Along with its quarterly earnings call today, Vocus announced that it had acquired email marketing software provider iContact for $169 Million cash and stock.
Screenshot of iContact home page announcing acquisition (above)
Entrepreneurs and small business managers may be most familiar with Vocus through its PRWeb product. PRWeb seems to be on every short list of press release distribution services for small businesses. However, Vocus serves larger corporations, too, with its public relations products.
In October 2011 Vocus added a marketing suite for SMBs. The cloud-based marketing suite provides a combination of social media monitoring, publicity monitoring, and a Facebook app/landing page creation tool.
With this acquisition of iContact, Vocus is now adding into the mix the ability to offer email marketing services. iContact has a customer base of 70,000 small and mid-sized businesses, according to Rick Rudman, CEO of Vocus (although it wasn’t clear how many of those may overlap with already existing customers of PRWeb and other Vocus products).
Vocus’s goal is to provide an all-in-one suite — presumably with less of a learning curve. In a video interview accompanying the press release, Rudman said that small business owners and marketers “just do not have the time to go out and learn 5 or 6 different packages.”
Rudman went on to say that Vocus will continue to support the iContact product and will have the same iContact support team in place.
iContact was founded in 2003 by Ryan Allis and Aaron Houghton while they were students at University of North Carolina. Under the terms of the deal, which closed on February 24, 2012, Vocus acquired iContact for approximately $91 million of cash, $9 million of common stock and $79 million of redeemable convertible preferred stock, aggregating $169 million of total consideration, net of $10 million cash acquired.
That’s a large acquisition for a company the size of Vocus. Vocus trades on the NASDAQ, and as such its financials are reported publicly. Reported annual revenue for Vocus was roughly $115 Million for 2011, an increase of 19% over 2010. However, the company lost $4.2 Million (on a GAAP basis) for the year 2011.
There’s been a lot of acquisition activity over the past year among companies that provide marketing services to small businesses. In particular, we’ve seen a big push to combine email marketing, CRM and social media marketing tools. It’s still a highly fragmented marketplace with so many tools it will make your head spin — if you can even understand what they all do … or don’t do. Some consolidation and integration is not only to be expected, but in the long run will be a good thing. Having fewer companies and better integrated products will drive out inefficiencies from the daily marketing activities of small businesses, and make small businesses like ours more effective.