Digital Impact Searches Beyond E-Mail

E-mail service provider Digital Impact no longer wants to be known by that identifying phrase. The company’s branching out to offer search marketing technology and services.

San Mateo, Calif.-based Digital Impact made the move public during its conference call with investors to discuss its fiscal fourth-quarter results. It had earlier hinted it planned to branch out beyond email, but didn’t specify how. The results themselves were somewhat disappointing, but that was expected, since the company had earlier lowered guidance.

The company lost $884,000 or $0.03 per share in the quarter, on revenues of $10.4 million. In the year-ago quarter, Digital Impact lost $1.3 million, or $0.04 per share.

“The quarterly results reflect a greater than expected fall-off from the seasonally strong fiscal third quarter and new business wins that were below our forecast,” said William Park, chairman and CEO of Digital Impact.

Park also noted clients’ declining interest in using email as an acquisition tool, largely because of concern about spam and anti-spam legislation. That trend, in particular, is behind Digital Impact’s ambition to move beyond email.

“Just as email is the number one method of retaining customers online, search has become the number one way of acquiring customers online,” said Park.

The company kicked off its efforts in the search arena by hiring Michael Gorman as senior vice president of search marketing. Though Gorman’s resume isn’t particularly search-heavy, he’s worked with media companies at professional services firm Mitchell Madison Group. He also served a stint at ESPN.

Digital Impact executives argued that the company is well positioned to take on the search market, despite the current dominance of the space by smaller private companies like Did-it.com, iProspect, Impaqt and Grantastic Designs. The company cites its relationship with Fortune 1000 businesses, its expertise in strategy, and its experience in analytics.

“We think we’re in a very good position to enter this space and establish a leadership position quickly,” said David Oppenheimer, chief financial officer of Digital Impact. “Fortune 1000 clients are just beginning to realize the huge opportunity they have with search.”

Digital Impact’s current clients include Citibank, Dell, MasterCard and Hewlett-Packard.

The company said it planned to offer both bid management technology and professional services, and will build at least some of the new operation from the ground up. Executives wouldn’t comment about potential acquisition plans.

The company predicts a net loss for its fiscal first quarter, ranging from $0.02 to $0.04 per share, on revenues between $10 and $10.5 million. For the whole fiscal year, the company expects net income to range between breakeven to a loss of $0.05 per share.