Marketfish Raises Cash from Alliance of Angels, Looks to Elbow List Brokers Out of Lead-Gen Space

8/26/09Follow @gthuang

[Updated Aug 27, 11pm PT, with clarification about the list marketing and lead-gen process (see below)]

A stealthy Seattle startup in online marketing is starting to generate some buzz around town. Marketfish, which recently moved into new offices in Pioneer Square, has raised an undisclosed sum from private investors, led by Seattle-based Alliance of Angels and including Bellevue, WA-based Atlas Accelerator. Now it is aggressively putting the money to work, scoring a lot of new customers and hiring staff as it gears up for a beta launch of its Web service early next month.

Marketfish is led by founder and CEO Dave Scott, who was previously chief marketing officer at Seattle-based Entellium, the company that imploded last year in an accounting scandal (which was blamed on executives who were above Scott’s pay grade). Before that, Scott was head of marketing at Intermec and PeopleSoft. In his first media interview about Marketfish, he declined to say how much funding the startup has received, but said, “We think we’ve raised enough to get to break-even.”

Scott founded the company in July of last year. He initially tried to raise money in October, but was unsuccessful. “I liquidated my 401(k), sold my car, and buckled down for six to nine months,” he says.

Here’s the problem Marketfish is solving. Say you’re a big company like Dell, and you want to market yourself to small business owners. Today, as the head of marketing, you’d go out and rent a list of potential customers from Forbes, Fortune, or Inc., say, and get a list broker to represent you. They call all the list managers, at firms like Worldata or InfoUSA, and negotiate a deal. It’s all part of list marketing—using a third-party permission-based list to launch lead-generation campaigns. “The process today is extremely painful,” Scott says. “It’s really hard to measure, and it’s all manual.” He adds that the whole process can take something like 24 days, and is done over the phone. [See Scott's clarification of the process in comments section below---Eds.]

Marketfish is trying to automate all that by creating a Web platform, similar to Google AdWords, that could potentially cut the time down from 24 days to 30 minutes—and make it much easier to measure the performance of an ad campaign. It does this by providing a patent-pending Web interface where marketing agencies can work directly with list owners. “We’re trying to create a marketplace,” Scott says. “We want to create trust between the two.”

Using the Marketfish site, a marketer can directly find the lists he or she wants online, add them to a shopping cart, and be done with it. Marketfish takes a percentage cut of the revenue from each transaction (which Scott didn’t disclose). Scott says the company already has 30 customers—with 20 more on the waiting list—including 19 of the top 20 marketing agencies in the Seattle area.

Previous companies like NextMark and min (Marketing Information Network) tried various approaches in the pre-Google days, Scott says, but they largely failed to solve the list marketing problem. “They wanted to play nice with all the middlemen. We’re going to cut them out,” he says. “It’s a bold strategy.”

The company has some heavy hitters on its board of advisors, including Clark Kokich, chairman of Seattle-based Razorfish (recently sold to Publicis), startup advisor Janis Machala of UW TechTransfer, and Mike Crill of Atlas Accelerator. Scott says Marketfish is looking to form a partnership with a big company like Google, Microsoft, or Yahoo—none of which has developed a platform to solve this particular online marketing problem (at least not yet).

Scott says Marketfish currently has seven employees, and is looking to hire five more in the next six months or so—everyone from Java software developers to experts in direct marketing and lead-generation marketing. Even while planning to ramp up spending, he notes, “We’re on our path to break-even.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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  • http://www.xconomy.com/author/ghuang/ Gregory T. Huang

    NextMark president Joseph Pych wrote in to say, “Just wanted to clarify that NextMark has not ‘largely failed’. In fact, we are doing quite well with our ‘playing nice’ strategy. NextMark acquired Marketing Information Network last year and has continued to deliver innovative services to the marketplace.”

  • http://www.NextMark.com Joe Pych / NextMark

    It’s nice that NextMark is recognized as the technology leader, but felt compelled to respond further through our blog: Marketfish aims to put List Brokers and List Managers out of business.

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  • http://www.lakegroupmedia.com Kathy Stivaletti

    Dave Scott clearly doesn’t even understand the industry he is planning to cut out. He states above that as a mailer, first you go and rent the lists you are interested in and then you get a list broker to represent you. That’s what I would call bassackwards.

    Ridiculous that someone with so little knowledge of the relationship that is developed between mailer and broker from day one could make such statements. And, further, attempt to build a business around trying to destroy it.

    In my twenty years being a list broker, I have developed several campaigns for Dell and many other top tier mailers. Most do not begin a discussion with a list of lists they wanted to rent. Rather, together we look at the myriad of lists that are available within their market and hone in on the best lists for that particular campaign.

    Choices are made based on response analysis tools, indepth review of available lists and current budget just to name a few things. It doesn’t seem to me that any of these decisions can be made in a shopping cart. Most importantly, each mailer hires a list broker based on the skill set that matches their needs and then they work together to build a solid mail plan.

    I would like to see a side by side test of the Marketfish product versus those chosen by a reputable list broker. As a direct marketer, I will trust the results of the campaign as that is what rules the direct marketing industry. Not buying lists from a shopping cart.

  • http://www.xconomy.com/author/ghuang/ Gregory T. Huang

    The article’s description of list marketing was my interpretation of how Dave Scott described it. Scott clarifies the process as follows:

    “– Dell wants to launch a lead generation campaign

    – Dell can’t source the marketing lists themselves

    – Dell has to hire a list broker who sources it for them

    – That list broker does the research, makes the calls, and secures the list.

    – That process is what times up to 24 days to do

    It’s the back and forth between the advertiser, list broker, list manager and list owner that is the problem. Our technology streamlines the process and brings it down to 30 minutes through automation.”

  • http://www.NextMark.com Joe Pych / NextMark

    Dave Scott makes at least two false assuptions: (1) “Dell can’t source the marketing lists themselves” and (2) “Dell has to hire a list broker who sources it for them”.

    Not true.

    Dell or anyone else can source the marketing lists themselves. Nobody is forced to go through a list broker.

    However, many choose to utilize the services of a list broker because they bring experience and advice that enables better mailing list purchasing decisions. This, in turn, leads to better ROI on your marketing campaign.

    Best of all, the services of a list broker are free.

    Why would you do it yourself and risk blowing your marketing campaign when you can get professional advice and help for free? That’s why firms like Dell choose to hire list brokers.

    For more information on this topic, read the article Four Simple Rules for Better Mailing Lists.

    Finally, Dave Scott is right in pointing out that the speed at which the mailing list purchasing process traditionally operates is a problem. It’s not 24 days as he states, but it’s certainly not “internet speed” as you would reasonably expect these days. NextMark is solving this problem in cooperation with the industry. This “play nice” strategy gives you the best of both worlds – speed and intelligence.

  • http://www.act1lists.com Steven Cushinsky

    I’ve been list broker for more than 23 years. The experience, knowledge and service we veteran list brokers provide to companies like Dell is extremely valuable. Marketfish may work with someone who wants to rent general business or consumer compiled data, which many companies including ours already makes available online 24/7/365, and make their payments via a shopping cart but I highly doubt this would ever come to fruition with most other lists out there. The savvy, larger, mailers certainly know better. It’s almost like saying they should be able to fix their own automobiles when they break down – need a mechanic, hire a mechanic!

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