Tag Archives: Constant Contact

Constant Contact’s $1.1 B Sale to Endurance: Is There Synergy with Email and Hosting?

Constant Contact, the king of SMB email newsletters with 600,000 overall accounts, has been sold for $1.1 billion in cash to Endurance Holding Group, one of the largest web hosting, presence and domain companies with 4.5 million accounts and brands like HostGator and Domains.com.

The deal – which might be seen an SMB version of Salesforce’s $2.5 billion acquisition of ExactTarget in 2012– potentially represents a way to “save” Constant Contact, which is constantly under attack by marketing rivals. It also represents a way to add to Endurance’s average customer revenue, which currently runs about $10 or so a month (for hosting). CCI typically receives $20+ a month for its marketing services.

For CCI, the deal is the culmination of a multi-year effort that began with its founding in 1995; its IPO in 2007; and a more recent effort to provide comprehensive SMB marketing efforts. Indeed, its stock price fluctuations tell the story of a company that still depends on email in an age of email fatigue, spam and messaging; but remains the envy and target of every SMB marketer.

In fact, CCI has managed –with some success — to move its customers from one that is solely about email to a deeper relationship with extensions such as social media (Facebook ad management) events management, search, loyalty and other services. Via its costly, $65 million acquisition of Single Platform in 2012, it also added presence management, contact management and in some cases, larger customers.

None of the “new” services have been the home run that Constant Contact’s email services represent. But all of its efforts act on Constant Contact SVP Joel Hughes’ observation at BIA/Kelsey’s SMB event in Denver this September that “the two changes in SMB marketing are the advances in audience targeting, and the rise of native advertising.”

Can the two companies ultimately help each other? Endurance is not known as a deep integrator among the 40 companies it has acquired over the years, and its brand names don’t have high awareness outside of their customer base. In terms of brand awareness, it is no “Go Daddy.”

But its brands have deeply loyal customers like me (Local Onliner is hosted by Host Gator). Loyal and trusting customers may be more likely to buy enhanced services. It also has a reputation for low cost customer acquisition. This is a major plus, given that Constant Contact and its competitors in the SMB marketing space have a reputation for high cost customer acquisition.

For the two companies, it also seems like an easy merger. Both companies are headquartered in the Boston area, and already work together as marketing partners. Five percent of CCI’s new customers come from Endurance leads. Endurance says the combination will allow the two companies to reduce duplicated resources, saving millions of dollars a year. The current employee count is 2,500 for Endurance, and 1,400 for Constant Contact.

In our view, the CCI/Endurance combination gets it right in combining presence and marketing. Together, the two features represent the stickiest parts of the SMB marketing arena.

But the combination of Endurance and Constant Contact is going to have to fend off a lot of other players. Many of them will have a higher profile. In fact, extending the platform is the real quest for every company in the SMB space right now. Will email marketing and hosting turn out to be the right anchor for an SMB platform? Or will it be search? Or Deals and loyalty? The list goes on. In this case, timing and execution will be everything.

I like what Constant Contact co-founder and current PagePart CEO Randy Parker told me today – focus on the consolidation of this space. “It really is coming and there will be few companies acquiring the SMB,” said Parker. “The rest of us will just get ‘distributed’ through them.”

Constant Contact CEO Gail Goodman Keynoting at ILM East

Constant Contact Buys SinglePlatform for $65 Million

Constant Contact has made a really big bet on presence management with the acquisition today of SinglePlatform, a provider of a one stop “write once, read everywhere” presence management network that provides parsed searching capabilities and services for 600,000 SMBs, including 10,000 paying customers. The service also has valuable partnerships with a growing roster of major media players, including the New York Times, YP (formerly ATTi.com), FourSquare, UrbanSpoon, Trip Advisor, Tribune, Gannett and Village Voice Media.

It has shapedup to be a big week for presence management solutions, with Yext picking up $27 million from investors to build on its base of 50,000 SMBs. The investor group include Marker, a new fund, along with CrunchFund and existing Yext investors Sutter Hill Ventures, Institutional Venture Partners (IVP), and WGI Group. The new investment gives Yext a valuation of $270 Million.

