November 24, 2010, 10:53 AM

JiWire buys NearbyNow to form location-based ad platform

Online consumers in Wi-Fi cafes will be able to see what’s in advertisers’ stores.

Lead Photo

Scott Dunlap

JiWire Inc. said this week it had bought NearbyNow Inc., laying the groundwork for a new location-based advertising platform that will let web browsers in, say, a coffee shop or airport Wi-Fi hotspot click display ads on a mobile device and see if the advertised product or service is available in a nearby location.

JiWire operates an online display advertising network that reaches consumers as they use Wi-Fi Internet access in thousands of cafes and hotels and more than 200 airports. NearbyNow’s technology enables magazine publishers and retailers to develop mobile apps that let users click on featured products to see where they can find available inventory in a local store as well as online.

All 12 NearbyNow employees will remain with the new company, bringing JiWire’s total headcount to about 52, the companies say. The purchase price was not disclosed.

The deal creates a base of nearly 40 million unique monthly visitors who access mobile devices to view ads and other content featuring consumer products and services, the companies say.

By combining the two companies’ technology platforms, consumers will be able to click an ad on the JiWire network to find a specific version of an advertised product or service within a 25-mile radius of the Wi-Fi location.

Scott Dunlap, founder of NearbyNow and recently appointed vice president of mobile business at JiWire, says the combined advertising platform will enable retailers and other advertisers to reach millions of consumers based on where they happen to be when an ad is served.

Consumers accessing the web in a Starbucks, for example, could view an online ad from an apparel designer or retailer, click to learn if an advertised dress is available in a nearby store in her size and preferred color, then request to have the dress placed on hold until she gets to the store to buy it.

“The era of location is upon us,” Dunlap says. “It’s about delivering relevant location-based advertising across all media types.”

Although JiWire’s acquisition of NearbyNow was announced Tuesday, market awareness of the merging of their advertising platforms has already spiked business among advertisers looking to reach nearby consumers, Dunlap says. “I’ve already sold more business in the past month than in the previous year,” he says.

JiWire’s advertising clients include car brands Buick and Jeep, the Hyatt Place hotel chain, Virgin America and Microsoft Corp.

NearbyNow’s clients include several consumer print magazines, including Seventeen, GQ and Cosmopolitan, which have used the technology to develop mobile apps that enable consumers to read magazine articles and click the images of featured products to find where they can buy them in local stores as well as online. Retail chains including Macy’s Inc., No. 20 in the Internet Retailer Top 500 Guide, and Bon-Ton Stores Inc. have also developed mobile apps with NearbyNow’s technology to let shoppers click featured products and find which stores have what they want on hand.

Consumers who use the magazine apps to find apparel, footwear and cosmetic products have converted to purchasers at a rate of about 5.8%, with nearly all of the purchases made in stores rather than online, Dunlap says. He was not able to provide conversion rates for the retailers’ apps.

The apps can show pictures of products featured in magazines or in stores, play product videos, and also display useful and entertaining tidbits like quizzes, surveys and favorite-product lists to entice shoppers to keep coming back, Dunlap says.

Magazines and retailers can develop the NearbyNow apps for no charge if they agree to display ads and share ad revenue, Dunlap says. Otherwise, the cost to develop the apps ranges from $30,000 to $50,000 for a software license, depending on the number of products featured in the app, he adds.

If a user clicks a “Find it” button on the app, NearbyNow uses GPS technology to locate stores within 25 miles, then uses call center reps to contact stores and check product availability. In a growing number of cases, retailers let NearbyNow connect to their inventory management systems to get an automated confirmation of product availability, a process that has become easier within the past year or so because of an improved and more widespread ability to use the programming language XML, application programming interfaces and other means to connect NearbyNow’s technology platform to retailers’ inventory systems, Dunlap says.

Once product availability is confirmed, the consumer sees a list of mapped store locations. If she then clicks to request the retailer to hold the item, a call center rep will inform the retailer that a reader of Seventeen or other magazine is interested in the product and request to have it set aside for pick-up.

NearbyNow also can call the store back later in the day to ask if the requested item was sold to the app user. Although not all advertisers request that service, and not all stores are able to say if the same app user completed the in-store purchase, NearbyNow figures the average conversion rate is 5.8%, Dunlap says.

Going forward, the NearbyNow name will remain as a product line of JiWire, he adds.

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