NextAction takes guesswork out of marketing

WESTMINSTER – If you’ve ever been mystified by the fact that soon after you buy something at REI you get an e-mail from EMS, wonder no more. EMS found out you’re an outdoor enthusiast because both companies share their customer data with NextAction.

The four-year-old company is the brainchild of President Karl Friedman, a pioneer of consumer database development who, in June, was named Ernst & Young Entrepreneur of the Year in the business services category in the Rocky Mountain region.

Friedman’s idea to analyze the consumer data collected by retailers in order to determine a particular consumer’s inclination to buy something else earned NextAction the 2006 IQ Award in the business products and services category.

NextAction maintains what’s known as a cooperative database using data collected from more than 1,100 U.S. retailers that employ direct marketing through catalogs, Web sites, e-mail, RSS feeds, banner ads, shopping portals, search engines and old-fashioned brick-and-mortar storefronts.

“We take all those transactions from varied retailers, and we apply statistical models similar to an FICO score (the credit worthiness score developed in the 1950s by Fair Isaac and Company). We can rank order the 100 million households in the U.S. by their propensity to buy a fly-fishing rod from Orvis in the spring. It could be any product from any company in any season,” Friedman said.

The retailers then use that massaged data to reach only those consumers who might buy from them.

Retailers don’t pay to submit their customers’ names. “They submit in exchange for the opportunity to do business with us,” Friedman said.

How the company has made money has changed over the years.

For catalogs, NextAction charges clients when it ranks America’s 100 million households to select those most likely to shop with them.

“We get paid for each of the names that we provide that’s above their break-even point,” Friedman said.

But for digital media, NextAction helps online media companies choose what ads to show you, e.g., depending on your surfing style you may see an ad for Edmund Scientific or F.A.O. Schwarz.

“If we’re in a position to increase the performance of an ad placed on the New York Times Web site then we get a share of the advertising revenue. That is the whole future.” Friedman said.

Some space on the Web is very easy to sell, Friedman said, like AOL’s home page. “But there are billions of other pages that need to be supported. If you know who is visiting the page you have an idea what to show them.”

Retailers share their data for the same reason banks decided to share their data with Fair Isaac. “They realized it was in their best interest to share the data because it was mutually beneficial to everyone,” Friedman said.

“Although (NextAction) is a private company, it works as a co-op. You have to contribute to be able to benefit from the database.”

Friedman said consumer names aren’t used by anyone other than its client retailers, “and they are all fairly large with good reputations.”

He’s also clear that if you opt out of receiving communication from a retailer, your name won’t end up in its database.

“We wouldn’t be in business” if people accused NextAction clients of selling their names without their permission, he said. “If you don’t want to participate, we don’t want you in the database.”

Contact Caron Schwartz Ellis at 303-440-4950 or csellis@bcbr.com.

NextAction Corp.

10155 Westmoor Drive, Suite 100, Westminster, CO 80021

303-327-1616

www.nextaction.net

Karl Friedman, president

Primary business: Consumer

cooperative database

Employees: 120

Founded: 2002

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