While the overall consumer economy continues to struggle, we have found resilient performance in branded response marketing. Revenues for Syndero , AccountNow , Advanced Payment Solutions and Zeo , four branded response Trident portfolio companies, are in aggregate up almost 60% year over year for the first half of 2009 and are expected to continue their aggressive growth in the second half.
Branded response (for some additional discussion see here) is an evolution in the concept of direct response marketing . Similar to direct response, branded response focuses on marketing efforts that drive specific, and quantifiable actions from the target customer. In this way the marketer is able to evaluate the effectiveness of the marketing dollars spent. In addition, through branded response the marketer can simultaneously formulate and execute a brand strategy. If executed well, a branded response campaign can quickly create a large, loyal base of customers that generate recurring revenues and brand equity.
AccountNow, a Trident portfolio company since 2007, has successfully built its business leveraging branded response. The Company offers consumers a prepaid debit card that effectively acts as a virtual bank account, allowing consumers to deposit checks and get access to cash without using expensive check cashing services. While the company builds its customer base primarily through online channels, it is important that it is viewed as a strong financial institution that its members can trust. This trust is centered around the AccountNow brand. The customer’s positive association with this brand increases usage of the product, which, in turn, drives revenues and profitability.
Branded response marketing ensures that marketing dollars are spent efficiently and generate long term profitability. Advertisers who are evaluating how to allocate their dollars are increasingly turning to online advertising because of the ability to continually assess the ROI of their spend. This drive towards accountability has only been sharpened by the economic downturn. Corporations want to evaluate revenues generated from their marketing campaigns and optimize their marketing spend by marketing initiative and by media channel. While this level of detailed tracking is still in its infancy in much of the online advertising market, it is at the core of branded response.
Branded response represents a very attractive and unique investment
opportunity. It enables a company to quickly make significant sales with
a relatively limited capital outlay and a moderate level of risk. Executing on
this model, however, is not as simple as it sounds. According to Brad Klaus,
the former CEO and cofounder of Trident portfolio company Syndero, “Branded
response marketing requires a unique skill set – the ability to combine
knowledge of online marketing, analytics, online commerce and consumer
products.” These skill sets must be applied to the reams of data that drive the
business model – and in order to do that, management teams must have best in
class data collection and analysis tools. “Having the right tools to help in
the decision making process is critical” says Tim Coltrell, CEO of AccountNow.
“Trident has been invaluable in helping us deploy best in class tools to
improve our sell through and customer retention rates as well as manage costs.”
Brad recently joined Trident as an entrepreneur in residence after helping to grow Syndero at a CAGR of over 200% during the first four years. He will be working with the Trident team to help discover and develop additional opportunities in the space. Brad’s expertise as a successful entrepreneur as well as his industry contacts as a board member of the Electronic Retailing Association will be invaluable in helping Trident continue its successful track record in the sector.
Branded response and, more generically the increased use of data analytics in online marketing will also drive opportunities in the ecosystem of online marketing and e-commerce. Trident’s online commerce companies such as Homeaway , Kayak , and HipDigital are adopting many of the same strategies for online customer acquisition that companies like Syndero and AccountNow utilize. Other Trident portfolio companies like Turn, Sojern and Merchant e-Solutions provide tools to online retailers to help them improve their customer acquisitions and online commerce.
Trident is leveraging its acquired expertise in this sector to help its relevant portfolio companies adopt and apply best practices and them to success faster.