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i-Level Media Group Inc (OTCBB: ILVL)
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i-Level Media Group Inc. (OTCBB: ILVL) is a development-stage company engaged in the business of selling video advertising timeslots on its network of flat-panel video advertising display units installed on taxis in the People's Republic of China.
The Company provides digital media services in markets including Canada, the US, Thailand, Hong Kong and China and has co-developed a proprietary hardware and
software platform for use in vehicle digital media networks. After a successful trial test of the technology, ILVL signed a 6 year exclusive access agreement with Jin Jiang Transportation, Shanghai's premier taxi operator which has over 7,000 standard and luxury cars and the largest vehicle fleet in Shanghai. In May 2005, the Company began deploying its digital advertising networks with the launch of the i-Level Mobile Media Network in Shanghai.
TThe company conducts its all of its operations through its wholly-owned operating subsidiary in China, i-level SoftComm.
Market opportunity
China is one of the fastest-growing markets in the world, and the second largest advertising market in Asia. According to CTR Market Research, total expenditure on advertising on the Chinese mainland, Taiwan and Hong Kong approached $48 billion in 2005. Of the total expenditures, the Chinese mainland represented spending of $18.5
billion, up 25% from last year or 7 times greater than 1994 spending. Shanghai, Beijing and Guangzhou made up nearly 50% of the total.
According to Nielsen Media Research, the advertising industry in China will maintain rapid growth rates mainly as a result of that nation's booming economy. China's economy has sustained double-digit growth over the last 25 years and is the advertising market is expected to surpass Japan within next seven to ten years, becoming the world second largest advertising market.
Outdoor advertising has grown substantially in China over the past decade, growing about 19% annually and becoming the third largest advertising medium after TV and print media. With an increasingly stronger purchasing power, and the upcoming 2008 Beijing Olympics (with more than 500.000 visitors expected) and 2010 Shanghai Expo, China's outdoor advertising will continue to grow at double-digit rates.
Innovative business model
The Company has developed its business using technology advances in digital media to meet the increasing demand for outdoor advertising. As a result, ILVL has developed a business based on selling advertising timeslots on its proprietary, in-taxi digital network, the i-level Mobile Media Network.
ILVL's Mobile Media Network is China's premier in-taxi digital advertising network, consisting of high-quality LCD displays typically mounted inside the right front passenger headrest of a taxi at eye-level with passengers seated in the back seat.
Beyond its core business, the Company is able to leverage its technology and knowledge base to generate additional revenues from media platform franchising, consulting services, design, sourcing and manufacturing of digital advertising display units.
A new approach to advertising
The Company's Mobile Media Network provides upscale advertisers with access to a highly desirable audience of consumers in a captive environment, making it an ideal medium for effective out-of-home advertising.
Given the fact that taxi-users in China's major cities are mainly educated, affluent, upwardly mobile professionals with above-average disposable incomes and high consumption rates, the ILVL's business model offers a superior alternative to traditional TV and print advertising that are chasing quantity, not quality. There are between 175 million and 200 million high-income taxi riders in China.
Chinese environment allows a rapid rollout of ILVL business model
The number of taxis in operation on both national and regional levels is expected to increase steadily in the foreseeable future. There are over 120,000 taxis in Shanghai and Beijing and this number is expected to increase by 5-6%/year.
Due to rapid increases in the number of vehicles on the road, roadways are becoming jammed thus blocking traffic routes. The average vehicle speed on the main roads in Beijing and Shanghai during rush hours fell to 10 kph last year from 45 kph in 1994. The time passengers spend in taxis and exposed to in-taxi advertisements has increased dramatically.
Exclusive agreement with an important Shanghai taxi operator
ILVL has an exclusive agreement with Jin Jiang Transportation, which grants the Company rights to operate advertising displays in a minimum of 4,500 taxis for 6 years, plus a 6-year renewal. This contract alone enables ILVL's network to reach more than 260,000 unique viewers per day or about 8 million views per month.
To date, the Company has installed displays in a total of 2,550 taxis operating in Shanghai. Given the size of the market and the insignificant penetration of ADU advertising technology, the Company can easily expand its digital network to 10,000 displays in 2008 and 20,000 displays in 2009. Accordingly, ILVL may provide a powerful advertising channel for international companies wanting to expand their brands into the fast-growing Chinese consumer market.
Significant Relationships and Alliances
The Company has forged strong relationships with advertising industry leaders and leading media buyers to successfully penetrate the Chinese market. ILVL's advisors and media partners bring more than 25 years of cumulative experience in outdoor advertising in Asia, enabling the Company to leverage its infrastructure and expertise to expand more easily to media markets beyond Shanghai.
On Apr. 18, 2007, ILVL announced a long-term content supply agreement with MOGO, a producer and distributor of professional, non-time sensitive, short-format original video content for the Chinese market. The agreement will bring a series of MOGO's entertainment and original content to viewers on the ILVL's Mobile Media Network in Shanghai. MOGO's series of lifestyle-oriented short programs will complement the Company's current mix of programming content.
Products and Services
Mobile Media Network
The ILVL Mobile Media Network is China's premier in-taxi digital advertising network, consisting of high-quality LCD displays typically mounted inside the right front passenger headrest within a taxi at eye-level with passengers seated in the back seat.
ILVL co-developed the design of its display units with Smartwin Technologies. Each company owns an undivided 50% interest in the intellectual property rights relating to the ADUs. The Company and Smartwin Technologies will split the proceeds
generated from any future sales of ADUs and/or the licensing of the related intellectual property rights to third parties.
The hardware (ADU) is very basic, comprised of a media player, LCD, power board, and speakers. Version 2.2 measures 183(W) x 160(H) x 44(D) mm employing a 8.2" LCD (4:3) with an active viewable area measuring 125 (H) x 166(W) mm. The device is capable of projecting Flash animation, 3D dimensional JPEG and full motion video format files onto the LCD screen. ILVL's clients can choose spot durations from 5 to 60 seconds and campaign lengths ranging from 2 weeks to 6 months. Memory comes in the form of removable flash cards that are installed and replaced manually and run off a simple customized operating system. The devices are upgradeable and can be wirelessly enabled to allow for wireless content change/updates in the future. The device is self-contained in an all-in-one form, is mounted in the passenger side headrest of the taxi, and is powered by the vehicle's existing power supply.
Smartwin Technologies is ILVL's sole supplier of ADUs. However, all components of the ADUs are readily available from multiple manufacturers, and could be sourced through a number of original equipment manufacturing factories in China.
Through ILVL Mobile Media Solutions, the Company offers its proprietary platform for franchising to create turn-key mobile media network solutions. It also offers license technology to media companies and estate owners to enable them to build and manage vehicle-based digital media networks in their own respective markets.
Additionally, the Company offers consulting services for evaluating opportunities in the digital media space, or in designing, sourcing and manufacturing digital ADUs.
Looking forward, we expect the Company to expand its product offerings by offering complimentary services via its Mobile Media Network, including:
- Internet Access - passengers can surf the Internet;
- E-Commerce - passengers can use terminals for on-line purchases;
- SMS Related Revenues - passengers engage via mobile phone;
- Coupons - passengers can receive coupons from sponsors;
- Location-based Data - passengers can receive locations/directions/mapping.
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