FetchBack Fetches $40 Million From GSI Commerce

Let the ad retargeting acquisitions begin. This morning, GSI Commerce announced it purchased FetchBack, an advertising startup which specializes in retargeting. The size of the cash deal was not disclosed, but one source puts it in the $40 million range. FetchBack raised a single round of $1 million in January, 2008 led by Gersh Venture Partners, which is now Metamorphic Ventures (a New York City venture firm with strong ad-tech portfolio which likes to put in small amounts of capital in startups which become self-sufficient quickly). Angel investors Erik Matlick, 24/7 co-founder Geoff Judge, and Jeff Stewart also invested. The company quickly became profitable and never needed to raise another round. CEO Chad Little will continue to run the business within GSI Commerce.

The way it works is that if somebody visits an e-commerce site on the Web, FetchBack will show that same person related ads from that retailer or even the page they visited when they go elsewhere. The conversion rates are much higher than with standard display ads because they are being shown to people who have already shown an interest in the exact or similar products.

GSI Commerce powers many online retailers. Adding a retargeting capability to its marketing services is a no-brainer, since retargeting is basically a way to drive customers back to your shopping site after they’ve left. One of the biggest problems e-commerce sites have is shopping cart abandonment. Retargeting also allows retailers to present the items in an abandoned shopping cart in the form of a display ad. On average, less than one percent of visitors to e-commerce sites end up purchasing anything. With retargeting, Fetchback is able to get that number up to 8 to 10 percent. The trick is getting the analytics right and drilling down to what works and what doesn’t for each individual potential shopper.

Retargeting is a hot area right now in the ad world. French retargeter Criteo recently raised $7 million from Bessemer, and Google is getting into the game as well.