MIG: Barry Houlihan
2006 Young Gun Barry Houlihan explains how the fastest growing technology firm in the UK grew up
As mobile agency MIG launches a new business and restructures, founder and 2006 Young Gun Barry Houlihan explains how the fastest growing technology firm in the UK grew up.
Talk about the UK lacking world class internet and technology firms is as rife as ever. Even when an entrepreneur comes along who builds a company with the potential for genuine international scale, the press can be curiously reticent about covering them.
Mainstream media interest in Mobile Interactive Group (MIG), the company that claimed the top spot in last year’s Tech Track 100, has been scant, and doesn’t even compare with that given to the runner up, Lovefilm. However, Barry Houlihan, one of MIG’s three founders and its chief executive, won’t mind if it stays that way if the firm’s remarkable growth continues.
Indeed, a relatively low media profile proved something of a boon in the wake of the spate of premium-rate phone-in scandals of 2007. MIG provides the technology that powers volume SMS voting for TV shows, such as The X Factor and Britain’s Got Talent, with most of the company’s growth coming from premium-rate services for broadcasters. Television companies were fined a combined total of £5.6m for vote-rigging and misleading consumers, but MIG emerged largely unscathed.
“We were heavily involved in the delivery of the services affected, but were audited by everyone. We fully complied with the due diligence that went on and came out with a clean bill of health,” says Houlihan. “We don’t make editorial decisions.”
As interactive TV voting and other volume SMS services still provide the lion’s share of the company’s turnover, Houlihan will be pleased MIG is helping broadcasters bring phone-ins back after a post-scandal lull. But even when the premium-rate party was in full swing, he was busy diversifying the company beyond mobile.
Last month, he announced a changed structure that positions MIG as a parent brand for a group that also encompasses: Mobile Interactive Technology (MIT), the operating technology company that runs services such as volume SMS voting; New Toy, an “experiential design agency”; Jigsaw, which provides web design; and 4th Screen Advertising, a mobile advertising agency.
“The headline is that MIG becomes the holding brand from a corporate positioning perspective,” says Houlihan, who has also launched a mobile publishing business, Kilrush, which helps companies translate a traditional website into a mobile-optimised one.
“The vision was always that the mobile and, to a lesser degree, the digital interactive services chains were complex,” he continues. “Brands wanted to build a strategy and they didn’t know where to start.” The implication is that if MIG can market itself effectively, brands wanting an integrated digital and mobile campaign or presence will know exactly where to look.
MIG was formed in 2005 by Houlihan, Anthony Nelson and Nick Aldridge, former colleagues in O2’s mobile interactive services division. When it was downsized, the trio took voluntary redundancy and set up MIG with a £125,000 loan from the then Department of Trade and Industry and £250,000 from business angels.
Although he reportedly hated his job at O2, Houlihan concedes that MIG’s story would have been very different if it hadn’t been for the expertise he developed there – and starting-up would have been a much harder slog too.
“We were seen in some quarters as young punks begging, stealing and borrowing,” he recalls. “But we were lucky in that we had credentials and credibility. We had a great network.” All of which comes in very handy when your prospective clients are blue-chips.
“It was a new name on the door, but with a similar approach and methodology. It wasn’t a standing start,” Houlihan continues. “We’d executed well in former lives, particularly at O2, and we made promises to people on the level of service, explained that our technology would be superior and that, through new platforms and products, we’d create more revenue.”
The contracts MIG won often involved a three-year vision, and in what turned out to be an under-regulated market, there was something of a gold rush. A talismanic performance on its first major project, the Live8 concert in Hyde Park in 2005, helped no end. A fledgling MIG was charged with distributing 130,000 tickets quickly and securely in a two-week timeframe, while at the same time raising revenues to offset some of the costs of putting on the event.
The competition received more than 2.1 million text message entries and generated more than £3m in seven days. The 66,500 winners were notified via text message that they had won a pair of tickets and sent a unique PIN, which they registered on the O2 website.
This enabled them to collect their tickets from any O2 store, increasing footfall for the grateful and impressed mobile giant. The operation also made the Guinness Book of Records as the largest ever text competition.
“It said a lot about how the team would cope with the stresses of growing a company,” says Houlihan.
Just as well – the breakneck expansion it subsequently experienced would put a strain on any operation. Last year’s turnover was £35.9m, up an eye-watering 422% a year, from £252,000 in 2005. Houlihan, who is predicting a £65m turnover this year, describes pacing the company’s growth as “like holding onto a wild horse”.
“That kind of growth tests everything,” he says. “But we focused on the operational stresses and felt strongly that if we didn’t screw up service delivery, everything else would be alright – and it has paid off.”
On the curve
Unsurprisingly, O2 remains a major customer. MIG’s clients also include ITV, Five, Walkers Crisps, Sony BMG, MTV and Honda, with other services including billing websites for mobiles and marketing.
