Unidentified Analyst: Are we uniquely positioned in some way that there isn’t a lot of competition for what we’re doing? Or what is it that makes us unique, if we are unique in that regard? And what’s the size, I guess, also of the market, if you can quantify.
Kim Carlson : Right, we are unique. I have yet to hear of the opinion of one right now, but I have yet to hear of any other solution out there that’s leveraging brand media, which is this SMS we’re talking about. We’re also doing things with on-premise signage for brands to drive downloads for gaming. Traditionally, gaming is usually game in game ads. So if you’re playing a game, you typically see an ad for another game. That is a predominantly vast majority of all marketing spend. So we are a very unique solution where we’re, again, as I mentioned earlier, providing a net unique new audience for game marketers that’s not out there anywhere else by leveraging these large brands. As far as the total addressable market, I know Dennis mentioned it earlier, it’s in several hundred billion dollars of spend on game marketing.
What that means is game marketers live and die by driving new users to their game. They’re typically doing that traditionally through Facebook, TikTok, mobile ad networks, and mobile programmatic players. We are a new solution. So we’re a new, unique audience for them to reach. So the addressable market is very, very large. And going back to what Dennis said, though, we’re in the early game here. We have definitely got rebuys from developers. We quadrupled our number of game developers and typically a publisher, and they will have a handful of games. So we have a very nice month-over-month growth rate on the number of games that are participating in our Connected Rewards.
Unidentified Analyst: And I understand the size of the market being hundreds of billions of dollars or billions of dollars, but I mean, for Mobivity’s purposes, how do you view your market opportunity is really kind of what I’m, I mean I don’t think you, maybe do hope you do, I guess. I don’t know that you believe Mobivity’s opportunity in the next two or three years is billions of dollars. I’m trying to just get an order of magnitude that we might be able to expect if things track the way you guys would like to. And I’m not looking for a revenue forecast, I’m just trying to get some kind of a ballpark figure of what Kim views as her opportunity for our market opportunity that she’s going after. If I made myself kind of clear maybe.
Kim Carlson : Yes, that makes sense. I appreciate the question. So total addressable market is always a big number. I understand that. I think in our press release we mentioned that it doesn’t answer the quantitative question. We mentioned in the press release that we do expect our Connected Rewards to usurp our legacy business this year. So on a short term, we believe that we can meet and exceed our legacy run rate by the end of the year. I think that Mobivity looking at one to two to three years, I see us as a formidable competitor to mobile ad networks as well as mobile DSPs, which is programmatic. Obviously, so if you look at the scope of spend, vast majority still goes to Facebook. We’re not going to debate that of that total addressable market.
But we see ourselves competing with a mobile ad network or a mobile programmatic player and we’d have to come back to you with those specific numbers of where we think we’ll be one, two, three years from now. But the short term, we do believe that our Connected Rewards will, like I said, surpass the legacy revenue business that Mobivity has had for the last couple of years.
Unidentified Analyst: Then that would go, I guess, to the question. I don’t know if this is a Dennis or Lisa or you question, but we have no idea at this point. We know you started in the third quarter tail end, fourth quarter more I would assume first quarter even greater. Fourth quarter number of 1,750, I have no concept of whether the Connected Rewards was 10% of that 20% of it. I understand that ultimate, it’s going to be 60 plus percent or more of your total revenues, but I have no basis for, I’m just trying to get an idea of you announce a $3 million quarter in March. I’m making it up. We’re still not going to know how much is legacy and how much is Connected Rewards. And as a long term investor, I like to have somebody give us some kind of an idea of what we can expect going forward grade.
By the end of the year, legacy is going to be less than half of what Connected Rewards is. I get that. But for me right now, I have no idea if the legacy business last quarter was a $1 million or $1.5 or $1.7 million.
Dennis Becker: Yes, Bob. I’ll tackle that real quick. I know in Lisa’s comments I think actually in my comments earlier in the call, I mentioned that the revenue from the fourth quarter compared to the fourth quarter of last year reflected a more kind of normal run rate for the legacy business. So I think from there, you could assume that the second half of 2022 was I kind of call it our proof phase for the Connected Rewards business model, we had select partners experimenting, a couple of game publishers. Not a material proportion at all of the revenue run rate. I think the way we describe more recent progress in the first quarter without being ready to report first quarter numbers. Now we’re really in the commercial phase.
