GSI Commerce Makes a Digital Splash with Hire of Denuo’s Pahade, e-Dialog Acquisition

If you’ve never heard of GSI Commerce, you’re not alone. The King of Prussia, Penn.-based e-commerce and marketing technology specialist has conducted only limited forays into digital channels. But two moves made public yesterday signaled an accelerated interest in Web marketing.

First, the company sealed a deal to acquire e-mail marketing firm e-Dialog for $157 million, adding a digital direct marketing capability to its existing search, site development, and affiliate marketing holdings. Second, GSI has hired Nick Pahade, president of Publicis’ all-star digital consultancy Denuo, to head up its marketing practice.

“It was time for me to go back and be an entrepreneur again,” said Pahade when reached by phone yesterday.

He declined to elaborate on the specifics of GSI’s expansion plans but suggested the company could be grouped with the growing field of new digital marketing services providers. These firms — call them baby aQuantives — are expanding their expertise largely through acquisitions in multiple digital channels such as search and e-mail marketing. Others in this group include Zeta Interactive and PV Media, which recently acquired ad network AdOn and search agency Prime Visibility.

Fiona Dia, GSI’s executive VP of partner strategy and marketing, confirmed the company intends to expand these and other areas through acquisition. “We will make acquisitions in the online marketing space to supplement and complement our capabilities,” she said. “e-Dialog was our first, and we expect to make more.”

GSI said its acquisition of e-Dialog will help its e-commerce clients drive revenue by better aligning e-mail offers with customers’ browsing and transactional behavior. The purchase also strengthens the firm’s presence in Europe, where e-Dialog has offices in London.

GSI formed its interactive division approximately 18 months ago. While that’s not recent in Internet time, growth of digital initiatives is a high priority in 2008, executives say.

“We took another important step toward achieving our goal of building GSI into a leading global provider of e-commerce and multi-channel services,” said Michael Conn, CFO for GSI Commerce, during a conference call discussing the e-Dialog buy. “Marketing services has been a key focus of our merging growth initiatives and e-mail marketing in particular is very attractive.”

E-Dialog’s staff, offices and brand will remain intact. The acquisition is expected to close within 30 days.

Pahade remains with Denuo through January, and will begin with GSI in a few weeks. A Denuo spokesperson said the agency is still sorting out succession plans in advance of his departure.

Matthew Nelson contributed reporting.

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