Gomez Inc - Expansion

EXPANSION

In April of 1999, Gomez sold 1.1 million shares as part of a private placement effort; Ashton kept a 28 percent interest in the firm. Using the $5.5 million it raised, Gomez began to broaden its marketing efforts and also started to develop new products. During that year, Gomez expanded into rating the online efforts of companies in other industries. Touting itself as "The E-Commerce Authority," the company launched scorecards for airlines, apparel retailers, consumer electronics and computers retailers, drug stores, furniture stores, grocery delivery services, hotels, loan and insurance providers, pet stores, sporting goods retailers, and toy stores.

In late 1999, Gomez also formed several key partnerships as part of its brand recognition effort and in order to gain an increased presence on the Web. In October, it teamed up with Hoovers Online, a provider of business news and company information. As part of the deal, the Gomez Advisors Internet Broker Scorecard became part of the Hoovers Stock Web site. It also partnered with Marketwatch.com, the operator of the CBS.Marketwatch.com Web site, and America Online. As a result, Gomez's financial-related scorecards became available on both sites.

As Gomez entered the new millennium, it began to focus on providing services to businesses as well as consumers. In March 2000, the firm launched GomezPro.com, a business-to-business site created to help companies in their e-commerce efforts. Through its IQM Program, the site offered e-commerce tools, quarterly Internet Scorecard reports, custom advisory services, and market research studies. That same month, Gomez also developed a Merchant Certification program designed to reward the efforts of online merchants in over 25 different industries, as well as foster consumer confidence among online shoppers. Merchants that met eight different criteria, such as having customer support access and published privacy policies, received a Gomez PASS seal. If the merchant met more advanced criteria, it received a PASS PLUS seal. By May 2000, over 2,000 online merchants were part of the program.

Gomez also continued to form alliances as part of its growth effort. The firm joined with InfoSpace, a provider of information and commerce infrastructure services, to provide InfoSpace customers access to Gomez certified merchant information. The firm also teamed up with Yahoo! Inc. to provide its Internet Banker Scorecards on the Yahoo! Finance banking center Web site. CNET.com, an online technology information site, also began using the Gomez Merchant Certification program on CNET Shopper.com.

In order to strengthen its foothold in the business services market, Gomez announced the formation of GomezNetworks in September 2000. This new division was developed to provide real-time Internet site and transaction performance measurement and diagnostic services. The firm hoped to use the network division in conjunction with GomezPro to capture increased business from online firms looking to compare their e-business initiatives against others in their industry.

The following month, Gomez announced that it was pulling the plug on its upcoming initial public offering. Citing weakening market conditions as the cause, Gomez instead secured private financing from Softbank Ventures Inc. and various other investors. The firm utilized the funds for continued development of new marketing and product initiatives designed to cater to both consumers and businesses. While a September 2000 Washington Post article reported that Gomez had become "a top spot for comparing the cost and quality of Internet brokerages, banks, and other e-commerce services," the firm also continued to promote the services offered on GomezPro and GomezNetworks to businesses. By securing customers such as Charles Schwab, Lycos, JP Morgan, Intel, America West Airlines, and Dollar Rent-a-Car, Gomez appeared poised for future growth.