Aptimus Makes More Tweaks to Business Model

As questions persist about banner advertising — and lately, about some of the companies that serve them — long-overlooked email marketing has enjoyed something of a renaissance, thanks to its relatively high margins of return. Now, predicting a softness even in email marketing dollars, affiliate marketer Aptimus said it will retool its business to decrease a dependency on income from online direct marketing.

Aptimus earns most of its income from targeted email and banner ads attached to offers, hosted by the company’s affiliate partners. Now, however, executives from Seattle-based Aptimus said the bulk of the company’s revenue will be from lead generation.

“While we remain optimistic about the future of email marketing, which we believe is superior to traditional direct mail, we feel it is prudent in the short term to lower our projections for that revenue stream, given market dynamics, with lead generation through our network strategy as our main focus,” said Aptimus chairman and chief executive officer Tim Choate.

The new tweaks to Seattle-based Aptimus’ business just over a month after the firm changed its name from Freeshop, and kicked off the affiliate network portion of its business. The company said Wednesday’s additional changes would help it keep ahead of industry-wide woes.

The firm’s new financial model projects 85 percent of revenues from lead generation and 15 percent from its other marketing services, banner ads and email marketing. That’s a sizable change — original projections put email and marketing services’ revenues at 60 percent and lead generation at 40 percent, for 2001.

Aptimus executives said the revamped financial model should allow it to meet its original 2001 revenue estimates of $37 million, and would say only that it anticipated email marketing revenues to remain soft “for some time.”

The company reiterated projected operating profitability in the second half of 2001.

The firm’s new, CPA-heavy model will be dependent on a recent network infrastructure acquisition. Last week, the company closed its purchase of XMarkstheSpot.com, a pay-for-performance acquisition marketing technology firm, which Aptimus said will help it build out the back-end of its affiliate network.

“The network initially overwhelmed our preparations for it, forcing us to identify a network-oriented technology solution,” Choate said. “With the acquisition of XMarkstheSpot … we now have a technology platform to scale the network and our lead generation business more rapidly.”

“We strongly believe that the technology devised by XMarkstheSpot, combined with the opportunities engendered by Aptimus’ network strategy, will produce the scale we need to achieve significant revenue growth in lead generation for 2001,” Choate added.

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