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September 11, 2004

Scotts Valley Startup Peddles On-site Digital Advertising

Santa Cruz Sentinel

by Jennifer Pittman, Sentinel Correspondent

SCOTTS VALLEY - The best time to reach consumers is when they’re standing at the store shelf, according to Scotts Valley entrepreneur Keith Kelsen, who heads The MediaTile Co., a digital marketing startup that uses wireless cellular technology to beam Internet-based advertising into stores.

"Our mission is to get screens into new places where we couldn’t go before," said Kelsen, who envisions worldwide electronic signage on store shelves that carry tailored messages to consumers.

Kelsen sees plasma screens of all sizes as well as small, interactive systems that allow customers to connect instantly with manufacturers’ sales departments.

MediaTile has developed Media-Cast, the first Web-based system to use cellular data services to deliver its messages. The company has partnered with Verizon Wireless to deliver the data.

Keith Kelsen is president and chief executive office of the MediaTile Co. of Scotts Valley.

Quickly gaining traction in what is expected to blossom into a multibillion dollar market, the company is one of an elite group of companies launching wireless products this weekend at DEMOmobile 2004, a wireless technology conference in La Jolla that has served as the launch pad event for companies such as Palm, E*Trade, Handspring and U.S. Robotics. About 35 of 200 wireless company applicants were invited to participate.

"We’re having a great show down here been," Kelsen said Friday from La Jolla. "We’ve been very well received."

Putting on a show
Chris Shipley, executive producer of DEMOmobile, called MediaCast "a fresh and unique approach" to delivering content.

"We invited The MediaTile Co. to DEMOmobile to show their initial application of cellular-digital signage and share their broader vision that will open up new markets using the ubiquitous broadband resources of cellular-based networks. This is the just the beginning."

Retailers historically have struggled with traditional advertising displays. Because MediaCast is managed from outside the store via wireless cellular technology, it bypasses the need for expensive and time-consuming infrastructure to set up displays.

"The beauty of MediaTile is you can send different messages over a period of time," said Stephen Dix, a Scotts Valley resident who is on the advisory board for MediaTile.

Dix is also vice president of sales for Austin, Texas-based Buffalo Technology USA, a multibillion computer hardware company and one of MediaTile’s first customers.

For the holiday season, 27 Fry’s Electronics stores and about 50 CompUSA stores will have small plasma screens featuring several messages advertising Buffalo Technology USA hardware products. Buffalo plans to transmit a series of educational and promotional videos.

"This is the type of technology that you wonder where it’s been all your life," Dix said.

Although market size and its potential vary among analysts, no one argues that digital signage is a growing trend. Sanju Khatr, a senior analyst with iSupply Corp., said digital signage is "the next killer application" for the professional audio/visual industry. She estimated last year that the dynamic digital signage market generated $557 million in revenue and would generate $1.2 billion by 2007.

In 2002, InfoTrends/CAP Ventures, a Massachusetts-based digital imaging market research firm, estimated the market for "narrowcasting in public spaces" was $388 million and is growing at a compound annual growth rate in excess of 40 percent to reach $2 billion by 2006.

The technology is also known as "dynamic visual messaging" or "the outernet."

Born in the kitchen
The 2-year-old company in Scotts Valley that was launched at Kelsen’s kitchen table has received $270,000 in early-stage private funding. In February, the company received another boost with the commitment for legal services from prestigious law firm of Wilson, Sonsini, Goodrich & Rosati of Palo Alto. The company is preparing for an undisclosed amount of Series A funding.

Robert P. Latta, a lawyer with the firm, said earlier this year that the company and management team "have the critical elements we like to see in early stage start-ups - a clearly defined marketplace combined with an innovative approach to solving real customer problems."

For this venture, Kelsen has drawn on his experience in TV and advertising. He was co-founder of Enterprise Broadcasting Corp., a retail digital shopping and entertainment company. Prior to that, he served as president of Liquid Light Television, a TV production studio, as well as president of KCAT-TV, a Hearst venture in Los Gatos. His programs have been broadcast internationally and on major domestic networks such as PBS, TBS and HBO.

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