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Replies to post #115828 on Protagenic Therapeutics Inc. (PTIX)
09/28/14 3:00 PM
Overview
Our principal asset is a 51% membership interest in Momspot, which is in the process of developing an online affiliated marketing network targeting the Mommy Market, as more particularly described in this Registration Statement. We do not conduct any other business activity, directly or indirectly.
Our goal is to be the premier specialty retail affiliate marketing company targeting women between the ages of 24 and 45 who are either mothers or expecting their first child. We refer to our target audience as the “Mommy Market.” Towards that end, we are in the process of building a website that incorporates various existing technologies that allows for product aggregation and enhanced search and filtering capabilities, resulting in increased brand engagement and user traffic for the hundreds of manufacturers, distributors, retailers and other merchants, whom we refer to as “Platform Partners,” that want to reach the Mommy Market. We will also sell online advertisement space to various businesses (hereafter referred to in this context as “Advertisers”). In many cases, our Platform Partners will also be Advertisers and vice versa. Momspot’s website, www.momspot.com , will function as a vertical search engine and comparison shopping site that will enable mothers and mothers-to-be (hereafter, “Moms” and “Moms-to-be”) to search for and compare thousands of products for themselves and their families from their desktop and lap-top computers and mobile devices. We launched the Momspot website in March 2014.
We will focus on marketing our website and services in order to build to awareness of the Momspot brand, which, we hope, will translate into heavy user traffic and engagement. Ultimately, our value will be a function of the number of people using our website, the number of click-throughs to the web sites of our Platform Partners and Advertisers, and the transactional volume attributable to our users.
Our marketing strategy will focus on Moms and Moms-to-be, not just their babies and children. We will organize our merchandise and content according to what Moms and Moms-to-be will find informative and helpful. Finally, we hope to distinguish our brand as a sophisticated and fashionable comparison shopping tool and social destination for Moms and Moms-to-be, unlike existing Mom-related websites and retailers, whose primary focus is on “cutesy” content having to do with babies, children and general parenting issues.
Business Model — Affiliate Marketing
Our business model, affiliate marketing, is a type of performance-based marketing employed by many successful web-based companies, such as Kayak and Google. Affiliate marketing companies do not hold any inventory or buy and/or sell products. Rather, they facilitate interactions between consumers and merchants by creating an environment – i.e., a website – with multiple contact points for consumers, brands, and merchants. Affiliate marketing enhances the connections between consumers, on the one hand, and merchants and brand owners, on the other hand, by allowing for multiple opportunities for consumers to engage with multiple brands and products and services through an affiliate’s (i.e., publisher’s) website. Affiliates, such as Momspot, offer a risk-free approach for merchants and brand owners to increase consumer engagement with their products and brands, drive traffic to their sites and increase transaction volume. Affiliates specialize in product aggregation and search, and focusing marketing efforts on a well-defined and specific market segment (in our case, middle-to-upper class educated mothers between the ages of 24 and 45).
A publisher, also referred to as an affiliate, is an individual or company that promotes multiple products, brands and/or services in exchange for earning a commission. Merchants and brand owners contractually agree to work with a publisher and then provide the publisher with content – in the form of links, product images and banner or text ads – that the publisher incorporates into its website. When a user visits a publisher's website and clicks on a product, service, ad or other form of an advertiser's content, the visitor's browser receives a special tracking cookie that identifies the advertiser, the publisher, and the specific content and commission amount. This data is stored within the link information in what are called "parameters" and can include even more anonymous data used for attribution.
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The Market Opportunity
There are three key factors why we believe Momspot presents a good business opportunity:
1. Online advertising and mobile advertising are growing rapidly and search is the most lucrative online business.
2. There is an increasing shift towards performance-based marketing channels, such as affiliate marketing.
3. The enormous size and spending power of a valuable market segment.
Online Advertising Growth 1
Internet advertising revenues in the United States totaled $31.7 billion in 2011, an increase of 22% over 2010, and are growing steadily with a compounded annual growth rate of 20.3% over the past ten years. Search remains the largest online advertising revenue format representing 46.5% of 2011 revenues, up from 44.8% in 2010, and in 2011, search revenues totaled $14.8 billion, up almost 27% from $11.7 billion in 2010. We believe our advertising services address the large online and mobile advertising markets. From 2012 to 2017, the worldwide online advertising market, excluding mobile advertising, is projected to increase from $91.1 billion to $124.7 billion, representing a 6.5% compounded annual growth rate, according to industry sources. From 2012 to 2017, the worldwide mobile advertising market is projected to increase from $10.0 billion to $52.2 billion, representing a 39.2% compounded annual growth rate, according to industry sources.