Kim just joined us at the very end of the third quarter and really got going in the fourth quarter, building out our gaming business development operations here to go expand on that proving ground from all of the success we saw from the trials in the second half of the year. So I think that’s the way I would think about it. The legacy business, as per the comments of the fourth quarter really being the vast majority of the 2022 run rate. So incrementally growing from there in this year is how you could peg without us explicitly parsing out the Connected Rewards revenue, which we do expect to be able to do here as the year progresses and as those revenues become more material in a larger proportion. But that’s kind of the way I would think about it, if that helps.
Unidentified Analyst: Okay. No, that does. That’s helpful. And then one last question, I think, for Kim, and that is there any seasonality to either the brands or the gaming, brands, we kind of know, but the gaming companies and their desire to advertise or reach out to new players, I mean, is there any quarter seasonality at all to their kind of advertising budgets?
Kim Carlson : Yes, actually really there’s not. And historically, the only little blip we would see would be a very small window post-holiday, specifically when users get new phones around the holiday time. There has been a slight bump in spend from game marketers in the, I’ll say, after Christmas to mid-January time frame just to take advantage of people who bought their new phones and they want to make sure they’re reaching them with game advertising. But other than that, it’s pretty flat marketing year for game developers.
Operator: Our next question comes from Jeff Porter, private investor.
Unidentified Analyst: Yes. Hi, guys. You alluded to a press release and I just wanted to let you know that your press release just hit 30 seconds ago and wasn’t on company website. In the future it would be really great if you get the press release out on a timely basis so that we can read it before the conference call. But you’ve always done that in the past, and I have no idea why the press release just hit right now. So you should let your IR people know. I don’t really have any other questions.
Dennis Becker: No, I appreciate feedback, Jeff. Apologies. I know we hit a snag here getting into the wire as we were approaching the call, but noted. And again, apologies for the delay.
Operator: Our next question comes from Bob Prag with DCG.
Robert Prag: Hi, Dennis. Prag here. How are you and Kim? Good. Yes, you guys are making great progress. So a couple of maybe elementary questions just to once again wrap my arms around the Connected Rewards. I get what’s in it for the gaming company, it’s all about customer acquisition. I get what’s in it from Mobivity because they get a bounty on everyone that will download and play the game. I get that. Remind me, what’s in it for the brand?
Dennis Becker: A couple of things. So, first and foremost, the brands are looking for reasons to engage their consumers, particularly in the quick serve restaurant, the general restaurant, and the convenience store industries to drive traffic. Those areas of the industry which are vast. These are multibillion dollar industries with a large swath of US population consuming from them. But they’re high value, so they rely on traffic and volume and so anything that’s going to put a promotion or an offer in the consumer’s hand to incentivize the consumer to visit the store more often is certainly something that’s valuable to those businesses. The problem becomes what is the budget that those businesses can bear in discounting their services?
And I think it’s an important feature to note about Connected Rewards is it creates an opportunity for the restaurant or the convenience or fuel brand to get subsidization of those discounts because of the bounties that the game publishers are willing to pay. So in other words there’s enough there for kind of this win-win-win. Consumer gets free food or discounted gas and an introduction to a potentially entertaining game, game publisher gets a player they can monetize from the brand, the restaurant or the fuel brand et cetera. They get a sale because of the voucher the consumer is getting as an incentive that’s going to send the consumer back to their business and the economics from it allow for us to reimburse in some cases not in every case, but in some cases, some or all of that discount back to the brand.
So they get this like discount without discounting benefits.
Robert Prag: Got it. Okay, so that makes a lot of sense. So there’s enough coming from the gaming companies where you’re basically partnering with branding, with the brand and you’re going to split potentially to some degree the bounty, as I call it, that you’re getting from the gaming company. So the brand is in most cases, it sounds like it ends up to be little to no cost to participate in Connective Rewards.
Dennis Becker: Yes. And then there’s another side to this marketplace where and this is the next phase of our evolution, where the gaming companies and we’ve run tests that are showing this has got a lot of upsides where the gaming companies can introduce branded incentives, discounts, free food, et cetera into the gameplay, which in turn creates a stickier and higher frequent game player for the game publisher to monetize in other ways. Again, the game publisher willing to subsidize some of the cost of that discount, but also the brand paying for distribution of their rewards and promotions into these games to drive traffic back to the brand. All of this, by the way, in the current backdrop of inflation and everything, and particularly the squeeze on these retail brands, labor costs up, supply chain costs up, those are squeezing marketing budgets.
So this is creating a potentially far more efficient way for brands to tap the gaming audience to drive a really efficient media transaction to drive traffic and spend. And I think it’s important to note too, that the audience for mobile, for just mobile games now is, I think, beyond two thirds of the US population. So the reach of that industry now is comparable to TV, movies, social media, et cetera.
