Deal Radar 2009: OrangeSoda

OrangeSoda provides small and mid-sized businesses with the technology required to carry out a successful online marketing campaign. The Utah-based company created a service platform that aims to help SMBs navigate the complexities of search engine marketing, thus making it easier for them to grow.

OrangeSoda was founded in 2006, by Jay Bean, CEO; Derek Miner, EVP of OrangeSoda Enterprise; and Chris Finken, EVP of Research & Development. Prior to OrangeSoda, Bean started ah-ha, an early pay-per-click (PPC) advertising company, in January 1999. Ah-ha.com was acquired by Marchex in 2003, and Bean stayed with the company until 2006. After years in the industry, during which time he saw local merchants looking for more guidance than search engines could offer, with his colleagues he created OrangeSoda to fill the gap between local merchants and the major traffic providers on the Internet. Miner is also a veteran of ah-ha, where he managed teams focused on enterprise-level clients, while Finken’s background was running small business websites and generating leads for his own small business ventures. Most recently, Miner worked as director of Sales and Strategic Accounts at Enhance Interactive, where he built a sales team from the ground up. Prior to OrangeSoda, Finken was strategic distribution executive at Enhance Interactive, where his role was to establish new distribution and business channels.

The company has raised approximately $7.6 million thus far in a total of four rounds including a seed round funded by insiders, friends, and family and undisclosed strategic investors. It is on the lookout for additional funding from an institutional fund with similar experience.

There are several public and private companies that offer services for local online advertising. Some paid search only companies try to offer a small business solution, but all are focused on fully automated systems in order to minimize interactions with the client. One example is WebVisible, which focuses on interactive advertising and has been around for a while. Other competitors are ReachLocal and Yodle, but their focus is on paid search optimization.

OrangeSoda aims to offer solutions that encompass all aspects of online success – PPC, SEO, and maps to help customers run successful businesses by increasing calls, foot traffic and Web site success, rather than focusing on just one aspect of search. The company helps local businesses to develop a steady stream of new customers and a trackable ROI on their marketing spending. It offers ongoing maps optimization, not just maps submission, to improve the ranking and visibility of local businesses in the local results section of a search engine results page (SERP).

To penetrate the already crowded local online marketing space, OrangeSoda used direct marketing within the industry and in the SMB space in local markets to get the word out. The company also built partnerships with major newspaper and Web hosting companies, as well as many domain registrars, to gain a foothold in the market. OrangeSoda is also a certified Google AdWords Authorized Reseller Technology Platform, meaning the technology can be scaled to offer the right paid search management to clients regardless of their size. Google developed the program to help close the gap between how consumers used online search to find businesses and how those businesses marketed themselves online.

According to a Borrell Associates report, ‘Main Street Goes Interactive’, total interactive advertising spending will be $13 billion to $14 billion in 2009. Borrell also forecasts 2013 media spending on Yellow Pages, newspapers, radio, and direct mail to fall by 19% ($3.4 billion each year) while PPC is projected to grow by 39% ($242 million each year) for the same period. Other forms of online advertising are expected to grow $1.1 billion per year. comScore’s ‘Digital Year in Review’ says that in 2008, 137 billion searches were conducted on the five U.S. core search engines, a figure that represents a 21% increase over the previous year. Sixty-six percent of Americans use online search for local businesses and services, and 61% of local searches translate into purchases either on or offline, according to comScore.

Local businesses fall into three categories: those that don’t do search marketing, those that do their own search marketing and those that hire an external agency. OrangeSoda’s target market is professional service business owners who are well educated, located in medium to large cities, and with a budget of over $1,000 a month. These businesses are generally newspaper and Yellow Pages advertisers or new Web site owners targeted through reseller agreements with hosting and domain registration companies.

OrangeSoda is currently in a growth stage. The company pulled in approximately $9 million in revenue in 2008 and expects to be in the $25 million range in 2009. It anticipates being profitable by the end of the year and already has over 4,000 clients from small businesses to the enterprise level. Larger clients include RE/MAX, Jiffy Lube and International Trucks. SMB customers are from several industries including dentists, retailers, auto part dealers, and jewelry retailers.

OrangeSoda intends to strengthen existing partnerships and implement solutions quickly for new clients when they come on board. Bean feels that an exit via an acquisition in the next two to three years is most likely. Potential buyers include Internet hosting, SMB services, and media companies.

Recommended Reading:
Deal Radar 2008: Local Marketers
Deal Radar 2009: Jivox

This segment is a part in the series : Deal Radar 2009