Sycamore Ventures Inc has led a $15m investment round into FloNetwork Inc, a provider of permission-based outsourced email services. FloNetwork, formerly known as Media Synergy, acts as an application service provider for e-commerce and publishing companies who want to create and deploy their own email and measure the effectiveness of their campaigns. The business deals mainly with opt-in house lists, gleaned from customers or registered users of web sites. CNet, for example, offers its subscribers a choice of 28 newsletters. Other FloNetwork customers include Meredith Publishing, Ingram Micro, Iconocast and Internet World Daily.
Couldn’t companies do exactly the same thing with mailing list software like majordomo? Apparently not. With ordinary emailing lists, the sender never knows whether their readers clicked on links. FloNetwork lets users personalize mail and embed trackable URLs. Companies can tell by individual who bought what and when. Executives say they aren’t worried about the privacy implications of such a technology, because after all, the lists are opt-in in the first place. A privacy policy posted on the company’s home page details the extent of the tracking behavior. Whether subscribers to newsletters run by FloNetworks’ clients will ever see that disclosure is an interesting question.
The $15m in fourth-round funding from Sycamore and other investors will be used to expand marketing and sales efforts. The Ontario Teachers Pension Fund also took a stake. Because FloNetwork wants to woo very large volume clients, pricing is fairly fluid. Executives argue that while the cost per thousand (cpm) is higher than for web ads, the clickthrough rate for FloNetwork email is also much higher. Prospective clients can expect to pay around $50 cpm, with FloNetwork offering discounts based on volume.
