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Exclusive: Goodmail on the Block

By Ken Magill

08/24/2010

Email certification concern Goodmail Systems is being shopped around, according to a document obtained by this newsletter.

However, recent developments with Yahoo make the company a far less attractive buy than it otherwise would have been.

Investment banking firm ArchPoint Partners earlier this month sent an email introducing prospective buyers to a company it referred to as “Project Conduit.”

“Project Conduit (or the ‘Company’) is a leading email certification provider guaranteeing delivery of email for senders (brands) and their distribution or marketing agents,” the pitch letter said. “The Company’s core solution is certified email – an email delivery technology designed to ensure that the email bypasses spam filters and reliably reaches the recipients with links and images intact.”

A Google search using the phrase “Project Conduit” brings back multiple results, none of which have anything to do with email certification.

The description ArchPoint offers of Project Conduit fits one American firm to a “T,” Goodmail, and two others loosely: Return Path and Surety Mail.

Matt Blumberg, CEO and Chairman of Return Path denied his firm is for sale.

Anne Mitchell, CEO and President of the Institute for Social Internet Public Policy, also said her firm’s email certification service, Surety Mail, is not for sale.

Goodmail launched aiming to help non-spamming marketers get their email delivered to recipients’ inboxes with images and links intact for a fee. The startup was in reaction to an increasing trend under which email inbox providers were increasingly turning images off by default in an effort to combat spam and inappropriate images being delivered to people’s inboxes.

Goodmail’s business model is an incredibly ambitious idea that requires mass adoption by ESPs, marketers and inbox providers.

Mass adoption by inbox providers has been an ongoing challenge for Goodmail. Early on the company got a shot in the arm when in 2005 AOL and Yahoo agreed to start recognizing Goodmail-certified messaging.

At the time, AOL and Yahoo addresses accounted for large percentages of most business-to-consumer marketers’ email lists.

In the intervening years, however, AOL has steadily lost market share. And early this year, Goodmail announced to clients that Yahoo would no longer give Goodmail CertifiedEmail special treatment.

“There will be a reduction in privileges granted to CertifiedEmail messages sent to yahoo.com and other domains controlled by Yahoo,” the announcement said, according to a post on Deliverability.com. “We are in discussions with Yahoo and hope to restore full privileges to CertifiedEmail but there is no firm timeline for that at this time,” the announcement continued.

However, Yahoo representative Carlo Catajan said at the Email Insider Summit on Captiva Island, FL in April that Yahoo had decided it would no longer make delivery decisions based on Goodmail certification.

Catajan confirmed in an email exchange with this newsletter yesterday that Yahoo has officially severed ties with Goodmail.

“We have indeed completely terminated our relationship with them earlier this year,” he wrote.

AOL’s decline and losing Yahoo arguably makes Goodmail a far less attractive purchase than otherwise would be the case. Yahoo typically accounts for double-digit percentages—sometimes as high as 50 percent—of business-to-consumer mailers’ email lists.

Still, according to ArchPoint’s pitch letter, Goodmail delivers 32.5 billion messages per year for 164 clients. The investment bank also claims that Goodmail’s gross revenue grew by 250 percent from fiscal 2009 to 2010 “with net revenue expanding at an even faster rate.”

When asked whether or not he’d been approached or if he would consider buying Goodmail, Return Path’s Blumberg said: “I haven't been approached about any specific opportunities with Goodmail, but Return Path would always consider deals that present good opportunities for us and our clients.”

In response to a request for comment, Goodmail sent the following statement:

“Several months ago, Goodmail began a large scale industry initiative to leverage on its successful email certification business and its unique enhanced email technology which enables video and interactivity.

“While we courted participation in this initiative, we caught the attention of several very large companies. These companies expressed interest that went beyond participation. In response, to help us evaluate this interest and determine whether a transaction is in the best interest of our shareholders, we retained the services of an investment bank.”

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