SmartReply Snags Mobile Ad Firm mSnap

mSnap, an SMS ad network founded in 2001, announced today that it is being acquired by SmartReply, a company that designs telephone and email marketing programs for retailers, announced today that it is acquiring mobile-ad firm mSnap. The Wall Street Journal notes that this is a sign the recession is reigniting consolidation in the mobile ad industry.

The firm is one of the many mobile ad startups that didn’t quite hit the mark – likely due, in a large part, to the recession swinging ad spending in the downward direction. All eyes are on mobile startups and potential aquirees for the next slew of bargin buys in this space in the coming year.

Since Jan. of 2006, about 80 mobile marketing startups have raised more than $1.2 billion in venture funding, according to media and marketing investmeent bank Pesky Prunier. But few advertisers are jumping into mobile as fast as some anticipated, leaving many of these companies strapped for cash. That’s not to say mobile won’t be a profitable advertising endeavor, for many of these companies it was just wrong place, wrong time – the unfortunate tail for one too many startup ahead of its time.

For mSnap, however, the tale is not quite that grim. Under the new deal, mSnap’s shareholders, which include Partech International and First Round Capital, will get a minority stake in SmartReply.

The WSJ reports that smaller companies in the sector are the most vulnerable. Petsky Prunier estimates that since January 2006, about 20 mobile-marketing companies have been acquired for a total of about $900 million. A handful of those deals exceeded $100 million, including the $275 million acquisition of Qpass by Amdocs, a provider of customer-management software, and the $250 million acquisition of M-Cube by Verisign, both in 2006. By comparison, today’s acquisition costs are expected to be a bargain, says Mike Petsky, partner at Petsky Prunier.