Dotomi Plans U.S. Expansion

Online direct messaging company Dotomi secured a $10.5 million round of venture financing to expand its personalized Internet marketing platform.

The Boston-based company received the Series C financing in a round led by Investor Growth Capital. This raises Dotomi's total institutional backing to $15.5 million. Previous investor U.S. Venture Partners and new investor Velocity Equity Partners also participated.

Dotomi plans to use the funding to expand its U.S. sales and marketing efforts for its fledgling Dotomi Direct Messaging technology, which was pioneered by Yair Goldfinger, inventor of the ICQ instant-messaging platform. Direct Messaging lets marketers communicate with customers through personalized banner ads displayed on Web sites.

“We think it's a pretty unique value proposition and fills the void in helping marketers target their customers in a unique way that avoids the e-mail spam problem and untargeted banner ads,” said David Lee, managing director of Investor Growth Capital.

Marketers can offer Direct Messaging to consumers as an optional method for receiving special offers in much the way e-mail marketing is used. Dotomi has deals with ad networks and Web sites to display tailored messages in banner ad space when a Direct Messaging customer visits the site. The program is purely opt in.

“It's all controlled by the consumer,” said John Federman, Dotomi's president/CEO. “If the marketer treats their best customers with dignity and respect, and they nurture a dialogue, it's going to benefit all parties.”

Marketers can use the platform for customer retention and for sales. A typical Direct Messaging ad will address the consumer by name and contain a personalized message based on customer segmentation. An airline might display an offer for a travel deal from the user's home airport based on travel history.

Dotomi, which has 42 employees, is in the process of rolling out Direct Messaging in the United States. It has offered the product in Israel for 18 months, and Federman said it has generated 7 percent to 12 percent click-through rates. El Al and the Israeli divisions of Burger King, American Express and Blockbuster have used Direct Messaging. Federman said more than 575,000 Israeli consumers opted in while only 200 opted out from receiving the messages.

In the United States, Dotomi has secured deals with ad networks MaxOnline and as well as publishers like Dotomi said it reaches 60 percent of the Web. Publishers can choose to pass along lower-priced inventory to Dotomi, which charges marketers on an impression basis and not by clicks.

“We want to encourage marketers to not just send transactional messages,” Federman said.

El Al used Direct Messaging to send customers birthday messages. Dotomi does not keep any customer data, acting instead as a technology bridge for user cookies to be connected with a marketer's customer database.

Federman said Dotomi had more than a dozen clients ready to commit to the product, including Orbitz, Priceline and PalmOne.

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