware and software providers — particularly ones that are not consumer-facing or do not sell media face a major issue: where does the money come from on a daily basis?
Costly Division Of Labor — And Revenues
A company like a Gimbal either has to share temporary revenues among several other vendors and agencies when working on a campaign. Elle magazine’s highly-regarded and successful Shop Now! campaign is a perfect example. It drove 500,000 store visits for four retailers across 700 outlets. But it lasted a little more than a month. And the work and the rewards were shared among that included Swirl Networks on beacons, coupon marketplace RetailMeNot and ShopAdvisor on mobile app deals (Gimbal provided geofencing in some cases).
Or, take Gimbal’s work on SxSW. It’s a huge, high-profile event. But it takes place only in March.
Now, generating revenue from such big programs, along with powering marketing campaigns alongside other platform companies wouldn’t be such a big problem… except for the fact that the beacon hardware/software space is increasingly crowded.
According to Unacast’s quarterly report on the proximity industry, Proxbook, there were more than 350 global companies as of Q3 2016 — a gain of 70 percent from the 205 worldwide providers a year before. As Proxbook also pointed out in its most recent overview, 118 of those companies — like Gimbal — offer both hardware and platform services.
It’s also worth noting that in Proxbook’s rankings of the world’s proximity platforms, Gimbal is listed second after the UK’s Proxama.
Though the issue has been exaggerated, there is reasonable talk about proximity technology becoming “commodified” as brands have difficulty judging one provider’s services from another.
By merging with The Mobile Majority, Gimbal can support (and benefit from) a range of media services including serving ads across programmatic platforms, audience targeting, analytics, creative tools, and viewability and verification. There’s a certain value in being a one-stop shop and The Mobile Majority has been putting the pieces in place for the past two years to realize that function.
In fact, The Mobile Majority and Gimbal initially began working together a year-and-a-half ago as the beacon platform sought to extend the reach of its beacon network.
“We were looking to reach certain audiences through certain portions of Gimbal’s beacon network,” Russo recalled. “They didn’t have certainly capabilities in-house. They had to outsource it to groups like us to serve ads outside of the apps that they were integrated with.
A New Pay Day
The Mobile Majority started in 2012 as a very different company called PaeDae (pronounced “pay day”). Billed as an ad network focused on aggregating mobile rewards sites, the company found difficult hurdles by 2014.
“Over time, we could see that it was nearly impossible to scale PaeDae within the existing mobile ecosystem,” Mobile Majority’s official bio says. “The systems just didn’t work well together. As soon as our reward-based ads ran outside our SDK-based network, engagement rates plummeted – a sign that something outside our control was breaking. Large campaigns, which needed precise targeting required a massive potential audience, and the broader scale of the entire mobile ecosystem.”
When PaeDae tried to work with sites and platforms outside its network, it found that it was unable to achieve the same engagement rates. That lack of control suggested it was necessary to pivot and pursue a different business model as a an “integrated mobile ad company.”
Six months after the name and business model change, the company was able to tell Techcrunch’s Anthony Ha it had reached a $50 million revenue run rate. It then set about expanding to five other cities along with an ad tech acquisition that opened it up to the Brazilian market.
The Consolidation Bug
The expectation of a wave of mergers and other consolidation activity in the location business services space has been gathering for the past year. And while the space is still in its infancy, it’s more likely that we’ll begin to see a series of smaller waves and ripples as opposed to a huge tsunami that will narrow the field to a small few platform companies.
The Mobile Majority’s Russo and Gimbal’s Dunphy both highlighted location marketplace xAd’s acquisition last month of app-based meteorological info service Weatherbug as a sign of the times. (In addition to that deal, xAd also said it raised $42.5 million fifth funding round to promote its own global expansion and product rollout to better keep pace of the intensifying competitive environment.)
“xAd’s purchase of Weatherbug was about similar audience, client reach, and types of location data that we now have access to with the acquisition of Gimbal,” Russo said.
“Of course, xAd’s deal is limited to just one app,” Russo continued. “We are excited to begin working with the publishers Gimbal has in their pipeline and those that have already integrated the Gimbal SDK into their app. Together, we’ll be able to scale beyond what either of us would have been able to do as separate partners. That’s what gets us excited.”