Houlihan doesn’t claim to be the most prescient of innovators – the company’s success has been founded on a timely and ingenious exploitation of existing markets, rather than the creation of new ones. This owes much to the company’s privately funded, organic growth model, which relies on revenues generated within the company to grow the business.
“We haven’t had the cash reserves available to us that would let us go off and develop a piece of software that’s going to be a silver bullet in five years,” he says. “We’ve had to develop on the curve – technologies that will immediately deliver revenues and returns to the group. That’s where we are culturally, and this is consistent throughout the group.”
MIG’s main technology business, now called MIT, still accounts for 85% of revenues. The new group structure will allow its smaller companies more room to grow as the firm focuses on building gross profit margins in its agency businesses, Jigsaw, 4th Screen, New Toy and Kilrush.
New Toy, which Houlihan describes as “the fun business in the group”, sounds anything but when it’s described as an “experiential design firm”. So, what does it do beyond SMS ticketing for events?
“New Toy uses technology to help people solve a problem,” he explains. “We’re looking at live experiences, events and retail, helping businesses build in interactivity.”
New Toy was borne out of an existing contract with O2 for its Docklands arena, for which MIG provided interactive installations, mobile ticketing and text-to-screen services. It aims to create digital experiences for traditional events, using technology such as near field communication (NFC), Bluetooth, touch screen, video and blue screen.
At the O2 arena in 2007, this was manifested in an installation that allowed visitors to create personalised videos, which could then be delivered to their mobile phone and uploaded to Facebook or MySpace. New Toy also provided a priority ticketing service via SMS – where tickets can be sold to a select group or club first through a mobile short code – and an SMS jukebox that allowed guests to choose music via their mobiles.
Houlihan is hoping the concept, which has also been successfully delivered for the O2 Wireless Festival, The BRITS and Madame Tussauds, will be adopted by smaller operators. “We’ve developed a new range of live technology experiences for much smaller music venues, linking up social networking content so [gig-goers] can take a picture at an event and link that to social media platforms.”
Priority ticketing is likely to be a hit with the smaller players, too, and Houlihan is also aiming to help retailers connect their online marketing and advertising presence into the in-store experience by sending content to consumers’ mobiles.
Mobile has been touted as the next frontier for search for years, but until recently, it was patchy and the user experience frustrating. Also, most content wasn’t mobile-optimised, making much of it irrelevant.
The success of the iPhone and other smartphones has finally shaken the industry up. Search is moving away from the operator’s branded portals and into something more analogous to its traditional form. “The Apple phenomenon is driving everything,” says Houlihan. “The design of all or future devices will be touch screen, so discovery is accelerated.”
This will help drive growth across all of MIG’s divisions, particularly Kilrush. “People are browsing websites that aren’t optimised for mobile and brands haven’t fixed it. We’ve got a product that does exactly that,” explains Houlihan.
For its first contract, Kilrush will build and manage mobile-optimised content services for ITV, but Houlihan insists this service is just as relevant for small businesses. “It’s a market that’s booming,” he says. “We all know how people use text messaging peer-to-peer [P2P].
Anything that works P2P should work in B2B, because the behaviour is there. Small businesses are starting to unlock the potential of mobile. Estate agents and travel agents text me. The guy on the high street is using it.”
Mobile web usage in the UK alone has more than doubled in the past year, and as firms realise a distinct approach is needed, Kilrush’s service could prove invaluable. “You can do more with mobile,” stresses Houlihan. “The real opportunity is to treat it slightly differently and have it integrated.”
He says the growth in the market has made MIG recession-proof so far, and it’s enjoying its most robust quarter of trading. However, he does acknowledge that 4th Screen, the mobile ad agency, “knows the recession is on”. Just £28m was spent on mobile advertising in the UK last year, £14m on search and £14m on display.
Next to the £3.4bn spent on online advertising in 2008, it looks rather paltry. However, analysts suggest the mobile figures correlate strongly with the early days of online advertising – in 1998 the internet advertising market was worth £19.4m.
“Most of the big communications groups have a head of mobile now,” says Houlihan. “Their understanding has increased incredibly and they’re pushing the medium hard to the media planning fraternity. It has huge scope for growth.”
But it’s likely to be a different model to the traditional banner and skyscraper adverts that dominate the web. “We’re about to launch an affiliate-style product for mobile advertising,” says Houlihan. “We’re starting to explore location, behavioural and profile-targeted mechanics. Currently, mobile advertising has its place. But it’s going to grow.”
MIG is maturing. It will pay a maiden dividend to shareholders this year and is about to extend its existing international presence in Ireland, Europe and the USA. In a different market, you’d forgive Houlihan for considering an exit, but a commitment to driving organic growth remains.
“We had a sale offer at the end of last year, which we declined,” he reveals. “The value of the group was much lower than what we would expect to get in two years’ time. We grow so quickly, and now we’re starting to show real strength in depth and profit potential, it’s a conversation we can’t have.”