A few weeks ago, we had the opportunity to interview InfoSpace’s senior director of emerging products, Joe Herzog, and product management director, Ron Winter. The company has an interesting strategy with parallel initiatives in online search and in mobile products, which we wrote about here and in the last issue of Local Media Journal.
The Seattle Times has an interesting article today about the Bellevue-based company’s positioning in the mobile content market. The growth in mobile local search (analyzed in this client Advisory), as well as mobile content (growing rapidly according to this study) will bode well for InfoSpace, which is well-positioned in these markets.
There is an inherent challenge in its business model, however, in that wireless carriers stand between the company and end users. It is also dependent on a consolidated base of carrier partners. (Its top five wireless customers represented 84 percent of revenues in the first quarter.)
Given this barrier, the company has begun to employ the seldom executed "off-deck" distribution strategy that allows users to download content from their computers rather than directly to their mobile devices. Last week it launched Moviso, a Web site that markets mobile content directly to the end user. Though this sidesteps the carrier, it adds an additional step and additional marketing costs for InfoSpace.
But if you think about it, marketing costs should be minimal if it utilizes its other online properties to promote and drive traffic to the site. This is an example of how the company has been able to use one side of its business (online search) to leverage the other (mobile content). These will continue to converge for InfoSpace, and we expect to see more synergies between the two. Meanwhile, it will put more and more emphasis on (and investment in) wireless initiatives, given the growth expected there. (Global mobile content revenues are expected to rise from $26.4 billion in 2005 to $91.8 billion in 2009, according to analysts cited in The Seattle Times piece.)
Indeed, CEO Jim Voelker has publicly stated his intention to spend up to $7 million a quarter on mobile initiatives. This will include mobile local search, which will mirror the feature enhancement of its local online search portal (Find It), and benefit from the overall growth we expect in the MoLo area as adoption grows, hardware improves and GPS integration reaches ubiquity. As these factors come together, look to InfoSpace to be a leader in this space.