We are exciting to be heading to Las Vegas later today for the king of all lead generation trade shows, LeadsCon (www.leadscon.com). It will be great to connect with customers, prospects, partners and friends in the industry. Huge hats off to Jay Weintraub for organizing what is always a great two day conference.

We are exhibiting this year. Come find the Sparkroom team at booth 213 at the Mirage.

Today, we are excited to announce that we have signed a definitive agreement to be acquired by CUnet, a leading provider of performance media and interactive marketing services for higher education marketers. It is a great opportunity that will bring Sparkroom’s industry leading enrollment marketing automation platform to the hundreds of schools that currently partner with CUnet.

What is going to change for Sparkroom? Our clients should know it starts with “business as usual” with the same great team, same great products, and same commitment to driving innovation in the marketplace. On top of that, we are going to be able to execute against our mission with a lot more resources behind us. Over the coming months, you will see us working closely with CUnet to deliver a broad array of interactive marketing products to the higher education marketplace.

Why does this acquisition make sense? Primarily because CUnet and Sparkroom share a common vision for how marketing will evolve for career colleges. We see increasing investments in interactive marketing together with increasing investments in technology to manage that spend more efficiently. Some schools will want cutting edge technology solutions and we deliver it. Some schools will want performance media and interactive media management solutions and we deliver it. Some will want an integrated suite of products and services delivered on a common platform and we will deliver that as well.

We expect the deal to close in February of this year and the entire Sparkroom team is excited to join the CUnet team. We are looking forward to increasing our investment in our software platform and dramatically scaling our customer base.

Some industry conversations since the QuinStreet S-1 was filed (get it here) got us thinking about market share in the EDU lead generation space. Real revenue numbers on the Top 5 lead providers (CollegeBound, QuinStreet, Vantage, Education Dynamics, All-Star Directories) in the education space are hard to come by but everyone talks about rapid growth in CY 2009. The standard growth number that I hear lead gen folks talk about is 20% YOY revenue growth. But let’s look at QuinStreet in education for a second.

*QuinStreet’s fiscal year ends on June 30th

Two key takeaways

1. DeVry is a huge chunk of QuinStreet’s EDU business and it is likely to decline given Starcom’s AOR relationship

2. Actual growth with clients other than DeVry in the EDU vertical has been anemic compared to the market over the past 24 months. They have grown 4% YOY for the past two years vs. 20% for the market.

This data speaks to the importance of the M&A machine to QuinStreet’s future growth.

DeVry reported on their fall enrollments this morning. Check out the release here.  Key takeaways are 19.4% YOY growth in new student enrollments and total enrollment increased 22.7% YOY. Sparkroom customer US Education grew the new students 21.5% YOY (November data) and total student population increased 14.8%. Results were well above analyst expectations.  Congrats to the DeVry folks on putting up what will be a great quarter when they report in January.

Two weeks ago, I attended Saleforce’s annual customer and partner conference, Dreamforce Global Gathering 2009. It was an impressive event, with over 19,000 attendees crammed into the Moscone Center in San Francisco. Their quarterly numbers, released just before the show, came in at $331M, up 20% YOY, with a total of 67,900 customers, up 31% YOY. This company is a huge success story.

Although the adoption of Salesforce today is not widespread in the for-profit higher education arena, our guess is that their presence will grow over the next couple of years. Today, many schools simply utilize the basic CRM capabilities that are already built into their Student Information Systems – typically this is vendor software which is broadly installed throughout their campuses and which was bought and paid for years ago. The downside is that it is much harder for schools to adopt sales and marketing best practices because their data and processes are hemmed inside a legacy SIS platform.

At Dreamforce, my eyes were opened to a world filled with a rich ecosystem of partners. Salesforce’s AppExchange has been very successful – it is a marketplace where customers can select software from hundreds of third-party vendors offering value-added solutions across a myriad of categories such as integration, data cleansing, marketing automation, analytics, to name a few.

I was also interested to note the steady adoption of Salesforce by the not-for-profits. The Salesforce Foundation offers deep discounts to not-for-profit schools – up to 80% off list price. At one panel session, Northeastern University demonstrated an impressive number applications that they had built out on top of the Force.com platform to manage donors, placements, at-risk students, alumni, enrollments and many other things. With the total cost of ownership so low, building out custom applications on the Force.com platform becomes a compelling option for these schools.

After witnessing the energy and momentum at Dreamforce, we at Sparkroom have concluded that a stronger Salesforce presence in for-profit edu is inevitable and could be of great benefit to the industry. Why? Because if it happens, it will likely lead to:

• Deeper adoption of sales and marketing best practices. Many schools are limited by their current vendor solutions, and unable to fully implement capabilities and best practices that can help maximize their enrollments and reduce their acquisition costs.

• Greater choice and flexibility for schools. Salesforce’s platform is open. Open APIs make it easier to integrate best-of-breed software solutions together. An open platform also makes it easier for schools to extend and augment native functionality. And the AppExchange would provide schools with access to a rich ecosystem of complementary vendor solutions.

• Greater adoption of cloud computing. As a software-as-a-service vendor, Sparkroom is naturally a firm believer in the cloud. Salesforce was the original pioneer of SaaS, and in under 10 years has fundamentally changed the mindset around software and enterprise data living in the cloud.

We will be watching with great interest to see if our prediction becomes true.

First of all congratulations to Dave (@davewengel) and Jay (@jayweintraub) as they kick off Shouk Media. LeadCritic breaks the story here. Why this is interesting:

TargusInfo issued a press release announcing the departure and the formation of the new company.  First of all, this doesn’t happen – ever. TargusInfo must really like Dave. Secondly, they also said ” TARGUSinfo will be Shouk’s first customer.” Let the speculation on what Shouk is now and what it will be in the future begin. I have often asked Jay how he plans on monetizing his lead gen relationships and the platform that he has built with LeadsCon. This is obviously part of that play.

