Like Archimedes, John Winn was in the bath when his big idea hit him. It was November 2000, and Mr. Winn was earning a Ph.D. in artificial intelligence at CambridgeUniversity. Lying in the tub, he thought about the near ubiquity of mobile phones. He thought about the Internet. And then his vision struck: the whole world as one giant Internet portal.

Every object on the planet, from trees to washing machines, would be a kind of hyperlink accessed through the keypad of a mobile phone. When he emerged from the bath, he couldn’t wait to tell three friends from Cambridge the idea. When they heard it, they couldn’t wait to quit their jobs and turn the idea into money.

The four friends founded Hypertag in 2001. Based on technology devised by Mr. Winn, Hypertag’s chief product is not quite the Borgesian dream he conceived in the tub, but it does tap into a market for outdoor advertising worth $3 billion in the United States and $1.1 billion in the United Kingdom.

Aiming at that market, Mr. Winn, who is no longer with the company, invented a technology that allows cell phone users to point their phones at a tag and download information, using Bluetooth or infrared. But unlike billboards and posters, Hypertags allow advertisers to know how many “clicks” they get, or how many people download the information, says Hypertag co-director Jonathan Morgan. The technology also “massively improves the impact of poster advertising” because it gets consumers’ attention, and keeps it longer, he says. “They are interacting with that company every time they look at that screensaver or hear that ring tone,” says Mr. Morgan.

Hypertag launched its first campaign in July 2003, with Nintendo. Since then, its tags have gotten attention in the U.K., with customers such as O2, Vodafone, Nokia, Hewlett-Packard, and Proctor & Gamble. In December, the company put posters about night safety in the London subway, with tags that beamed a hotline number with further information. And in March, Hypertag got its first retail marketing campaign, for Warner Brothers Records, offering fans free song clips, ring tones, and photos for the New Order album Waiting for the Sirens’ Call.

The idea also caught the attention of venture capitalists. Hypertag has raised debt financing and closed three funding rounds for an undisclosed total. Investors include the U.K.’s National Endowment for Science, Technology, and the Arts; the Federated Trust; and the Cambridge University Fund. The company has been profitable for the last few months, and expects to post a profit in the next fiscal year, which begins in August, says Rachel Harker, co-founder and sales and marketing director at Hypertag. While the private company doesn’t disclose revenues, Mr. Morgan says they were in the six figures last year, and he forecasts that they will be a much larger six-figure amount this year.

Tagging the Competition

Hypertag uses short-range wireless technology to transmit content such as images, ring tones, or games to mobile phones. A tag is placed in a poster, or worn on a field marketer’s sash, and cell phone users activate their infrared or Bluetooth connections, then point the phone at the tag to download content. The tag recognizes more than 2,300 different phones, and sends matching material. Phones with smaller screens get smaller images, color screens get color images, and the transfer rates match the phones’ capability.

The content is also delivered directly to the phones from the tags, bypassing the network, so no precious minutes are used. And because users need to maintain a line-of-sight connection to the tag for several seconds, there are no accidental downloads. The tags record the number of interactions, and the types of phones that are used, but don’t record any personal information about the consumer. The cost varies depending on the content, but is comparable with other premium advertising, says Mr. Morgan.

Mr. Winn wasn’t the only one with big ideas. Several other companies have similar products, including WideRay in San Francisco, Kameleon Mobile Technologies in Paris, and BlueCasting in London. And Paul Jackson, a principal analyst at Forrester Research, says Hypertag’s technology “isn’t that innovative”—but he considers that a key advantage, because it can support most mobile phones. Ms. Harker says Hypertag supports more cell phones than any competitor, and calls this “the crucial difference.”

To keep the phone database updated, employees survey the market constantly, and Hypertag uses relationships with phone manufacturers to stay ahead of the game. Working with both Bluetooth and infrared expands their effectiveness, as about 70 percent of phones have infrared, and about 20 percent have Bluetooth, says Mr. Morgan. And unlike some competitors, Hypertag users don’t need to download a program before using the tags, says Ms. Harker.

Mr. Jackson says Hypertag also has the advantage of experience and a good range of clients, and has come in at the beginning of a “largely untapped” marketing opportunity that will become “irresistible to marketers.” But he says some competing technologies are cheaper. And, because Hypertag doesn’t route users through a service, it can’t gather much information about the handset owners, he says.

Hypertag will need to focus on good ad placement and execution, and the company’s success will ultimately depend on advertisers’ returns, compared with their costs, says Mr. Jackson. He adds that Hypertag will also need mobile operator cooperation, since its device is “offline,” and will need to convince advertisers that Hypertags can reach beyond mobile geeks into the mass market. Hypertag will also have to keep up with growth, and Ms. Harker says managing that could be the 11-employee company’s biggest challenge.

Thinking Inside the Building

While Hypertags may never become as prevalent as in Mr. Winn’s bath-time vision, the applications keep expanding.

One of the latest new developments is Hypertag’s first revenue-generating advertising campaign, launched in August. Mforma, a game publisher in Bellevue, Washington, will put Hypertags in a U.K. airport to let people download a trial version of a game, and then have the option to buy the full version directly from the trial. Hypertag is seeing major interest from retail advertisers, and wants to expand further into that market, says Mr. Morgan.

Hypertags can also be found in three British museums: the FitzwilliamMuseum, at CambridgeUniversity; the British National Space Centre, in London; and At Bristol, in Bristol. The Fitzwilliam is still fundraising for the program, but plans to take its Hypertag system—called eGuides—live in the fall, says Margaret Greeves, assistant director of central services at the Fitzwilliam. Instead of ads, Hypertags will be put on signs about the displays and collections, and the museum will rent PDAs out to visitors.

Hypertag is also expanding geographically. In the last five months, the company has expanded to Australia, South Africa, France, Spain, and Ireland, and it plans to expand into Canada and the U.S. in the next year, says Mr. Morgan.

If this growth rate continues, and if Hypertag can lower its prices enough, the rest of the world might not be far behind.