Rich Media Ad Firm ePod Closes Doors

Sources at ePod Corp. confirmed that the New York-based rich media ad firm ceased operations Monday, despite a recent influx of cash from investors.

Few details were forthcoming about the closing of the firm. According to a company spokesperson, “the overall downturn in the advertising market combined with the unique challenges faced by rich media companies led the ePod Board of Directors to reach this decision.”

In December, the company reassured investors and the public that it “continues to thrive,” when a similarly named — but otherwise unrelated — company went under.

Despite the statement, and in spite of the harsh market for online marketing and advertising plays, ePod’s closing comes as something of a surprise. The firm in recent months secured some $18 million in financing, most recently from Macromedia, whose Flash technology the firm uses in its ads.

The company was founded in Toronto in May, 1997, as Reflexive Networks Inc. Several months later, ePod moved to New York and changed its name to that of its chief product — a rich media “mini-site” that functions like a Web advertisement, but that can incorporate additional screens of information and transactional capabilities in the ad space. Customers could, for instance, browse product listings, register for a newsletter, or make a purchase inside the ad.

From outward appearances, the company seemed to finding traction for its proposition, netting customers that included CDNOW, Hoover’s Online, and Entertainment Weekly Online. ePod also said it routinely delivered clickthrough rates about 25 times better than the industry average, or about 10 to 17.5 percent.

Meanwhile, larger advertising formats with interaction within them — such as the much-ballyhooed Oracle ads on CNET — have been drawing increased interest as of late. Still, the challenges faced by rich media companies trying to gain acceptance with publishers are not insignificant.

The firm had other investors in Brand Equity Ventures, XDL Intervest, I-Hatch Ventures and U.S. Trust. All told, the company raised about $21 million from venture capitalists. ePod also had strategic marketing and distribution partnerships with DoubleClick and Macromedia.

The firm also recently opened an office in San Francisco, in addition to its existing locations in New York and Toronto.