Marin Software offers a paid search management application for advertisers and agencies to enable them to manage large-scale paid search campaigns across search engines such as Google and MSN in an easy and effective manner. Through its main product, a SaaS application called the Marin Search Marketer™, Marin offers advertisers campaign set-up and management, bid optimization, keyword expansion and complete business-level analytics. Advertisers are able to manage all of their search programs under one roof, thereby reducing the time spent as well as eliminating replication and complexity.
Marin Software was founded in 2006 by Chris Lien, who is the CEO. Lien was previously COO at Adteractive, a large provider of performance-based marketing leads. Prior to that, he co-founded Sugar Media, a broadband services platform which was later sold to 2Wire. Lien was also CFO and later CEO of BlueLight.com, Kmart’s e-commerce subsidiary. The other two co-founders, Wister Walcott and Joseph Chang, also held executive roles at software, search, and technology companies. Walcott was previously VP of marketing at Composite Software and VP at Pilot Network Services. Chang was previously VP of Information Systems at W.P. Carey, a real estate investment firm, and was also part of business development at Mercer Consulting, where he helped start companies such as BlueLight.com and jcrew.com.
The company has raised approximately $25 million to date: Series A and Series A-1 rounds totaling $5 million at the time of founding; a $7.25 million Series B led by Benchmark Capital in the spring of 2008; and a $13 million Series C led by DAG Ventures with participation from Amicus Capital, Benchmark Capital, and Focus Ventures in April 2009. With its focus on investors who add intrinsic value through business expertise and strong networks, Marin Software does not anticipate raising additional capital at present.
The idea for Marin Software was conceived when Lien saw that advertisers were spending over $100,000 a month on paid search advertising in order to drive traffic to their websites. They used inadequate tools such as Excel spreadsheets to manage their programs. This was not only time-consuming but also prone to error. These homegrown Excel solutions are Marin’s primary competition. Other providers such as DoubleClick and Atlas offer paid search applications, but Marin believes that since they were designed several years ago, they are not adequate for the scope and complexity of advertising today. Other interactive agencies like Efficient Frontier, Omniture and CoreMetrics offer client-facing reporting tools or basic search applications but do not offer a complete client-side solution as Marin does.
In January of this year, J.P. Morgan released a report titled ‘Nothing But Net’ which said that in the US alone, marketers will spend $16 billion on paid search in 2009, up 9.9% from $14.5 billion in 2008. By 2011, that number is expected to reach $23.6 billion in the US. Globally, paid search is projected to reach $49.3 billion in 2011, up from a projected $33.2 billion in 2009, according to the report. A copy is available here on Scribd.
Paid search is the largest and fastest-growing sector within the online advertising arena, accounting for 50-60% of total dollars spent. Even during the current recession paid search is increasing, albeit at a slower pace than in prior years, but online display banner spending and other ad spending is down.
Marin’s addressable market is the global annual advertising dollars spent by enterprise customers on paid search –- currently $16-$20 billion. Marin’s SaaS paid search application is available via subscription. Customers pay Marin approximately 2-5% of the paid search spend that they manage through the Marin Search Marketer.
Marin recently commissioned a study from JupiterResearch titled ‘Large-scale Paid Search: Challenges and Opportunities’, which found that 92% of large search marketers would increase their paid search advertising spend by an average of 22% if major technology and management impediments were resolved.
Marin has penetrated the market by focusing on enterprises that spend heavily on search, such as interactive agencies, online or multi-line retailers and affiliate or performance marketers. The company was born at a time when paid search programs were growing at an exponential rate across several search engines, but the tools used were not keeping pace. Marin aims to allow customers full transparency to have control over their SEM programs for maximum ROI. Another strategy Marin used was to over-invest in client services during its initial growth phase.
Over 120 companies use Marin Software, including Razorfish (owned by Microsoft), which uses Marin to manage millions of dollars worth of SEM programs for its clients. In total, customers manage approximately $300 million of annualized paid search spend through Marin’s application. Every night, the application recalculates bids on over 75 million client keywords and by the next morning, it matches over 8,000 individual cost reports to the keyword data for accurate bidding. Reply.com, Trouvé Media, W3i.com and Luxury Link are a few other companies that use Marin Software. The company declined to share detailed revenue information but said that in 2009 revenue has been in the double digits every month, which is a 200-300% increase over 2008 revenues.
Marin expects its growth to stem from increased penetration in the US and geographic expansion abroad. They recently opened a London office for European business and plan to roll out across the EU over the coming year, with expansion in Asian markets next. Lien feels it is too early to discuss an exit, but when appropriate, a liquidity event will come either as a public offering, a merger with or acquisition by a strategic partner such as a company in online advertising and technology.
This segment is a part in the series : Deal Radar 2009