Nightfly was launched in December 2000 with a remit to create an opt-in SMS database through signing up a target audience of 18 to 35 year-olds in venues, pubs and clubs.
Diageo supported the venture significantly in terms of PR and money.
Last year it invested £1million in expanding its consumer database (P&I, July/August 2002). Nightfly even broadened its offer to external clients including Haagen-Dazs Cafes, Debenhams, Asda, Tesco and Sainsbury's, and built up a 120,000-strong database.
Decisions on the use of mobile technology across Diageo brands will now be made by individual brand managers and will be outsourced to third-party SMS marketing firms. Nightfly's 15-strong team has been disbanded, though a spokeswoman could not confirm how many will leave the company.
"The market is fragmented and continues to grow. We felt Nightfly had reached a natural conclusion," she added.
The move is all the more surprising given that Nightfly recently made two changes to its senior management structure. Last October, it hired Andrew Wood from technology company Volantia to become its managing director; and in March, Nick Wiggin, appointed head of planning, was poached from Aerodeon, where he worked on the development of wireless marketing campaigns.