YP Acquires Sense Networks, Eyes Mobile Ad Expansion

YP on Monday announced acquiring mobile location-focused ad firm Sense Networks as the local search, media and advertising company aims to enhance its mobile ad offerings. Terms of the deal were not disclosed.

Founded in 2003, Sense Networks provides a mobile targeting platform that delivers advertising based on users' location and behavioral data. Gathering real-time information from phones, GPS devices and WiFi, the company uses machine-learning algorithms -- along with research on consumer behavior -- to predict mobile users’ activities.

In addition to serving location-targeted display ads through its AdMatch service, Sense Networks offers specific products, such as mobile retargeting for retailers, audience segmenting for publishers, real-time bidding, and mobile analytics tools.

In buying the company, YP seeks to bolster its mobile display ad capabilities as a complement to its core focus on local search in mobile advertising. “With Sense’s technology, YP will be better positioned to improve and grow our mobile advertising leadership through enhanced targeting to consumers,” stated CEO David Krantz in the announcement.

He added that the company expects to make further technology acquisitions to build up its mobile ad business, which accounted for about $350 million of its more than $1 billion in digital ad revenue last year. The YP Local Ad network, spanning search and display advertising across online and mobile platforms, reaches an audience of more than 60 million monthly U.S. visitors.

In addition to integrating Sense Networks technology and behavioral data into its own operations, YP is also adding engineering talent from the company’s dozen or so employees. Under the deal, former Sense CEO David Peterson will take on the role of vice president in YP’s national markets group, led by former AOL executive David Lebow.

Sense Networks had raised $9 million to date from investors, including Intel Capital and Drobny Global Advisors.

YP can use all the help it can get when it comes to competing with Google and Facebook. Last month, eMarketer reported that YP was No. 3 in U.S. mobile advertising behind the two Internet companies, but claiming only a 3.9% share of the market. That’s far smaller than Google, with 41.5%, and Facebook, with 16%. What’s more, YP’s share is down from 5.8% in 2012, and is forecast to continue shrinking to 3% by 2015.

Still, YP stands to benefit from the expected growth in local mobile ad spending in the coming years. Its local media consultant BIA/Kelsey earlier this year projected the category will rise sevenfold to $9.1 billion by 2017 from $1.2 billion in 2012. That reflects an annual compound growth rate of nearly 50%.

YP in August named Havas Media as its agency of record for media planning and buying and event marketing, prior to launching a brand awareness campaign in September, which included highlighting its newly redesigned mobile app. 

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