Loopt aims to triple sales as competition from Google mounts
Loopt, a service that lets mobile-phone users track their friends’ whereabouts, expects to more than triple its revenue this year, fending off competition from Google.
Loopt, which has more than 1 million users, has tapped a new source of sales by running ads on the service, said Chief Executive Officer Sam Altman. The company currently makes most of its money selling its technology to wireless carriers and acting as a platform for other software developers.
Loopt’s technology allows users to voluntarily show their location on a digital map, letting friends and family know where they are. Google entered the market in February, offering a location-tracking service called Latitude. The publicity from its new rival is helping fuel growth for Loopt, which should be profitable by year-end, Altman said.
“It’s actually been really great for us,” Altman said last week in an interview. “Our growth has accelerated since they launched.”
Still, Google has the potential to become a bigger threat, said Charles Golvin, an analyst with Forrester Research in Cambridge, Massachusetts. People that already use Gmail and other Google services can easily add Latitude, instead of having to find Loopt and add it separately, he said.
“Their focus is fairly narrow,” Golvin said. “Location is just one attribute of a wide variety of services.”
Dunkin’ Donuts
Loopt runs an opt-in service, meaning users have to agree to be tracked. Its ad business relies on a customer’s location information to provide relevant on-screen commercials. Dunkin’ Donuts, for example, shows ads when Loopt users are near its restaurants. Ad revenue could make up as much as 70 percent of total sales by the end of the year, Altman said. He declined to give specifics.
Loopt also can help find customers by predicting their income, age or gender based on the types of places they visit, Altman said.
Location-based services are one of the most promising parts of mobile technology, said James Brehm, a consultant with Frost & Sullivan. “When you tie presence, location and opt-in advertising together, you’re going to see that market explode,” Brehm said.
Loopt, based in Mountain View, California, plans to expand outside the US, possibly this autumn, Altman said. It also may forge a partnership with Google to let it sell more advertisements, he said.
Friend or Foe?
“We have some concerns about where they fit on this friend-and-foe continuum,” Altman said. “I don’t know if we’ll end up doing a deal or not, but it’s certainly something we’re considering.”
Google is pleased with the progress of Latitude, said Katie Watson, a spokeswoman for the company. More than 1 million users signed up for the service in its first two weeks, she said. Google, which is also based in Mountain View, declined to comment on a potential ad deal.
Google rose $6.84, or 1.8 percent, to $396.84 yesterday in Nasdaq Stock Market trading. The shares have climbed 29 percent this year.
Loopt received backing from the same venture capital firm, Sequoia Capital, that invested in Google. Altman doesn’t expect to have another venture investment as Loopt moves toward profitability.
The company might get a “strategic” investment from a technology company, a deal that would be more of a business partnership. Altman said he’s open to an initial public offering.
Dating Service
To stay ahead of Google, Loopt is introducing related services. One new feature called Mix lets users find people nearby who have similar interests. Dating is the most popular way to use the feature, Altman said.
“It’s growing the most quickly of any feature on our service,” he said.
Loopt faces other competition besides Google, including a startup called Glympse. The Redmond, Washington-based company began offering a service today that lets users track another person for a set amount of time, say, an hour. After that period, the tracking is disabled. So users get location-based services without long-term commitments.
“People don’t want to create another social network,” said Bryan Trussel, co-founder and CEO of Glympse. “You got to be simple, and you got to have an instant payoff.” (Bloomberg)
- Brian Womack
