Miva Hopes to Innovate Troubles Away

It’s been what coaches would euphemistically call a “building” year at performance ad network and e-commerce solution provider Miva. Even before changing the name from FindWhat.com last June, the company has been working to improve the quality of its affiliate traffic and to explore other online ad opportunities beyond search, with branded toolbars and overseas initiatives. Still, revenues were down 27% in the fourth quarter of 2005, while operating costs went up 23%. Miva’s shares, priced at $23 in mid-2004, have been trading below $5 since February.

The company has also made some big moves not directly related to marketing. In January, Miva revealed it had retained an investment bank to explore “options” for growth, possibly including a sale. And last week saw departure announcements for founder, chairman and CEO Craig Pisaris-Henderson and Miva president Philip Thune. Former COO Peter Corrao will step into the CEO spot, while chief marketing officer Seb Bishop will add the Miva presidency to his marketing duties. Board member Larry Weber has stepped in as non-executive chairman. Pisaris-Henderson and Thune will keep their seats as directors.

“Craig had been at the company for 10 years, and had created an unbelievable company, but he decided for his own reasons to call it a day,” says Bishop, who himself helped co-founded. “Miva is still an unbelievable company. It’s got the right strategy, is signing the right deals and innovating the right products. And it’s just a question of time until we see those ideas turn into cash and turn that share price around.”

The company produced two more of those innovative ideas within the last month. In late March, Miva launched a novel partnership with British mobile directory service The Number, which operates 118 118, the U.K.’s most popular wireless call for directory assistance. Callers to 118 118 get the phone numbers they’ve requested sent to them via text message. The new Miva service, called TXT//ADS, will let advertisers bid to have their own business numbers appear in those text messages under the number the caller has requested.

“When you request the number for Domino’s Pizza, we thought, why can’t we put the number for Pizza Hut directly underneath?” Bishop asks. “It won’t look like an ad but will look exactly like the number the caller asked for.”

He says research showed that directory user in the U.K. were happy to get two numbers for the price of one. (A 118 118 call costs 40 pence or about 70 cents U.S.) Product tests have shown that nearly 60% of respondents who were sent the messages recalled them, and 8.4% of that group actually used the second number. Half said they would consider forwarding the text message on to family or friends.

“If I can call Domino’s and find out that they’re busy and can’t send my order for an hour, then call Pizza Hut and get my order in 20 minutes, that’s a big added value for the consumer,” Bishop says. “Or if I ask for the number of an airline I’ve booked a flight on and find that I’m going to miss that flight, TXT//AD can send along the number for a competing airline so I can re-book easily.”

For advertisers, the TXT//AD offering gives them a position alongside competitors and also within complementary ad groups. For example, a caller requesting that airline reservation number might also see a number for a taxi or hired-car service to take him to the airport.

“This is purely permission-based, it’s additive, and it’s complementary to what the consumer is looking for,” Bishop says. “We think pay-per-text is a fantastic new opportunity.” Advertisers buy placement based on a rate card listing different prices for text ads in business categories; the prices range from 60 pence per text ad for movie and restaurant enquiries to one pound ($1.75) per message for takeout or delivery food, to as high as one pound 50 pence ($2.62) for requests relating to auto breakdown insurance. Marketers can also insert a line of text around the number to feature a tagline or special offer.

Those prices seem high, but Bishop points out that these directory callers are in-market and ready to buy. He also notes that 64% of consumers save those directory text messages on their phones to avoid paying the assistance charge again in the future. He adds that most people move their mobile phone’s subscriber identity module (SIM) card when they change or upgrade phones and keep that card much longer than they keep their landline number, their home address or even their job. “So for British Airways or American Airlines to pay a buck to stay in that phone memory for the rest of a consumer’s lifetime is actually incredibly cheap,” he says.

Bishop says TXT//ADS has already signed on U.K. advertisers such as AAA, Vodaphone and British Gas. Voice carrier Vodaphone actually elected to place text ads in the directory requests for its own number, offering message recipients rebates on their next bill for recommending friends.

Deploying TXT//AD in the U.S. will be somewhat more complicated than in Great Britain, since this country is served by a wide range of carriers who have different directory-assistance models; some push text messages, while others make callers request them specifically. The prospects are there, but the mechanics will take a bit more effort to solve, since there’s no real correspondent to the third-party 118 118 call in this country. Other deployments might occur first in European countries like France, where directory assistance has already been deregulated, Bishop says.

That’s Miva innovation one; innovation two came earlier this week, when the company announced that it would partner to deliver contextual pay-per-click and pay-per-call ads on content using Data Depth’s iCopyright platform, designed to let Web publishers make revenue off something most users have assumed to be free—the ability to download, save and forward their content on the Web.

Using the iCopyright system, Web publishers can permit visitors to perform some services for free—usually e-mailing or printing a Web page—while providing a means for large-volume users to request custom reprints or re-use rights permissions. The free services can also be limited so that users can only print or e-mail the same page a set number of times before paying a small per-copy fee.

Under the iCopyright deal, Miva will place contextually related ads from its network on the right margin of those downloaded, printed or e-mailed pages. The Miva ads on the forwarded or stored pages will replace any ads running on the Web versions of those pages. The revenue from clicks or calls on those ads in forwarded content will be shared between Miva and iCopyright, with iCopyright in turn sharing with its client publishers.

Miva network ads will go live on the iCopyright service in the second quarter of 2006. The iCopyright platform has already placed ads on forwarded content from the Associated Press wire service Web site and from Internet publications from Scripps, Freedom Communications and Penton Publishing, among others. The company has signed deals for its service with some 700 content publishers in all, including Reuters, UPI, Primedia and the San Jose Mercury News.

“This agreement falls directly in line with our strategy of empowering publishers, helping find new ways for them to generate revenue, and helping to improve their overall business model,” said Seb Bishop, president of Miva. “We’ve worked with iCopyright to figure out a new way to monetize e-mail linking of content, which traditionally didn’t generate any cash for publishers. And it’s very targeted ad delivery for the advertisers in our network. If an article is relevant and interesting enough to e-mail to a friend, that means readers are very highly targeted to ads relevant to the content.”

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