Performance-Based Marketing Growth 1
Advertisers are constantly seeking ways to maximize marketing their return on investment through better alternatives to acquire users, generate traffic and increase sales that produces measurable and repeatable results. The result is an increasing trend on the part of advertisers to use targeted, performance-based marketing that consistently and effectively reaches their desired market segment. As such, ad spending on traditional search engines is expected to grow more slowly than overall online ad spending, driving the growth of topical sites that provide a targeted, performance-based marketing alternative grabbing a larger portion of marketing budgets.
According to the Interactive Advertising Bureau (IAB), online advertising priced on a performance basis represented 62% of total U.S. online advertising spend in 2010, which represents a 20% share gain from cost-per-mile (CPM) and hybrid pricing models since 2004. CPM represents the price per 1000 user impression/views. It does not measure whether any revenue was generated form those views.
Online advertising priced on a performance basis, such as cost-per-click (CPC), has taken significant share from advertising priced on either a per-impression (CPM) or hybrid basis over the last several years, and the IAB expects performance-based online marketing will continue to grow relative to non-performance-based marketing. Performance-based marketing maintains 5% of the Internet advertising market share, or approximately $1.6 billion. This trend is fueled, in part, by the fact that the Internet enables self-directed and targeted marketing. Highly targeted marketing messages will help advertisers tackle the difficulties of reaching certain fragmented audiences.
Internet search behaviors are changing as users expect topical search services that produce more relevant search results. In addition, advertisers are seeking more measurable and effective advertising options and the ability to easily target a well-defined market segment , such as the Mommy Market.
1 Interactive Advertising Bureau Advertising Revenue Report, 2011
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The demand by advertisers for performance-based marketing coupled with the increasing demand by users for more topical relevant search and shopping options are changing the nature of search, resulting in the increased popularity and use of performance-based, topical search tools (also known as vertical search engines) that produce relevant results specific to a narrowly defined market segment. Yelp, Kayak, and ShopStyle are just a few examples of these sorts of search alternatives, and how their popularity has grown in the past few years.
Topical search is growing compared to traditional search, as witnessed by the 8% increase of searches on vertical search engines, while searches on traditional services ( e.g., Google) declined 3%, and the number of searches per searcher declined 7%, in the second half of 2012. 2
The Value of the “Mommy Market”
The “Mommy Market” is estimated to be in excess of 31 million women under the age of 42. This includes 9.9 million “Millennial Moms” (age 18-29) and 21.9 million GenX Moms (age 30-42), two of the more Internet savvy segments. 3 However, the true potential of our target market could be as many as 113 million women given that there are approximately 141 million women with children in the United States, and approximately 80% of them have access to the Internet. Moreover, the size of the “Mommy Market” is growing around 1% a year. 4
Furthermore, women control more than $2.1 trillion in household spending and the U.S. Department of Agriculture estimates a family with average income will spend approximately $165,000 on a single child by the time the child reaches 18 years old. Furthermore, expectant and new mothers spend, on average, more than $10,000 in the first year of their child’s life. 5 Finally, estimates are that Moms account for 85% of the purchase decisions of U.S. households. Thus, the “Mommy Market” comprises a powerful consumer market segment. 6
Digital media is an essential and important part of a Mom’s life today, and the Internet is a rapidly growing media outlet that Moms turn to for information and entertainment. According to America Online DMS, mothers spend up to 16 hours and 52 minutes per week online, which is more than teens (who are online approximately 12 hours and 17 minutes). 7
According to Simmons Market Research Bureau, Moms are more inclined to use the Internet for communicating, socializing and meeting people and for family entertainment than women who are not Moms. 8 According to the same survey, Moms spend an average of 86 minutes per day reading and sending emails and 38% of those surveyed indicated the Internet is their prime source of information, second only to television (48%). 9 What makes these facts even more interesting is that, when compared to women without children, Moms appear to favor the Internet in many different aspects of their life. Women also tend to seek assistance and opinions from their female peers when making product selection and purchasing decisions.