Constant Contact is paying SinglePlatform $65 million in cash, $5 million in employment retention and has set aside another $30 million for earn outs. Single Platform, which is based in New York and has about 100 employees, had raised $4.45 Million from investors, including DFJ Gotham Ventures, New World Ventures, First Round Capital, RRE Ventures, and Seamless Founder Jason Finger. SinglePlatform Founder and CEO Wiley Cerilli becomes GM and VP.

While the acquisition of SinglePlatform is expensive, it certainly makes a nice extension for Constant Contact, which has been evolving from a company that initially provided email newsletter management for SMBs to a broader SMB promotions platform. It now services 500,000 paying SMBs, which are being eyed by everyone from scheduling companies to Yelp, each seeing that social alerts and tagging quickly becomes substitutes for email. But Constant Contact has now really gone on the offensive this year with a number of acquisitions and developments that have greatly diversified the company.

In a conference call this morning, Constant Contact CEO Gail Goodman said to get the full revenue earn out, the SinglePlatform team would need to bring in $74 million over the next two years.

Bookshelf: Constant Contact CEO Gail Goodman’s ‘Engagement Marketing’

Explaining the basics of local and social marketing to clients and prospects is a tough task for companies, who might come off as patronizing. Why not give them a book?

A couple of years ago, Yodle CEO Court Cunningham wrote Local Online Advertising for Dummies, which did a great job explaining local advertiser options. Now, Constant Contact CEO Gail Goodman has done the same for social media. Goodman calls it: “Engagement Marketing: How Small Business Wins in a Socially Connected World.

As industry analysts, we look to Goodman for all kinds of insights into SMBs at every level. This book is more geared towards the basics of the engagement marketing cycle — as a means of managing good word of mouth.

Goodman defines the cycle as providing the “Wow! Experience”; Enticing customers to stay in touch; and Engaging customers via social media. She emphasizes that SMBs really need to develop nuance when they are applying messaging via email, Facebook, Twitter, LinkedIn and G+. Each has different strengths.

While a lot of SMBs don’t think they really have much to say – a real problem in working with them for social media — Goodman provides insights into possible subjects, and case studies on how and when to apply social media techniques, including discussions, promotions, events, polls/surveys, shared information and news and announcements.

Constant Contact Founder Randy Parker: ‘Stop the Fragmentation, SMBs Can’t Cope’

The arrival of Groupon and Living Social four years ago appeared to be a no money down, fail-safe way to get ahold of small business accounts. But the followup hasn’t been easy, and the race to win SMB accounts is still anybody’s to win.

In fact, there is no single “disruptive” door into the marketplace , says Constant Contact Founder Randy Parker, who has been watching the transition of SMB marketing since 1995. Parker believes the richer opportunity is in SMB platforms that plug in “presence,” social and mobile opportunities from best-of-breed providers. He’s currently trying to do that with SMBApps, a startup that he’s been incubating for a couple of years.

What you have today is a bunch of SMB solutions that typically rank below aggregators such as Google, Yelp and Twitter on search pages, he says. SMBs, to their great consternation, have to work with each platform.

Where does the “feature creep” stop? he asks. Moreover, as it gets more and more complex, Parker fears that the vendors are overwhelming their customers. Meanwhile, the severe fragmentation in the space keeps driving the costs of merchant acquisition up.

Parker says the ideal solution manages three things: an SMB’s data (such as deals and menu items), the content side, such as blogs, social media and copy points), and visual presence. The best way to “future proof” the Web is to build a single Web presence with “pre-made building blocks” for social, email, click to call buttons, delivery tabs, promotional links and mapping.

What won’t work is the extension of new platform after new platform. All that does is result in under-performing and marginalized channels, he says. Take mobile, for instance. Mobile is extremely important, and results in 1 of 3 leads, he notes. But the people pushing dedicated mobile apps for SMBs instead of universal HTML pages are “in la la land. The typical SMB may get 35 installs of their app,” he says.

Parker appears at ILM East March 26-28 on the “Local Business Success” summary panel, along with Kudzu Founder Tom Bates and Schedulicity’s Dave Galvan. You can register here.