Spam Continues to Hurt Digital Impact

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Spam concerns continue to slow adoption of e-mail marketing, Digital Impact said yesterday.


Reporting its fiscal second-quarter results, the San Mateo, CA, e-mail service provider said its business shrunk in the three months ending Sept. 30. Quarterly revenue totaled $10.2 million, down 7 percent from the year-ago period. Digital Impact had a $2 million net loss in the quarter compared with a $108,000 profit a year earlier.


"Our growth has been slowed by external factors, including a pullback in marketing budgets by some of our technology clients and the slow adoption of e-mail by enterprise marketers as a result of spam," CEO William Park said on a conference call with investors.


Digital Impact sent 740 million e-mails in the quarter, down 3 percent from a year ago. It blamed the loss of a few technology clients, which moved to low-cost providers.


The company hopes to reignite growth by offering integrated agency services, including search marketing through its acquisition of search marketing firm Marketleap in July. Digital Impact expects to bring in $1.5 million in search-related revenue during the year.


"We believe significant progress in reducing spam will be made in the next 12 to 18 months, and prospective clients will feel more confident using e-mail to communicate with their customers," Park said.


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