2 New York Times, April 4th, 2013.
3 BabyCenter US Mom Market Facts.
4 Simmons Market Research Bureau, Study of Media and Markets.
5 Mom 3.0: Marketing w/ Today’s Mothers by Leveraging New Media & Technology, by Maria Baily.
6 ABCNews.com, 4/11/2008 (abcnews.go.com/Video/playerIndex?id=4614331&affil=wftv).
7 The U.S. Mom Market Report; Silver Stork Research & Packaged Facts.
8 Simmons Market Research Bureau, Study of Media and Markets.
9 The U.S. Mom Market Report; Silver Stork Research & Packaged Facts.
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Our Value Proposition – To Users
Momspot endeavors to be a new shopping experience - one tailored to the needs of busy and sophisticated women. For users, Momspot will be a topical, one-stop product aggregator and vertical search engine that offers a simple way to find merchandise for the Mom herself and for her children across all ager milestones (i.e., new-born, infant, toddler, kids and teens). In addition, we will provide access to special sales and promotions, allow users to interact with one another and curate informative content, all with the goal of enhancing connections with brands and with other similarly situated users. Momspot will leverage key social networking features to facilitate the sharing and promotion of merchandise, and allow users to create their own customized “spot” where they can highlight and promote merchandise they particularly like for other users to view. We will differentiate ourselves from other websites by focusing on the Mom, not just her babies or children. We will organize our merchandise and content according to what, we believe, Mom will find informative and helpful. Our brand will emphasize this fact, and aims to be a sophisticated and fashionable shopping tool and social destination for Moms and Moms-to-be. Ultimately, our goal is to become the number one destination on the Internet for Moms and Moms-to-be by providing them with a simple, stylish and social way to search for, and compare, thousands of products to make finding what they need, for themselves and their families, informative and easy.
Momspot will bring the following value to its users:
· Targeted product search and filtering – search and filtering produces results that are more relevant to the user, saving time and reducing frustration;
· Enhanced search and product selection functionality – our site will allow users to filter by brand, retailer, price, and/or product category, thus producing most relevant results and increasing the likelihood that the user will click-through to the merchants’ site;
· Product aggregation for thousands of merchants and brands that want to reach the Mommy Market – provides the user with a one-stop shopping alternative that doesn’t not currently exist for this large market segment;
· Special discounts and promotions –to entice users to the site and to click-through to merchants;
· User community - to entice users to the site and increase user engagement that will increase likelihood of clicking through to merchants;
· Social network integration and ability to solicit real time assistance from friends - to entice users to the site and increase user engagement that will increase likelihood of clicking through to merchants;
· Trusted product reviews and ratings – a value-add for users to entice them to use the site; and
· Ability to customize the user’s personal area for others to follow - to entice users to the site and increase user engagement that will increase likelihood of clicking through to merchants.
Our Value Proposition – To Platform Partners and Advertisers
The value we will create for our users will be enhanced by our Platform Partners and Advertisers. Platform Partners and Advertisers will integrate with www.momspot.com through an application programing interface (“API”) that we provide which will allow our users to seamlessly move from our website to the websites of our Platform Partners and Advertisers. We will provide our Platform Partners with a set of development tools, APIs and embeddable widgets that will allow them to seamlessly integrate with our platform.
Affiliate marketing companies, such as Momspot, offer a risk-free approach for merchants to increase consumer engagement with their brands, drive traffic to their sites, and increase transaction volumes. Platform Partners will use www.momspot.com as a complementary distribution channel to expand their reach and engage with their audiences.
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We will also offer advertising services via our website to allow our Advertisers to promote their brands, products and services, and to amplify their visibility and reach. Advertisers can use www.momspot.com to communicate directly with their natural constituency and reach a broader audience and further promote their brands, products and services. Our natural targeting capabilities allow Advertisers to better reach users who are more likely to engage with their ads, better achieve their goals and improve the return on their ad spending. Our advertising services provide compelling value to our Advertisers by delivering the ability to reach a large audience through our website and to-be-developed mobile applications, the ability to target ads based on our understanding of our users, and the opportunity to generate significant earned media. We expect that most, but not necessarily all, of our Advertisers will be Platform Partners.
