Millennial Media shows Md. can excel at digital innovation

Baltimore company making name in mobile advertising

August 24, 2010

Harbor Hospital just took a step toward solving the old problem of wasting advertising dollars on people unlikely to respond.

Wanting to promote its emergency department to neighbors and employees of nearby businesses, the Baltimore hospital launched an ad campaign on "smart," Internet-connected phones — but not just any smart phones.

"Geo-targeting" filters sent the banner ads only to folks using phones in 20 nearby ZIP codes. Clicking the ad produced a website on which potential patients could plot turn-by-turn directions to the ER, for immediate use or future reference.

Seems a bit gimmicky. Calling 911 is still probably your best bet in a life-threatening emergency. But mobile ads are the next big media thing, and Harbor's campaign was calculated, in part, to gain technology-hipness cred.

A significant aspect of Harbor's campaign is the company that made it possible: Millennial Media, just across the water in Baltimore's Canton section. As my colleague Gus Sentementes has been reporting, Millennial has become a huge deal in mobile advertising and the next great Baltimore information-technology hope, keeping alive the notion of a "digital harbor" and prompting worldwide rumors of richly priced takeovers.

Whether Millennial is bought by the makers of the BlackBerry phone or somebody else, or whether it issues public stock next year as it had planned, the company demonstrates one of the healthiest aspects of the Baltimore and Maryland economies.

Twenty years ago, Harvard's Michael Porter popularized the idea of the business "cluster," or the tendency of similar companies to locate near one another, swap employees and ideas and create an environment that gives birth to competitors. The best-known and most-envied of these self-perpetuating ecosystems is California's Silicon Valley, which has been producing innovation and riches since the 1960s.

Maryland's biggest business agglomeration is the kind economists call a "factor-endowment" cluster. By this they mean companies are locating because of some immovable geographical feature, such as the mineral veins running beneath Butte, Mont., a century ago.

Maryland's immovable mother lode is the United States government down the road, whose money machine makes even Silicon Valley look a bit impoverished. Government agencies and contractors are this state's biggest economic cluster.

Fortunately, however, Baltimore and Maryland boast of several mini-clusters not directly attached to the federal udder. Baltimore financial know-how lives on despite the disappearance of the city's major independent banks and its storied investment bank, Alex. Brown.

Not only are there T. Rowe Price, Legg Mason and Stifel Nicolaus' vaunted research department; there are scores of money-management boutiques and hedge funds. The dynamism continued this month as the Alex. Brown refugees at Signal Hill Capital announced a merger with Updata Advisors of New York and Virginia.

Moreover, Hunt Valley has a computer-gaming cluster. Maryland has a historic cluster of African-American-owned businesses, which I wrote about a few months ago. And the state is an important biotechnology center. It also is becoming the headquarters for cybersecurity, although that's largely a function of the federal factor.

Millennial Media demonstrates that Maryland still excels at purely commercial computer innovation. The cluster here includes Advertising.com, which was sold to AOL years ago but still has an office in Baltimore. Several key Millennial executives are Advertising.com alumni, including CEO Paul Palmieri.

As smart phones have gotten smarter and more able to support attractive, interactive ads, advertisers such as Harbor Hospital are more interested in trying them out. Teaming up with The Baltimore Sun and other providers of digital content, Harbor displayed its emergency-room banner ad more than 3 million times to central Baltimore smart phone customers in the first month of the campaign, said hospital spokeswoman Jean F. Bunker.

More than 7,000 clicked through during that time. Results for the second month of the campaign, which ended three weeks ago, aren't available yet.

"I'm not a big one for ad spends," said Bunker. "But when it makes sense, and it's strategic, and it's also a little bit innovative, which this was, we thought, 'OK, let's put our toe in the water.' "

Smart phone companies are counting on many more advertisers to do the same. This year Apple, maker of the iPhone, bought Millennial competitor Quattro Wireless for $250 million. Last year, Google, publisher of the Android mobile-device operating system, bought another rival, AdMob, for $750 million. Last week, The Wall Street Journal reported that BlackBerry maker Research In Motion had been in talks to acquire Millennial but rejected a reported asking price of $400 million.

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