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Billion Dollar Unicorns: Zeta Interactive Counts on Inorganic Growth

Posted on Friday, Sep 16th 2016

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According to an IDC report published last year, the global marketing technology (MarTech) industry is estimated to grow 12% annually to $32.4 billion by 2018. More recent trends also suggest a growing interest in MarTech industry, away from the AdTech industry, due to its more sustainable business model. A few years ago, I spoke with serial entrepreneur David Steinberg whose latest initiative Zeta Interactive is now a Billion Dollar Unicorn in the MarTech space.

Zeta Interactive’s Offerings

New York-based Zeta Interactive was founded in 2007 by David Steinberg, John Sculley, and Bill Landman. The idea for Zeta Interactive came to David when he was working on his venture Wirefly. He had already taken Wirefly public after its merger with InPhonic and was working with them. He realized that the company was spending millions of dollars a year on the Internet in advertising that was all metrics-based. He saw that marketing was shifting from being focused on being creative and establishing relationships to a world that was more focused on analytics and understanding data. He quit Wirefly in August 2007 and within the next few months set up Zeta Interactive to build a company that could help organizations run efficient customer acquisition and CRM programs by using Big Data over the Internet.

Today, Zeta Interactive uses Big Data, advanced analytics, and machine learning to help brands acquire, grow, and retain customers. The Zeta CRM is a comprehensive, multichannel marketing solution that integrates and analyzes data to improve return on marketing investment. Organizations are able to get access to a digital marketing engine for personalized, insightful conversations with their customers that are delivered on a real-time basis both with precision and at scale. They are able to manage the entire customer lifecycle across all digital tools and by leveraging a single platform. It has a customer base of over 570 organizations and includes names like UPS, AIG, Sprint, and Ikea.

Zeta Interactive’s Financials

Zeta Interactive does not disclose detailed financials, but the management has said that the company is clocking revenues of more than $300 million annually and is very profitable. In 2015, the management had reported revenues of $200 million and three years of profitability.

Zeta was founded using $10 million pooled in by the founders. Since then, it has raised $240 million in debt and private equity financing with investments from Blackstone Group, Franklin Square Group, GSO Capital Partners, GCP Capital Partners, and Madison Capital Funding. Its last private equity round was held in July 2015 when it raised $125 million at a round that valued it at over $1 billion. Earlier this month, Zeta raised $45 million in debt financing from Cerberus Capital Management, FS Investments, GSO Capital Partners, and PNC Bank. It plans to use the newly acquired funds to continue its acquisitions.

Zeta Interactive’s Acquisitions

Zeta began its operations through acquisitions. The founding team had bought out a very small half-digital and half-telemarketing company to set up Zeta. After shutting down the telemarketing business, Zeta focused on digital and used the acquired data to build its backbone. It followed that with the acquisition of another small email marketing company and integrated the data of one company with the clients of the other to deliver email and analytics capabilities to the combined clientele.

Since its founding, Zeta has continued with acquisitions to expand its presence. Last month, it announced the acquisition of Acxiom Impact, a marketing automation solution for enterprise marketers owned by Acxiom. Acxiom’s Impact division focuses on providing marketing tools for email, desktop and mobile web, social media, and display ads. Through the acquisition, Zeta will be able to integrate Acxiom’s technology and managed services with its own platform. The agreement also includes a long-term strategic relationship with Acxiom’s LiveRamp, which is designed to help brands utilize offline data like store visits with online data. The acquisition is estimated to have cost Zeta $50 million.

Earlier this year, Zeta had also acquired the CRM division of eBay Enterprise for an estimated $80 million-$90 million. eBay’s CRM comes with added data warehousing capabilities, email, and attribution platform that will help enhance Zeta’s CRM offering.

Competition remains fierce for Zeta Interactive. While Salesforce is already a force to reckon with, there are other players making ripples in the market with acquisitions as well. Oracle, for instance, has become a formidable player with its MarTech acquisitions of web tracking company AddThis, marketing cloud company Maxymiser, data broker company DataLogix, data management platform BlueKai, Eloqua, and Responsys.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

Photo Credit: David Lisenby/Flickr.com

This segment is a part in the series : Billion Dollar Unicorns


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