Rhythm NewMedia (formerly Rhythm Networks)

Sector: Mobile applications, video advertising

Headquarters: Mountain View, CA

Management: CEO Ujjal Kohli was EVP of Marketing & Sales for AirTouch Cellular. SVP of Engineering John Sabella used to be VP of Engineering at DoubleClick.

Funding: Morgenthaler Ventures, Lightspeed, and Rembrandt.

Secret Sauce: Are you ready for television-style advertising on your mobile phone? Rhythm NewMedia is betting the time has come to give mobile users a taste of video advertising. From three-second messages to full 30-second TV-style ads, Rhythm’s technology is pushing the envelope and testing mobile users in a whole new way. Rhythm’s approach supports advertising on MMS, WAP/HTML, mobile search, video, and mobile TV. End-to-end technology powers advertising that has broad reach, sharp targeting, and precise frequency management. On the back end, Rhythm lets its clients automate key business processes and offers measurement and reporting features.

Marketers are excited about the prospect of using mobile phones—many of which are equipped with global positioning systems—to send ads to consumers based on their location. Imagine getting an ad delivered to you while you’re actually standing right outside the store. While Rhythm is currently running tests with companies such as recording label EMI, there are a few hurdles to overcome in the form of FCC rules governing privacy in the mobile phone world. Currently, it’s illegal for mobile carriers to sell phone numbers to telemarketers. Further, carriers can’t divulge information on a subscriber’s location unless that individual gives permission.

Undaunted, companies like Rhythm are looking at creative solutions to overcome these obstacles, which could ultimately benefit advertisers and carriers alike—such as offering users incentives, like reduced fees, if they agree to receive ads.

Seen and Heard: The New York Times reports, “Marketers said they were particularly excited about the prospect of eventually using cellphones, many of which are equipped with global positioning systems, to send ads to consumers based on their location.” In The Hollywood Reporter Bob Kuperman says, “Up until now, mobile advertising has over-promised, but under-delivered. Unless an effective ecosystem is created where all stakeholders thrive, it will remain a niche. Rhythm has made some exciting progress in this area.”