In what could be a last bid to become profitable, Engage Inc. is trying to sell its media business and will focus on developing and marketing software. The moves were announced in late August, shortly after Engage was cut off financially from parent company CMGI Inc.
While Engage’s emphasis on software was greeted with skepticism by some industry watchers, there is much optimism within the company that it can pull off the transformation in short order. It has $31 million left in the bank, enough to help it make the move, though without much room for the glitches and experimentation that typically accompany software development.
"We’re under the same pressure everyone is facing, and that is how do you achieve profitability?" said Betsy Zikakis, senior VP-marketing.
Strengths offline, online
Engage believes its campaign management and ad management software, products designed for both offline and online campaigns, will differentiate it from competitors such as DoubleClick Inc., whose software is designed for online campaigns only. It’s targeting publishers, ad agencies and marketers with software that can be used for marketing collateral, direct mail and logos.
Zikakis said Engage has been developing software since the late 1990s and has been erroneously labeled as a media-only company. "Our roots were really all about software," she said. Engage’s ad network expertise, meanwhile, will smooth its transition to a software developer-only status, she said.
"We really know how to work customer data, and if you really think about what it takes to build a successful ad network, it’s all about technology," Zikakis said. The company already has 400 software clients, including The Wall Street Journal and Los Angeles Times.
All hands on deck
Still, given the lukewarm reception that Engage’s media business received, the question is whether its software venture will meet a similar fate. Should the business take off, Engage will face the challenge of quickly gathering enough hands on deck to handle customer support.
"They have to be able to provide ongoing maintenance for software products," said Tom Topolinski, principal analyst at Gartner Inc. "Any software company’s challenge is acquiring and retaining technical staff, and to be able to expand as their clients expand."
Engage currently has about 400 employees, including about 125 employees in its media business.