We believe the Momspot platform will provide our Platform Partners and Advertisers with the following benefits:
· Risk-free opportunity to allow users to engage directly with products and brands. Because of our pay-for-performance revenue model, Platform Partners and Advertisers will pay us on a performance basis, meaning they only pay us when a user engages with their ad, such as when a user clicks on a link for a promoted product or replies to or favorites a promoted product. The pay-for-performance structure aligns our interests in delivering relevant and engaging ads to our users with those of our Advertisers.
· Risk-free opportunity to drive user traffic and increase transaction volume; brand equity leverage. As Momspot’s brand equity is enhanced, Platform Partners and Advertisers will benefit.
· Automatic market segmentation. Platform Partners and Advertisers will be able to instantly reach a distinct market segment, which happens to be large and that has a significant amount of disposable income.
· Unique Ad Formats Native to the User Experience. The organization of our website, including product placement and curation, will appear to the user as natural and organic. Thus, we will provide Platform Partners and Advertisers with an opportunity to reach our users without disrupting or detracting from the user experience. As such, Platform Partners and Advertisers can drive product webpage visits or application installs.
· Connect in Context. Platform Partners and Advertisers can gain meaningful insights and market intelligence from, and respond directly to, the feedback from customers. Our Platform Partners and Advertisers will have powerful context to connect their messages to what is most meaningful to our users in real time, and can engage directly with their customers. We will be able to provide Platform Partners and Advertisers with measurable, accountable and repeatable results including the following: unique monthly visits, average visit duration, bounce rate, pages per visit, page views, percentage of new visits, demographics ( e.g., age, gender) and geography ( e.g., country, region, state, city)
· Extension of Offline Advertising Campaigns. Advertising on affiliated marketing sites complements offline advertising campaigns, such as television ads. Additionally, we enable Advertisers to engage directly with users who have been exposed to their ads on television. We believe that synchronizing Momspot and television advertising campaigns makes brand messages more engaging and interactive.
Our Value Proposition – To Data Partners
We will license or sell our data to Data Partners, i.e., third-party marketers and advertisers who will search and analyze historical and real-time data on our platform. Our Data Partners will be able to use this data to generate and monetize data analytics, from which data partners can identify user sentiment, influence and other trends.
Specifically, our platform provides our Data Partners with the following benefits:
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· Access to Actionable Data . Our platform will enable our Data Partners to analyze and act upon data based on how users engage on our platform. This data can then serve as the foundation for applications and tools that can draw relationships between social interactions and business results, and even derive signals that predict consumer preferences.
· Ability to Create Measurement Standards . We will provide our Data Partners with the tools and data to find the right signal for the right audience.
Revenue Model
Eventually, we expect our revenue to include the following:
· Affiliate Commissions – When one of our users purchases a product from one of our Platform Partners or Advertisers, we will receive a percentage of the purchase price. The rate of the commissions will vary, depending on the merchant and other factors. For example, we may enter into special arrangements with Platform Partners to promote specific products, in which case the rate may be higher than the usual rate.
· Affiliate CPC Revenue – Each time a user clicks on a button that redirects the user to the website of a Platform Partner or Advertiser, that Platform Partner or Advertiser pays us a fee.
· Display Advertising – Advertisers, whether or not they are Platform Partners, will pay us a fee for display ads. The rates will depend on the ad placement and frequency and are typically measured on a CPM basis (i.e., cost per 1,000 impressions).
· Sponsored Content – Part of our strategy is to promote our website to serve as a resource for our targeted market segment and to serve as a forum where users can interact with each other. In order to achieve this goal, we will look to bring sponsored content, such as blogs or articles of interest to Moms. We will charge a fee to persons who wish to post content on our site. The fee will probably be based on a CPC pricing model.
· Data Analytics – We have created a detailed measurement plan to regularly track and collect site data and user interactions. We plan to leverage Google Analytics as the platform and tool by which we will collect and analyze this data. This plan focuses on the analyzing the number of unique visitors per month, page views per visit, visit duration, bounce rate, and defined user conversions. We will look to sell or license this data to third party marketers and other interested parties.
Our Growth Strategy
As is typical of affiliate marketing companies, our strategy is to build brand awareness using marketing strategies that focus on our target market. See “Sales and Marketing”, below. We believe that the growth of our business will be driven by a virtuous cycle that starts with what is best for our users. We believe that growth in our user base and user engagement will be a fundamental driver to the growth of our business, and we believe that there is a significant opportunity to develop a robust user base. Growth in our user base will drive more unique content, which in turn will drive the viral, organic promotion of content on and off our properties, thereby attracting more Platform Partners, Advertisers and even Data Partners. As we attract more users, the value proposition for Platform Partners and Advertisers increases, incentivizing them to develop unique and compelling content for our platform.
