Constant Contact, the leader among e-mail marketing services for small businesses with 120,000 customers mailing out 500 million e-mails a year, has filed for an IPO. In the S1, the company says it is looking to expand its services beyond e-mail to include survey solutions and upgrades, such as logos and archive access (a May profile of the company is here).
Currently, customers pay $15 to $150 per month, with the average customer paying $32. Two-thirds of its customers have fewer than 10 employees. The company has marketing relationships with 1,700 active channel partners, including Network Solutions, American Express and VistaPrint.
Unpaid sources of customer acquisition account for 45 percent of new customers. They include customer referrals and the inclusion of a link to its Web site in the footer of e-mails.
Primary competitors include Vertical Response, CoolerEmail, Broadwick Corp. (iContact, formerly Intellicontact), Emma, Got Corp. (Campaigner), Lyris Technologies, and Topica, as well as the in-house information technology capabilities of prospective customers.
In the future, the company says it may experience competition from Internet service providers, advertising and direct marketing agencies, and other large established businesses, such as Microsoft, Google or Yahoo!, possessing large, existing customer bases, substantial financial resources and established distribution channels. In addition, one or more of these ISPs or other businesses could decide to offer a competitive e-mail marketing solution “at no cost or low cost in order to generate revenue as part of a larger product offering.”
The 275-employee company’s revenues in 2006 were $27.6 million – a boost of 88 percent from the previous year. The increase resulted from a 93 percent rise in the number of average monthly e-mail marketing customers partially offset by a slight decrease in average revenue per customer.
Constant Contact had a net loss of $7.8 million. The company has never actually turned a profit, and its accumulated deficit is $37.2 million.