How this company is replacing TV ads

This week my travels have taken me to the epicentre of the UK's hottest new business hub Hoxton Square in Shoreditch.

I never imagined that this drab corner of old industrial east London would come into style. Now it's home to such luminaries as Tracey Emin and Damien Hirst.

There are bijou art galleries and wine bars on every corner and the pavements are crowded with arty types in angular sunglasses.

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Feeling like an insurance salesman at a rock festival, I venture into the offices of Oil Productions, which has nothing whatsoever to do with oil.

There I meet Mike Bennett, who founded the business along with Mark McKeown back in 1998.

He recently sold it in exchange for shares in AIM quoted Milestone Group (that's me with Milestone's chief executive Deborah White in the picture below).

TV ads don't work like they used to

Mike told me all about viral marketing. The problem faced by advertisers is that few of us bother to watch TV advertisements any more. This applies particularly to young people who watch far less TV than their parents. The young crowd look not just at the TV screen but also at their PC screen, their laptop screen, their Xbox screen and of course their mobile phone screen.

Oil seems to be pretty good at this. Mike showed me a campaign it had devised for Channel 4 in which youngsters were encouraged to take an interest in genetics through, amongst other things, an online game that involves infecting as many people as possible by sneezing all over them. Charming! A more recent campaign involving the page three model Keeley Hazell and aimed, surprise surprise, at teenage boys has proved to be an effective way of marketing deodorant.

Viral marketing seems to be the way of the future and Oil has never been so busy. But Milestone's boss Deborah White is thinking big. She thinks this type of online interaction can be applied elsewhere. As an example she told me about is football coaching.

How Milestone is the middle man between clients and young people

When it comes to coaching local youngsters, few clubs do it better than Charlton Athletic. But before a ball can be kicked in earnest the coach must first be CRB checked; have a first aid kit; and have the necessary insurance cover. All of this data must sent back to the club where no doubt it resides in files that are never looked at ever again.

Now, though, Charlton Athletic has decided to take this exchange of information a little further. In a project involving the club, the coaches and the local police, authorised participants can share information in a protected online environment on software provided by Milestone. Saracens Rugby Club is doing the same and with sports clubs keen to do their bit for 'the local community' other clubs could well follow.

Milestone is also helping the police reach out to young people. The Metropolitan Police's Hackney gangs intervention team has monthly meetings attended by no fewer than 32 'stakeholders'. This is cumbersome to say the least. But collaboration software provided by Milestone offers the chance for a regular flow of communication between these interested parties.

A third application Milestone's is targeting is the corporate whistle-blower, who could report corruption in a secure online environment that would meet the demands of the Bribery Act.

With a 0.73p share price and a stock market value of just £2m Milestone is a real minnow, but it is not short of ambition. Besides creating and selling the collaboration software, it believes that it should be able to charge fees, attract sponsorship and sell games to the participants. As befits a business nestling close to London's Silicon Roundabout, this all sounds very futuristic. It's a company and an industry to watch in 2012.

This article is taken from Tom Bulford's free twice-weekly small-cap investment email The Penny Sleuth. Sign up to The Penny Sleuth here.

Information in Penny Sleuth is for general information only and is not intended to be relied upon by individual readers in making (or not making) specific investment decisions. Penny Sleuth is an unregulated product published by MoneyWeek Ltd.