In addition to our Sales and Marketing strategy, our growth strategy includes the following:
· Add relevant and meaningful content to our website. We will expand our value proposition by adding editorial and sponsored content to www.momspot.com . This will most likely occur at first through the addition of a weblog or “Blog” section where individuals will write short articles (“Blog posts”) that are contextually relevant to our website. These may include consumer product reviews and recommendations, parenting tips, fashion and style trends, or discussions about popular culture. Initially, we will look to both syndicate articles and posts from partner content sites and use freelance writers to create exclusive content for Momspot. Eventually, we hope to build an in-house editorial team that will focus on publishing new content on the site on a weekly or daily basis.
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· Mobile Applications. We plan to develop mobile applications to increase our reach and make our service accessible to more users.
· Product Development. We plan to continue to build and acquire new technologies to develop and improve our products and services and make our platform more valuable and accessible to people around the world.
· Replicate the platform for other market segments. Once the initial Momspot site is complete and we have achieved a certain amount of success in acquiring user traffic and building our brand reputation, we intend to replicate the Momspot platform for different market segments (e.g., men, students, athletes, grandparents). The functionality and features of these new websites will essentially be comparable to the Momspot website, but we will create a new logo and brand identity, including color palette and UI style, that we feel will appeal to the particular new market segment we are targeting.
· Geographic expansion. Our initial focus for Momspot is the North American market. However, eventually, we hope to create cloned websites for other geographic markets ( e.g., Latin America, Asia, the Middle East and Europe). Content on these sites will be in the local language, and contain Platform Partners and Advertisers that are well known in the specific region.
· Expand into the physical realm. Once we have built Momspot into a well-recognized consumer brand, our hope is to leverage this brand equity and expand into the physical realm by creating “brick-and-mortar” “Momspots” that will be a combination of a café, day-care and retail store. The notion is to create a physical domain where Moms can go with their babies and/or children that offers them the following value-added services:
(i) An opportunity for Moms to meet and socialize in a relaxed and comfortable environment;
(ii) An opportunity for children to interact with other children their own age (i.e., play dates) under proper supervision; and
(iii) A retail destination where Moms can shop for themselves and their children (of all ages).
Acquisitions. We may also seek to acquire other businesses or assets that would enable us to expand our business. These acquisition opportunities may be in the same or complementary markets. We have neither identified any such acquisition opportunities nor can we predict the terms of any such acquisitions. We cannot assure you that we will be able to complete any acquisitions.
Sales and Marketing
As a start-up venture, sales and marketing is critical to our success. Acquisition of users, Platform Partners, and Advertisers requires significant resources, which is why we have made it such a significant part of our budget and one of the largest focuses of our business. Our marketing budget (approximately $60,000) is double our development budget (approximately $30,000) and represents the single largest allocation of funds. Our goal through marketing is to build our brand popularity and reputation that will translate into heavy user traffic and engagement, and ultimately traffic and sales for Platform Partners and Advertisers. To achieve this, Momspot has developed the following sales and marketing strategy:
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· Search Engine Marketing (SEM) – paying a search engine to display your ad when a user searches on specific keyword terms;
· Search Engine Optimization (SEO) – optimizing site code and content such that the site URL is ranked higher in a search engines organic search results;
· Paid advertising – paying websites or other media to display ads or sponsored content;
· Public relations – promoting our website through various popular media channels, including television, radio, magazines and online channels (e.g. blogs, online magazines);
· Strategic partnerships – entering into relationships with other enterprises that we believe will enhance our image, increase brand awareness or otherwise have a positive impact on our business;
· Event Sponsorships – attending or participating in trade shows and conventions and sponsoring various events that target the Mommy Market; and
· Viral marketing campaigns – a method of product promotion that relies on getting customers to market an idea, product or service on their own by telling their friends about the idea, product or service, usually via email or text.
With respect to acquiring Platform Partners and Advertisers, our principal strategy is to work through third parties that specialize in building affiliate networks, principally CJ Affiliate by Conversant (formerly known as “Commission Junction”), and to solicit Platform Partners and Advertisers directly. At the present time, we have approximately 20 Platform Partners, all of whom we acquired through CJ Affiliate by Conversant.