So what is Shouk Media going to be? (point of parliamentary procedure: I think Shouk is typically spelled souk).

I never thought I would be able to use photos from a recent trip to Marrakech to make a point about lead generation but here goes.  The souks in Marrakech:

* are incredibly, busy marketplaces

* have lots of vendors selling, what appears on the surface, to be exactly the same thing

* make it nearly impossible to authenticate and verify the identity/trustworthiness of sellers/buyers

* have zero price transparency – everything is negotiable

* are full of tiny niches (my favorite Marrakech souk was the one selling exotic birds)

Perhaps Dave and Jay can solve some of the issues above and provide a trustworthy marketplace where buyers and sellers can meet. LeadsCon in February will be even more interesting as I expect we will learn more about this new business.

Sparkroom will be exhibiting. Looking forward to catching up with the lead gen ecosystem there.

Today, ForProfitEdu.com launched their first survey of education marketers and lead providers. See the press release here as well as on our website. Sparkroom is excited to be sponsoring the survey and to be working with the whole team at ForProfitEdu. Take the survey now!

Look for results from the survey in early 2010.

QuinStreet filed their S-1 for a proposed $250MM IPO last Thursday. While this has been rumored for months, it is exciting to finally get to read the fully disclosed story on this famously secretive lead provider. Read the full S-1 on the SEC website here. First of all, a huge congrats to the whole QuinStreet team for building a fantastic business and for wearing the white hats in the lead gen industry.

My observations on the company after reading the filing:

• QuinStreet has built a great business but it took time. 10 years of solid growth.
  • $260MM in FY 2009 revenue, on target for $320MM in FY 2010
  • $56MM in EBITDA in FY 2009, on target for $72MM in FY 2010 – note to self – does it take $70MM in EBITDA to IPO these days?

• QuinStreet’s competitive advantage is driven by 1) Technology 2) Content assets and URL libraries 3) Affiliate network 4) A superior monetization engine that allows them to be an M&A machine (100+ small acquisitions)

• Growth is going to be hard for QuinStreet in the long-term. At present, lead gen is pretty small outside of education and financial services. Doug Valenti must be banking on a) M&A b) international c) secular growth in online direct marketing d) new verticals.

• M&A is a major growth driver. They have used M&A to drive growth: “Since the beginning of fiscal year 2007, we have completed over 100 acquisitions of third-party website publishing businesses and other businesses that are complementary to our own for an aggregate purchase price of approximately $189.5 million.” Wow!!!!

• Here is how the M&A machine works. QuinStreet finds small lead provider with a) good content b) good URLs and/or c) good lead volume. They buy the lead provider for a small revenue multiple and then run the traffic through their monetization engine. Presto – they double the effective CPL and revenue generated by the set of URLs. This is identical to the TripAdvisor M&A growth strategy in the travel vertical.

• DeVry! DeVry! DeVry! One client, DeVry, represented 19% of 2009 revenue of $49.5MM. Note that they only spent $10MM in Q1 2010 which shows that they are cutting their QuinStreet spending 20% in 2010. Note to DeVry CMO – you might be able to save even more money on this. Please call Sparkroom for help.  :)

• Verticals
  • Education is the base of the business and DeVry is a huge part of the EDU business. QuinStreet generated $151MM in revenue in the EDU vertical in FY 2009. DeVry represented 33% of that revenue. Surprisingly, their growth in EDU lead gen is reasonably muted – 6% growth in FY 2009.
  • Financial services growth driven by SureHits acquisition and organic growth. QuinStreet is taking share from LowerMyBills and LendingTree. Financial services also includes insurance lead gen. Sadly, EDU vs. mortgage vs. credit card vs. deposits is not broken out in the S-1.

• Media mix: QuinStreet owned URLs, PPC, affiliate networks, email lists, display. I wish this was broken out in the S-1 but alas it is not.

• Culture. See page 61 of the S-1. I am a culture nut and now a bigger fan of Doug Valenti after reading the QuinStreet business values.

• Doug Valenti is the largest shareholder at 18.33% before the offering. Nice work Doug! I love stories where the entrepreneur makes money and makes money for the investors.

• See the notes to the financial statements (starting on page F-20) for details (price, earnout, etc.) on their big acquisitions

Congrats again to Doug and the QuinStreet team. This is a great story.

Sparkroom announced two very important milestones today. Firstly, and most importantly, we announced that Premier Education Group (PEG) is now working with Sparkroom. PEG’s brands include Branford Hall Career Institute, Salter College, The Salter School, Seacoast Career Schools, Suburban Technical School and Harris School of Business. We are thrilled to be working with Tony McPeck and his team and are excited to help them solve some of their most pressing sales & marketing issues.

Secondly, we are pleased to announce Sparkroom Lead Deliver, which PEG is implementing. Lead Deliver performs real-time lead capture, scrubbing and distribution and is integrated with leading CRM platforms in the EDU vertical. Tony captured the essence of the product when he said:

“We have always managed our vendor relationships in-house but we have lacked a technology platform that can aggregate, validate and distribute our leads quickly and efficiently. We selected Sparkroom Lead Deliver to solve those problems.”

See the press release here.  We look forward to a great partnership with PEG and to continued adoption of the Lead Deliver product in the marketplace.

We ran a webinar on May 14 called “How To Take Control of Your Online Lead Generation”. We discussed how marketers in higher education can utilize software to automate lead delivery and gain business intelligence across all of their online and offline marketing channels, and covered best practices for developing media plans, managing vendors, and evaluating performance.

Thanks to all those who participated. If anyone would like to listen to a recording of the webinar, simply email us at events@sparkroom.com and we will reply with a link.