Firm Connects Buyers and Sellers Via Wireless
Inside offices that once housed a dating service, Internet entrepreneurs Gregg B. Lavin and Matthew Dusig are trying to create their own version of connectivity--and profits--by linking advertisers to customers via wireless devices.
The pair is betting that demand for tailored advertising and marketing messages, delivered through pagers, cell phones and hand-held personal devices will explode in the coming years. And with it, they hope, so will the fortunes of their fledgling Encino-based company, GoZing.com.
“The strength of this company is that we can reach somebody one on one, wherever they’re at, at any point in time,” Lavin said. “We are out to prove that through this medium, we can actually influence people’s buying habits.”
GoZing’s business plan centers on creating a loyal customer base it can parlay into marketing partnerships. But unlike traditional ways of grabbing eyeballs--through billboards, print media or direct mail--GoZing.com sells clients on its ability to pick out customers directly and immediately through criteria such as age, gender, geography or areas of interest.
A fast-food restaurant, for example, could send out a message before lunchtime telling users who work in Sherman Oaks they can receive a free soft drink and $1 off a sandwich.
A music store looking to promote a new band could send out discounts on their upcoming release to college-age students.
The more subscribers, the bigger the stable of advertisers--like Subway, Coffee Bean & Tea Leaf and Wherehouse Music--willing to pay GoZing 20 cents or more per customer to advertise, company officials say.
Currently, about 100,000 people receive wireless alerts for everything from food to retail goods and sporting events, Lavin said. He predicts those numbers will climb to 500,000 by June and 1 million by year’s end.
Christopher Todd, an analyst at New York City-based technology research firm Jupiter Media Metrix Inc., said companies such as GoZing could be primed to take advantage of growth in the U.S. wireless advertising market, which is expected to jump from the tens of millions today to as much as $700 million by 2005.
In the meantime, GoZing.com and others will have to overcome near-term obstacles such as an inhospitable and limited marketplace for wireless, cutthroat competition as well as the fact most consumers have to play catch-up with the technology.
“There is a customer base out there. But building on that is going to require a critical mass in the marketplace,” Todd said. “Right now, the early adopters [of wireless technology] are not necessarily going to be the ones that are going to be motivated by one or two dollars off a sub sandwich.”
And there’s another potential problem, according to Adam Zawel, an analyst with the Yankee Group, a Boston telecommunications consulting firm: the annoyance factor.
“If the users get bombarded with ads, the whole wireless Internet industry could be ruined,” Zawel said. “We don’t want to repeat the mistakes of spamming on the Internet.”
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In addition to wireless services, GoZing provides e-mail messaging, Internet-based marketing research and two-way messaging surveys. All told, those services earned the company revenue of $200,000 last year, against $750,000 the company spent in start-up costs, executives said.
If all goes as planned, Dusig and Lavin say their eight-person company will turn a profit by November.
In addition, the two say they plan to hand over day-to-day operations of the company to a new management team. This will free them to concentrate on building the business in order to sell it or take it public.
Whatever the eventual outcome, the longtime friends and former Cal State Northridge roommates say they have come a long way from humble entrepreneurial beginnings.
That includes their ill-fated attempt to distribute “Zing,” a game they licensed during their college years, which amounted to hitting a ball connected on a cable between two poles.
Lavin, 29, went on to work at Salomon Smith Barney as a retail investment advisor after graduation. Dusig, 31, took a job as a marketing consultant for a local real estate company.
But they never strayed far from their ambition to build a successful business.
In mid-1999, amid a surge of interest in technology businesses, the two came up with the idea of delivering promotions to wireless devices, taking the name of the new company from the game “Zing.”
“Gregg and I come from a sales background where you never give up,” Dusig said. “It takes a long time to brand a company. And the name symbolizes our determination.”