Competition
Our industry is evolving rapidly and is becoming increasingly competitive, and we cannot assure you that we will be able to compete effectively. See the sections titled “Risk Factors—If we are unable to compete effectively for users and advertiser spend, our business and operating results could be harmed” and “We will need to hire highly skilled personnel to grow and operate our business, and if we are unable to hire, retain and motivate our personnel, we may not be able to grow effectively.” We believe the principal barriers to entry are the following:
· acquiring a valuable domain name;
· building a user base and a robust affiliate network; and
· financial resources for sales and marketing.
We expect to face significant competition in all aspects of our business – for users, Platform Partners, Advertisers and also for personnel.
In general, the competitive landscape in which we operate is vast. Our competitors include traditional “brick and mortar” retailers, whether or not they have an online presence; online retailers, such as Amazon.com; and comparison shopping sites such as GoogleShop, Shopzilla and others. However, rather than view these enterprises as competitors, we prefer to treat them as potential Platform Partners. In our view, our real competitors are online comparison shopping sites that target the Mommy Market. We are aware of three such sites: www.weespring.com , www.theprowl.com and www.cricketscircle.com.
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Many of our competitors and potential competitors have greater financial resources, larger user bases and longer operating histories than we do. As a result, they have a significant competitive advantage over us when it comes to attracting users, Platform Partners, Advertisers and personnel. Our ability to compete effectively will ultimately depend on many factors, some of which may not be entirely within our control. These factors include usefulness, ease of use, performance and reliability of our website; the scope and quality of the products and services offered on our website; our ability to establish and maintain relationships with Platform Partners that integrate with our platform; and our reputation and the strength of our brand.
Notwithstanding the highly competitive environment in which we will operate, we believe we will be able to compete effectively based on the following:
· We own valuable internet real estate, technical capabilities and a unique and trademarked brand name that has the potential to become extremely popular, giving us the ability to target and attract this large and valuable market segment.
· Our curated content and unique features, including the ability to create one’s own customizable “Momspot,” will increase user engagement and product click rates. Advertisers will want to leverage these assets to help them market their products and services to this market segment.
· The functionality of the website will allow for better product searching, including paid search results that appear to be natural and organic leading to improved click-through rates. Natural/organic results have 10x the click-through rate compared to display ads. Additionally, our website will have unique functionality that allows users to solicit real-time product search/selection assistance from friends on Momspot or other social networks.
· Retailers and brands targeting this market number in the thousands, and include large multi-national companies. We intend to give these merchants a risk-free channel to market their products and services to this market, acquire new traffic and customers, and have their products viewed by a larger audience.
We believe that, ultimately, the growth of our business will be driven by a virtuous cycle that starts with what is best for our users. We believe that growth in our user base and user engagement will be a fundamental driver to the growth of our business, and we believe that there is a significant opportunity to develop a robust user base. Growth in our user base will drive more unique content, which in turn will drive the viral, organic promotion of content on and off our properties, thereby attracting more Platform Partners, Advertisers and even Data Partners. As we attract more users, the value proposition for Platform Partners, and Advertisers increases, incentivizing them to develop unique and compelling content for our platform.
In order to attract users, we will differentiate ourselves from other websites by focusing on the Mom, not just her babies or children. We will organize our merchandise and content according to what we believe the Mom will find informative and helpful. Our brand will emphasize this fact, and aims to be a sophisticated and fashionable shopping tool and social destination for Moms and Moms-to-be.
Ultimately, our success will depend, in part, on the scope and quality of products available through our website. Therefore, it is imperative that we build the right affiliate relationships. Our competition for Platform Partners will include other online and mobile affiliate marketing companies, as well as online retailers. Our strategy for building an affiliate network is to work through third parties that specialize in this area. To date, we have a 20 Platform Partners. We believe this number will grow rapidly once we launch our website and begin to generate traffic.
We will also face significant competition for Advertisers. Our competition for spending on advertising will include online and mobile businesses and traditional media outlets such as television, radio and print. We believe that our ability to compete effectively for advertiser spend depends upon many factors, including the size and composition of our user base; our ad targeting capabilities; the timing and market acceptance of our advertising services; our marketing and selling efforts; the return our Advertisers receive from our advertising services; and our reputation and the strength of our brand.
