ProspectivDirect, Responsys, Aprimo, ExactTarget, and Silverpop potential targets for in market consolidation, industry executives say28 August 2006

Email marketing companies are likely to be snapped up by database marketers, off line media, and direct marketers, industry executives say. Companies like ProspectivDirect, Responsys, Aprimo, ExactTarget, and Silverpop could be next on the shopping lists of PE and media companies, they said.
The trend started with the acquisition of DoubleClick, Digital Impact, BigFoot Interactive, and CheetahMail, according to E-Dialog CEO John Rizzi. Traffix VP Dan Levine predicted a lot of consolidation, as companies with market caps below USD 100m and revenue under USD 10m merge in order to compete.
With each acquisition, valuations have risen, as there are significant capital and technology barriers to entry in the email advertising space, Rizzi said. Marketers generally do not have the legal and technical expertise to do email advertising in house, and doing so would be costly for mid-size companies V-Trenz CEO Brian Gramer said. Independent, small-scale email advertising companies are becoming rare, he explained.
Responsys, a California-based email advertising company will consider offers of over five times its annual revenue, or USD 100m, said CEO Dan Springer. Responsys expects roughly USD 20m in revenue and is privately held. Such a price is not unusual, and companies in this space sell for 2 times revenue up to 6 or 7 times revenue, Aprimo marketing director Michael Emerson said. Responsys was approached by Harte Hanks before it Harte Hanks bought Postfuture, Springer said.
Harte-Hanks refused to comment on previous talks with Responsys.
Responsys would most likely be acquired by a company that provides comprehensive advertising and customer relationship systems, such as Salesforce.com and Unica, rather than another email advertising company, Springer said. Salesforce.com is a public, California-based company with over USD 300m in revenue and a partner of Responsys. Unica is Massachussetts-based marketing company with approximately USD 60m in revenue.
Salesforce.com refused to comment on a possible acquisition. Unica executives were not available for comment.
ProspectivDirect CEO Jerry Doyle said he gets several calls a week from private equity firms. The company could be a good fit for someone who lacked expertise in building house lists, Doyle said. House lists are used to target potential clients for email.
E-Dialog CEO John Rizzi said he is not going to sell at this time, because he expects valuations to rise.
Will Weaver, co-founder of Emma, a privately-held Nashville, Tennessee based e-mail marketing company, said he has not been approached yet, but added that his company could “definitely” have synergies with a larger advertising agency.
eWayDirect, a private, Connecticut based email advertising company is not looking to sell, CEO Neil Rosen said. Rosen said the company may look at making acquisitions in areas such as RSS and pod-casting next year. Rosen said companies such as InfoUsa, Harte Hanks and Direct Media have interest in the space, as they look to build a stronger online presence.
Aprimo marketing director Michael Emerson said he would not comment on Aprimo’s acquisitions, but said marketing companies like Aprimo are looking to grow in the email advertising space.
Traffix is an interactive media marketing company, and distinguishes itself from “spam” because their email recipients sign up on their content-based websites. Traffix VP Dan Levine said Traffix is looking to acquire. Traffix is less interested in competitors like Aptimus, Prime Q, Valueclick and Martex who do not own their own media. Aptimus had too high of an evaluation at this point, Levine added.

by Homa Zaryouni, Kevin Nafziger, and Erin Griffith

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