Is Moko Australia’s own next Facebook?

Is Moko Australia’s own next Facebook?

August 22, 2013 – 12:54PM

Nate Cochrane

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Ian Rodwell, founder and CEO of ASX-listed mobile advertising company, Moko, says the business is on track to being a $1 billion company listed on the US Nasdaq exchange. Photo: Nate Cochrane

Its origins go back to a five-person operation above a hairdresser in Perth. Now reincarnated social network company Moko is gearing up to crack the US college scene and a $US1 billion capitalisation on the world’s biggest technology stock exchange. Next month, the Western Australia company will launch a service to connect advertisers with 5 million American college students.The ready-made audience that gave Facebook its start is proving a fertile hunting ground for the company that is hoping to crack the $US7.65 billion ($A8.5 billion) US mobile advertising market.

It’s not a small challenge, given it will be competing with Google and Facebook for the dollars, but it is the first stage of a plan to list on Nasdaq, according to chief executive officer and founder Ian Rodwell.

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Although this is Moko’s first tilt at US colleges, unlike Facebook, the company is no longer a start-up. Rodwell, who has a background in interactive multimedia, founded the business as Loop Mobile in 2004 to connect sports fans via instant chat on Hutchison’s 3 network in Australia. It has provided branded social networks for TV shows like Big Brother and Telstra’s AFL and V8 coverage.

Moko is not alone in targeting college students. Professional networking site LinkedIn this week lowered its age threshold to accept teenage members and launched University Pages, where colleges can post updates about news and activities.

But it is counting on its users’ recreational pursuits generating a fire hose of high-value and qualified data, including location information, to inform its advertisers’ spending and result in higher ad click fees for the company.

Its first major deal with the American Collegiate Intramural Sports (AMIS) association gives it an initial audience of 5 million university students (out of 21.6 million) at 200 colleges across the country. This saves Moko from building its audience from scratch. The key to its success will be how passionate students are about their recreation, Rodwell says.

When the service goes live next month, the company will provide colleges with a back-end administrator console to list events. Students will access information from Moko’s app on their mobile devices. Moko’s challenge is to provide targeted and relevant ads alongside what are essentially calendar, chat and sharing tools.

Rodwell says the company differentiates itself by how it slices and dices student data, to ensure the right ads are shown at the right time, and its location awareness.

“The local pizza chain may not be a national or regional advertiser but it wants to reach that [college] audience,” Rodwell says. “There are regional and local advertisers who can’t get access to these audiences because they’re dominated by national brands.”

The ACIS tie-up also allows it to tap into major lifestyle brands such as Nike and Adidas, as well as fast-moving consumer goods companies, Rodwell says.

“Procter & Gamble is an interesting one because they know [college] is the first time the kids have to fend for themselves and buy their own household products.

“The brand of washing powder you choose at college is probably the same brand you’re using 20 years on.”

Coming full circle

At its peak, Loop Mobile (no relationship to the Indian telecommunications reseller) had 12 million users in Australia, the US and Britain. However, this was on the old telco “closed garden” business model which was retired about five years ago when smartphones began to multiply.

The original was associated with Adultshop.com and a chat product called Kink Kommunity, but changed the product name to Moko and severed all ties with Adultshop before Loop Mobile’s Australian IPO in 2007, according to a post by Rodwell to investors at the time.

The business closed its Sydney and London operations when it made the decision to concentrate on the US.

Since then, Moko has acquired smaller companies in the US and UK, provided its interactive platform for non-defunct US mobile virtual network operator Helio, and to Asian carriers. It maintains a moderation centre in Manilla to vet comments on the social networks it operates for clients.

Rodwell says Moko will continue to develop its platform from Perth, but he’s relocating to New York to oversee the expanding operation.

The business earned $A18.24 million last year on operating expenses of $A21.07 million but Rodwell expects this to grow rapidly as the fresh intake of students download the app next semester.

Booming mobile ad market

It is this desire to reach consumers that last year propelled mobile advertising through triple-digit growth to $US4.26 billion and is projected to reach US$7.65 billion this year, according to market researcher eMarketer.

Google has the biggest slice with 55.7 per cent of the market followed by Facebook with 11.5 per cent. Moko will also work through buying networks to place ads on users’ screens, charging a premium and even a click-through bonus for its pre-qualified leads.

Moko’s drive towards a Nasdaq listing is causing a few headaches at home, however, as the thinly traded stock has trebled in value from 3 cents over the past month (it first listed at $0.22), causing the ASX to issue two “please explain” notices.

Moko is also spending more money than it is receiving for services, relying on investors to fund its expansion until revenues flow from some 12 pending deals.

Beyond colleges, Moko is targeting community groups with more than a million members and could grow to 100 million subscribers, Rodwell claims.

This includes political and religious associations, peak activities and adventure sports bodies, and high schools where it would customise its platform for the parents of some 50 million students, Rodwell says.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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