Tuesday, 16 April 2013

One year later: Did Millennial Media's IPO help or hinder mobile advertising

One year later: Did Millennial Media's IPO help or hinder mobile advertising, One year ago, Millennial Media burst onto Wall Street with a rousing IPO that instantly dazzled investors and analysts. Doubling its IPO price out of the gate, shares of MM immediately zoomed to $27.90 after the mobile ad company had announced that $13 was the high-end of its expected opening range.

Fast forward 12 short months and Millennial Media, now trading just north of $6 per share, inhabits a completely different world from that which it knew in late March 2012.

Without question, Millennial Media's first year as a publicly-traded company was not kind to its common stock. More detrimental, perhaps, is the toll that a steady barrage of unfavorable financial headlines has taken on the company -- a company that remains an integral player in mobile advertising and a trusted mobile partner for many of the world's top advertisers.

"The mobile revolution continues to grow at a torrid pace, but that doesn't mean the space is a can't-miss proposition for investors," explains Tom Taulli, the editor of IPO Playbook .

Paul Palmieri, co-founder, president and CEO of Millennial Media has consistently argued that mobile advertising is still in its early stages of development. And through it all, Millennial Media has delivered impressive results and revenue. But, invariably, the positive talk surrounding Millennial Media continues to invoke usage of the same word over and over again. And that word is future. That is, Millennial Media will lead the mobile advertising industry … in the future. Millennial Media will be a major force on Wall Street ... in the future. But what about today?

Although MM has an impressive track record and a promising platform for sustained growth, the company may have gone public too soon, some speculate.

"Millennial Media is an excellent company," Chicago-based independent mobile advertising consultant Ian Hayes told me this week. "But they are so busy trying to please shareholders and counter unfavorable headlines that one has to wonder if Millennial Media can comfortably focus on that which an ad network must do today without distraction: focus on innovation."

According to Hayes and other industry watchers, the lion share of positive reviews and headlines in mobile advertising last year went to competing ad networks like Tapjoy and Airpush. So far in 2013, says Hayes, the news continues to be exceedingly favorable for Tapjoy, particularly with all of the new industry-leading non-gaming apps integrating with Tapjoy services. The same goes for Airpush, the red hot Android ad network that keeps pumping out innovative new ad formats, targeting capabilities, and analytics resources.

And what about Millennial Media? Although one would be hard-pressed to find a client who was disappointed with the company's services and performance, a persistent cloud of disappointment still looms over Millennial Media's image. Like Tapjoy and Airpush, Millennial Media hasn't been short on innovation or growth. But the headlines only reflect the company's precipitous tumble on Wall Street.

"Of course it's not fair," Hayes says of the ad network's year-long PR misfortunes. "Millennial Media went public amidst impossibly inflated expectations. And it's sad that Millennial's slumping stock is somehow being interpreted as an indicator of poor health for the entire mobile ad industry. Nothing could be further from reality."

In February of this year, Millennial Media reported a profit of $2.6 million for its fourth quarter versus a loss of $1.2 million in the fourth quarter of the prior year. Revenue jumped close to 68 percent to $58 million.

Founded in 2006, Millennial Media is now a giant in mobile advertising. That much is certain. The only uncertainty is whether the negative baggage that comes from its 12-month struggle on Wall Street will ultimately erode Millennial Media's otherwise stellar reputation while non-public competitors continue to innovate and expand without the harsh, perpetual glare of excitable investors and hair-trigger analysts tracing their every move.

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