E-Mailers: You've Got Search. Search Firms: You've Got E-Mail

  |  June 15, 2004   |  Comments

As search firms like Mamma.com move to integrate e-mail into their offerings, e-mail service providers are likewise integrating search.

Meta-search engine just-announced Mamma.com's acquisition of email marketing company Digital Arrow marks a new trend in the service arena: the addition of email to search firms' products, and the integration of search into email firms' offerings.

Other examples include Gmail, Google's free, ad-supported email service, currently in beta, and Microsoft's well-known search aspirations. As for email providers, DoubleClick, the largest provider of online ad technology, struck a deal in May to acquire search engine firm Performics. And major ESP Digital Impact made its plans to offer search marketing technology and services known at its April earnings conference call.

Search firms can benefit from email marketing for a variety of reasons. For Gmail, it's another way to utilize contextually targeted ads, albeit a controversial one.

For Mamma.com, the move made sense because it's a way for the company to offer one-stop shopping, according to CEO Guy Faure. The company already operates a meta-search engine, a paid search listings network, and a pay-per-click ad network. Adding Digital Arrow completes the picture, according to Faure.

"We did this because these are the three most important marketing channels and we wanted to offer them all," said Faure. Mamma.com chose privately owned Digital Arrow, with its $2.3 million in annual revenue, as a way of getting started in the search market, Faure said. The cost of the acquisition was $1,050,000, and the issuance of 90,000 common shares of Mamma.com. Faure said the company is also examining the possibility of using contextual ads in email. "We've kept somewhat shy of contextual advertising because it can create problems," he said. "We're trying to do it in a well thought-out way."

As to why an email company might choose to move into search, the reasons are clear, according to Fredrick Marckini, CEO of iProspect.

"Search engine marketing is now at the top of the pyramid of an online marketing campaign, where email once sat," said Marckini.

"The email marketers have attained some scale and cash reserves. They want to extend into that marketing arena where right now all the cash is flowing. I think they recognize the marketing mix is unlikely to change for some time, and if they want to remain competitive they need to acquire, to get into search marketing," he opined. The head of a leading ESP has his own explanation of the synergy between the two channels, and why it might be to a firm's benefit to offer both.

"Search is an acquisition tool. E-mail is a retention tool," said Al DiGuido, CEO of Bigfoot Interactive.

But DiGuido said his company will continue to focus on email services and has no plans to move into the search space.

"Both strategies are good. And both can yield fruit," said Marckini of companies that go both ways.

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