Mobivity Holdings Corp. (OTCQB:MFON), a marketing technology company that connects brands to digital audiences, held its Q1 2024 earnings call on May 15th. The call highlighted operational successes of their Connected Rewards platform, but a subtle yet potentially significant shift in their business model appears to be unfolding. This change, barely a whisper in the call's narrative, might just signal the start of a revolution in performance-based mobile marketing.

Mobivity's core model involves connecting consumers from brand-owned marketing channels and physical locations to mobile games and driving these digital audiences back to the brands, generating $3 to $7 in revenue per successful interaction. However, a crucial detail revealed in the Q1 call is that Mobivity's revenue per action, the payment received from game publishers for each consumer action, has started to *increase*.

This rise in revenue per action might seem minor, but it's a critical indicator. It suggests a shift in Mobivity's value proposition within the mobile gaming ecosystem. Game publishers are finding Mobivity's platform increasingly valuable, outperforming alternative user acquisition channels.

"Mobivity COO, Kim Carlson, stated that Connected Rewards programs are "delivering exceptional results, far outpacing the return on ad spend goals of our game partners." This superior performance, consistently exceeding gaming industry benchmarks, is likely driving the growing revenue per action."

This whisper signifies that Mobivity is transitioning from a volume-driven model to a value-driven one. The initial focus on audience reach is now being complemented by a focus on the *quality* of these interactions. The platform is connecting the *right* consumers, those most likely to engage, retain, and spend within mobile games.

Growth in Connected Rewards Programs

The chart below illustrates the hypothetical growth of Mobivity's Connected Rewards program based on statements from their Q1 2024 Earnings call.

This shift has significant implications. Mobivity is carving out a unique position within the crowded $40 billion mobile user acquisition market. Traditional ad networks are dealing with Apple's privacy changes, but Mobivity operates outside this ecosystem, leveraging SMS, email, and in-app placements. This gives them a distinct advantage, ensuring stable user acquisition pathways and granular control over audience targeting.

Increasing revenue per action hints at a potentially faster path to profitability. As gross margins are tied to this revenue stream, its consistent growth paves the way for improved financial performance. Mobivity President, Bryce Daniels, suggested that overtaking the legacy tech business and reaching cash flow positive are likely to happen concurrently.

This revolution is further amplified by Mobivity's aggressive data-driven approach. By adding three new data scientists to the team, they are demonstrating commitment to optimizing audience segmentation and program performance. Leveraging predictive algorithms and sophisticated analytics, Mobivity aims to further refine the quality of its consumer connections, ultimately driving higher returns for brands and game publishers.

Here's the hypothesis: if revenue per action continues to grow alongside new customer acquisition and program optimizations, Mobivity could be on the verge of a significant breakout. Imagine a scenario where the company doubles its average revenue per action from $5 to $10. This alone, without factoring in audience growth, would dramatically increase revenue and profitability. Combine this with their robust pipeline of brand and game partners, and the potential becomes even more compelling.

While still early, Mobivity's Q1 whisper suggests they are pioneering a new era of value-driven performance marketing in mobile gaming. As they refine their platform, optimize campaigns, and expand their marketplace, this revolution may soon become a roar heard across the mobile marketing landscape.

"Fun Fact: The mobile gaming market is colossal. In 2023, global mobile game revenue reached over $92 billion, and it's projected to exceed $150 billion by 2027. This massive and growing market provides fertile ground for Mobivity's innovative approach to user acquisition and retention."