Alright guys, as promised to you, we've got our second of three great small cap ideas being unveiled today. The consumer technology sector is back. There's no two ways about it. It's not like it used to be, however, when hardware ruled all. The 'new' technology sector is defined most and best by mobile marketing, social media, and cloud computing. Of the three though, mobile marketing is going to serve up the biggest investment opportunities. The numbers are just nuts. 'Mobile' is Proving to be Recession Proof Yeah, you and I could argue that excessive unemployment and a shell-shocked consumer are reasons for consumer technology spending to be stifled, but the evidence definitely says otherwise. Take for instance the fact that more than 100 million iPhones have been sold since being introduced in 2007. Chew on the fact that more than 15 million iPads have been sold in just a few months after their debut. Google has activated more than 130 million Android-powered smartphones and tablets. By 2014, the total number of smartphones in use is expected to be 1.7 billion..... yes, 1/4 of the world's population will be using a smartphone within three years. The numbers are insane, but I don't doubt the projections for one minute - smartphones and other mobile devices ARE selling like crazy already. Now, do you know what those 1.7 billion smartphone users represent? A very specific, highly-stratifiable, self-selected group of consumers that LOVE to get the most out of their mobile device. It's an advertiser's dream. That's where our new Featured Stock CommerceTel Corporation (OTC:MFON) comes in. It's the company best-positioned to directly connect advertisers with their consumers in a way that's cost-effective and not complicated (one of the stumbling blocks of mobile advertising up until this point). Oh, and here's the cool part about MFON... it's already generating revenue. It's also been cranking up the top line for several quarters now, putting it head and shoulders above a bunch of other names in the same space. Mobile Marketing Hitting Its Stride You guys know the drill here. I'm not going to rant and rave about MFON in this newsletter. I'm just going to hit some highlights and refer you to other research on the site so you can finish up your due diligence and make a decision. Here's some food for thought though. Mobile-advertising - the specific art of getting a smartphone user to take some sort of revenue-bearing action - is now where online advertising was in 2000, when broadband became the norm and web-surfing was fast enough to become a form of entertainment. Of course, where eyeballs were, advertisers soon followed. That's why stocks like DoubleClick went ballistic in the early 2000's (with DCLK subsequently bought by Google in 2007 for $3.1 billion, even though DoubleClick had generated less than $200 million in sales a year earlier). There is a stark difference between online-advertising in the early 2000's and mobile-advertising in the early 2010's though. In 2004 when online ads were 'big business', the industry was worth $9.4 billion. Last year, local digital advertising generated $21.7 billion in revenue (and was much less organized than online marketing was in 2004). By 2015, the local digital advertising industry will generate more than $40 billion in revenue. How's it going to happen? Like I said, it already is. Mobile-device web connections are growing eight times faster than PC-based web connections did just a few years ago. Point being, if you thought the online ad business exploded a few years ago and paid off big for investors, you ain't seen nothin' yet. CommerceTel's the Real Deal There are a handful of competitors to CommerceTel that make sense to use for comparative purposes. Velti Plc (NASDAQ:VELT) is one of them. Just a little background on VELT.... it started (in earnest) in 2007, the year it drove $16 million in sales, which was also the year mobile marketing was identified as an industry in itself. Since then, the top line has been pumped up to 2010's $116 million. That's more than a 600% increase. Here's the thing: it was largely allowed to happen because few other players were standing in its way. Then CommerceTel steps in. It essentially performs the same function Velti Plc does. But, it does it better, if its client list is any indication. Last year, 825 ad agencies and brands used the Velti platform. CommerceTel, on the other hand, has 1500 clients, and counting. Its client list includes some big names too, like CNN, Verizon, McDonald's, the Miami Dolphins, and more. Those organizations aren't going to mess around with any company that can't deliver the goods. So, let's put two and two (and two) together here. A Reasonable CommerceTel Valuation Model We know VELT is currently valued at $524 million, or 4.5 times its sales. We know that it's been able to penetrate the mobile ad market because nobody has stood in its way, growing revenue by 600% in just three years. We further know that CommerceTel knows what it's doing too. And, we know that the local digital advertising market is going to double in value - to $40 billion - by 2015. There's no way of knowing exactly how much market share CommerceTel can steal from Velti, but with those dynamics and MFON's product, this is a multi-million dollar opportunity for the organization. Let's just say the company is able to produce $20 million in annual revs - a conservative estimate given what we've seen here, but let's just go with it. At only four times the top line, that's still $80 million, or 2.5 times the current share price; that puts the stock up from $1.25 per share to more than $3.00. Yeah, it's just a hypothetical, but not an unreasonable one when compared to VELT. In fact, it's probably a little too conservative when comparing it to Velti. There's really no reason MFON couldn't become as big a Velti is now, which could push the stock price up to more than $20.00 given Velti's current valuation. Anything's possible. Top Three Reasons to Own MFON So with that, I'll wrap things up with my top three reasons you might want to own CommerceTel in the rapidly growing sector of mobile marketing. Fortunately, some of the other contributors at the site have fleshed out the details for my three reasons. Sales and margin growth have already been phenomenal. Q3's top line was 231% better than the yoy comparison, and Q4's growth should be just as impressive. It's all about recurring revenue growth, which is all about client retention. The company may well be an acquisition candidate. (The folks at CommerceTel have in no way even alluded to this possibility, but James Brumley makes a couple of good points about the premise.) CommerceTel 'gets' that PC advertising and mobile advertising aren't the same thing - for a lot of reasons - and can't be treated the same. Here's why they're doing so well with this niche. If you want to start with the bird's eye view though, here's the detailed analysis of the company, complete with a description of how and why it does what it does; the printable PDF version is right here. And as always, you can see everything we've got about MFON at its StockHQ page. That's it. The only thing I'll add is that trading's been pretty thin up until this point. So, I'd use a moderate limit and exercise a decent amount of patience if you're diving in. Of course I said the same thing about AtheroNova on Thursday morning, and liquidity ended up being a non-issue and the stock soared 45% right out of the gate over the next two days. So, newcomers may not want to play it too tight. You know how to work it.