FreshAddress and Return Path's ECOA Join Forces

Get your change-of-address forms ready: Massachusetts-based FreshAddress announced last Thursday that it had acquired the email change-of-address (ECOA) offering of New York–based competitor Return Path. No financial details have been revealed, but according to both parties initial terms were set in August; the final purchase agreement was signed in the closing weeks of October.

"I think in the end you're just going to see more consolidation in the industry," says Bill Kaplan, chief executive officer of FreshAddress. Starting out, he says, vendors -- including email service providers (ESPs) --  are driven to capitalize on the next innovative idea, resulting in a market scattered with point solutions. "Eventually, they realize that [their] clients need more than just that," he says, noting that users don't want to be chasing down 20 different solutions just to have a complete set. "As each of these specialized services gets organized," Kaplan says, "it makes it easier for the [ESPs]."

Kaplan adds that he believes Return Path is shedding its ECOA business so that it can focus on its own core strength in email deliverability (e.g., tracking emails and ensuring they hit the Inbox). (There's some recent evidence supporting his position: This past August, Return Path acquired former email deliverability competitor Habeas.)

While the FreshAddress/Return Path deal seems to signify a focus on vendor specialization, there's also a push toward consolidation in the market. Kaplan notes that ESPs have been on a mission to bring these services under one roof, beginning with acquisitions to bring messaging and database services together: YesMail was acquired by InfoGroup (formerly InfoUSA) in 2003, CheetahMail by Experian in 2004; and Digital Impact by Axciom in 2005.

The situation was very different just a few short years ago, Kaplan says. "If someone wanted email change of address, they'd have to go to FreshAddress, Return Path, or Veripost." (Veripost merged its ECOA business with Return Path in 2001.) Partners have long encouraged the disparate companies to come together in a joint offering, but it's taken several years for the companies to heed the advice. "When you're first starting up and growing, you're competitors and you don't think you'll ever get together," Kaplan says. "But eventually a lot of us did."

For now at least, vendors scattered throughout the email landscape are taking advantage of opportunities just short of an acquisition. "What a lot of the agencies -- the ad agencies, interactive agencies, the email service providers -- do is resell [our] services...and [those of] Return Path," Kaplan says. Moving forward, however, FreshAddress is certainly on the lookout for what Kaplan describes as "synergistic opportunities." Future acquisitions, he says, will be with companies that provide complementary services or have a complementary client base -- particularly if that client base had been feeling stymied by the apparent burden of complicated implementations.

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