Boingo Buys Wi-Fi Startup Cloud Nine Media

by Mark Walsh, Aug 8, 2012, 7:00 AM

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Aiming to enhance its location-based ad network, Wi-Fi provider Boingo Wireless said Wednesday it has acquired start-up Cloud Nine Media, which offers Wi-Fi sponsorships at more than 6,000 airports, hotels, bars, restaurants and other public areas in the U.S. and Canada.

Terms of the deal were not disclosed.

San Francisco-based Cloud Nine was launched two years ago by Sebastian Tonkin, a former member of the Google Analytics team, and ex-Merrill Lynch investment banking analyst Henry Liu.  Across its network of Wi-Fi hotspots, the company focuses on delivering ad sponsorships consisting of a branded splash screen, an interactive page with video or other media, and a third page featuring a call to action, like visiting a site or downloading an app.

Clients include Google, Amazon, hotels.com, Old Spice and AOL. The vast majority (4,500) of Cloud Nine's Wi-Fi locations are in hotels, and the company says on its Web site it generates 6 million Internet sessions a month.

Through the acquisition, the company will become part of one of the giants in the Wi-Fi space. Boingo operates some 500,000 hotspots globally reaching more than 1.5 billion people annually.

Under the deal, Cloud Nine will be maintained as a separate brand and continue to operate as a wholly owned subsidiary of Boingo. Its eight-person staff of technologists and ad sales executives have joined Boingo as of today, with Tonkin assuming the title of director, advertising products and strategy. They will remain at their San Francisco location.

The company said Cloud Nine will help it bolster its ad services, which are increasingly important as Boingo expands its Wi-Fi business to include more consumer-oriented hotspots like shopping malls, stadiums and restaurants. In the first quarter, Boingo reported its ad revenue fell nearly 33% from the year-earlier period primarily because of the lower level of sponsorships. Ad sales made up less than 5% of Boingo's first-quarter revenue of $24 million.

In May, the company announced it was tapped by New York City to build out and manage Wi-Fi service in conjunction with Transit Wireless in the city subway system over the next five years. More recently, Boingo kicked off a partnership with Google Offers to sponsor free Wi-Fi at more than 200 hotspots in Manhattan, including six subway stations through Sept. 7.

The company is announcing the Cloud Nine acquisition on the same day it is scheduled to report second-quarter financial results.

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