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As we grow and need to expand our work force, we may also experience significant competition for highly skilled personnel, including senior management, engineers, designers and product managers. Our growth strategy depends in part on our ability to retain our existing personnel and add additional highly skilled employees. Competition for highly skilled personnel is intense, particularly in the New York market, where we are located, and we compete for personnel against online and mobile businesses; other companies in the technology industry; and traditional media businesses such as television, radio and print. In addition, our ability to compete effectively for highly skilled personnel will depend on our ability to foster a work environment that encourages independence, creativity and innovation; opportunities to work on challenging, meaningful and important projects; the reputation and strength of our brand; and compensation.
Finally, and perhaps most importantly, we require significant financial resources to execute our sales and marketing strategy to attract users, Platform Partners and Advertisers. At the present time, we have a limited budget for sales and marketing. As soon as we launch our website, we plan to begin to explore our options for raising capital. Until such time, we will rely on strategies that do not involve significant expenditures such as activating our social media presence and user network.
Technology, Research and Development
We are in the process of developing a user-friendly website with many features and functionalities that will be of value to our users, as detailed below.
Site Features
The Momspot website focuses on the following features:
· Intuitive and simple product search: Curated content, including product content such as special promotions, and editorial content such as topical articles discussing Mom, children or general parenting issues, as well as other useful information.
· Multi-dimensional product filtering: Giving the user the ability to filter search results by many different criteria, including by price, brand, and retailer;
· Product specifications: Giving the user the ability to filter search results by many different criteria, including details of the selected product such as product description, price, product ratings and user reviews;
· Product and price comparison capability: A table showing the various merchants that sell a particular product, and the price for each merchant;
· Social integration: The ability to post and share products and reviews to social networks, including Facebook, Twitter and Pinterest;
· Customizable area (“My Momspot”): The ability to curate content that is “followable” by other users, and where users can build a community of users with whom they can share and recommend products and interact.
Design and development of the Momspot website will focus on four main sections. These areas are:
1. Momspot homepage and universal navigation;
2. Product search results and filtering;
3. Product details; and
4. My Momspot.
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“My Momspot”
The “My Momspot” section will be a place where users can customize content in order to highlight certain products they want to recommend and/or promote to their Momspot user community. Certain views of this section will be publicly viewable by all members of Momspot, and others will be viewable only to those members the user has granted access.
My Momspot will consist of six important sub-sections:
1. My Favorites: users are able to “like” products using buttons located on the product image, which are saved to the “My Favorites” area of the My Momspot;
2. Product Reviews: users are able to review and rate products, which are then saved to the “Reviews”;
3. Baby Registry: users are able to flag products for a baby registry, which are saved to their “Baby Registry” section of My Momspot;
4. Followers: users are able to see other users may be following them, access their public My Momspot, and select any of those users’ profiles in order to view the public section of that user’s My Momspot;
5. Following: users are able to see the other Momspot users they are following, and allow any of those users to view their public My Momspot;
6. User Profile: this will have two functions:
a. Create/Edit Profile: users are able to add personal information, including hometown, and age and gender of children; and
b. Manager Alerts and Emails: users are able to manage price alerts they may set, as well as the type of frequency of email they receive from Momspot.
Site Design & Development
The site design will have a clean and sleek look and feel, with stylish colors. The user interface will be simple and intuitive, with logical high-level product categorization and navigation. The site imagery will focus on the Mom, not her baby or children, and should dominate the screen space. Moms will be youthful looking and attractive. No sponsored promotions or display/banner ads will be located on the home page.
In terms of technical development, we have organized Momspot’s functionality into the following four areas:
1. Core:
· Merchandise database
· Merchandise data feed
· User database
· Product search
· Product filtering
· Product sort
· Detailed product view
· Product utilities (e.g. sharing, saving, emailing, etc.)
2. Administrative:
· Merchandise management system (MMS)
· Content management system (CMS)
· User analytics
3. Value-Added Commercial Services:
· Promotions/sponsored products
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· Sponsored content
· Display advertisements
4. Social:
· My Momspot
· Instant message/chat
Current Progress
Since July 2013, we have achieved the following milestones in connection with our business plan:
1. Hired three independent contractor consultants to focus on user experience (UX), website design and technical development;
2. Created Momspot logo and brand symbol;
3. Developed style guidelines to manage the visual identity of the brand;
4. Analyzed user experience and developed wireframes and functional requirements for key sections of the website;
5. Developed webpage mockups by applying the Momspot style and visual identity standards to the wireframes (i.e. skinning);
6. Developed full webpage comps (i.e., mock-ups of web pages) as a blueprint for technical development;
7. Begun analyzing data integration solutions between an affiliate network (CJ Affiliate by Conversant) and Momspot;
8. Begun inquiring with merchants regarding their affiliate programs and compiling merchant product data;
a. We presently have 22 merchant partners whose products are contained on the site
9. Completed early development of search and browsing technology;
10. Completed full version of the website for testing purposes; and
11. Published a temporary website to the URL www.momspot.com in November 2013, which allows users to get basic information about us and add their email address to our mailing list.
12. Conducted numerous focus group sessions to get user feedback and help shape functional requirements
13. Released the first live version of Momspot (v1.0) to www.momspot.com on March 1 , 2014
a. We are not promoting the current live site, but rather waiting till the release of the next version of the website with the newly designed homepage
b. Despite this, since release more than 1,000 users have visited the site, accruing more than 2,200 page views, clicking on 213 merchant products and conducting nine sales transactions
14. Began designing and developing a newly redesigned homepage and other site functionality, which is currently live in our staging environment
Our development team, comprised of our sole employee and outside consultants, has made good progress with product development, having completed a number of phases of site design and the development of the following areas of the website:
· Temporary public website
· Homepage
· User registration & login
· Universal navigation
· Merchant data integration
· Product search capability
· Product details
· Ability to review and rate products
· My Momspot area
o User profile
o Favorites view
o Registry view
o Follower/Following view
o Product Reviews view
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Intellectual Property
At the present time our only intellectual property consists of our name, which is trademarked, and we are the registered owner of the URL www.momspot.com . Over time, as our business matures we may develop processes, methodologies and/or technologies that we deem proprietary. We may seek to protect those rights through contractual arrangements such as confidentiality and non-disclosure agreements, assignment of invention agreements with employees and/or independent contractors, license agreements with vendors and platform partners, and/or through the filing of trademark and copyright registrations or patent applications. We cannot assure you that our efforts to protect our proprietary information and technology will be effective. We may be unable to obtain patent or trademark protection for our technologies and brands, and even if we do they may not provide us with competitive advantages or distinguish our products and services from those of our competitors. In addition, any patents and trademarks may be contested, circumvented or found unenforceable or invalid, and we may not be able to prevent third parties from infringing, diluting or otherwise violating them.
Many companies in the Internet, technology and media industries own large numbers of patents, copyrights, trademarks and trade secrets, and frequently enter into litigation based on allegations of infringement, misappropriation, or other violations of intellectual property or other rights. In addition, various “non-practicing entities” that own patents and other intellectual property rights often attempt to aggressively assert their rights in order to extract value from technology companies. We may, in the future, face allegations that we have infringed on or otherwise violated the patents, copyrights, trademarks, trade secrets, and other intellectual property rights of third parties, including our competitors and non-practicing entities. As we face increasing competition and as our business grows, we will likely face more intellectual property-related claims and litigation matters. For additional information, see the section titled “Risk Factors—We are currently, and expect to be in the future, party to intellectual property rights claims that are expensive and time consuming to defend, and, if resolved adversely, could have a significant impact on our business, financial condition or operating results.”
Government Regulation
We may be subject to a number of foreign and U.S. federal and state and laws and regulations that may involve matters central to our business. These laws and regulations may involve privacy, rights of publicity, data protection, content regulation, intellectual property, competition, consumer protection, taxation or other subjects. Many of these laws and regulations are still evolving and being tested in courts and could be interpreted in ways that could harm our business. In addition, the application and interpretation of these laws and regulations often are uncertain, particularly in the new and rapidly evolving industry in which we operate.
We may also subject to federal, state and foreign laws regarding privacy and the protection of user data. Foreign data protection, privacy, consumer protection, content regulation and other laws and regulations are often more restrictive than those in the United States. We may also be affected by a number of legislative proposals pending before the U.S. Congress, various state legislative bodies and foreign governments concerning data protection. For example, regulation relating to the 1995 European Union Data Protection Directive is currently being considered by European legislative bodies that may include more stringent operational requirements for entities processing personal information and significant penalties for non-compliance.
Employees
As of June 25, 2014, Atrinsic had no employees and Momspot had one full-time employee.
