Firm helps clients blog easier: Compendium sees huge market in making business Web sites more interactive

May 12, 2008

The number of blogs operating on the Internet outnumbers the inhabitants of California, New York, Texas and Florida combined.

With a market like that, it's no wonder Chris Baggott and Ali Sales are so excited about the potential of Compendium Blogware, an upstart firm the two formed in January 2007.

Baggott is best known for founding, along with co-owner Scott Dorsey, fastgrowing local e-mail marketing firm ExactTarget Inc. in 2000. The company brought in $48 million in revenue last year. Now, the 47-year old Baggott aspires to accomplish similar success with Compendium.

The software company offers tools to help businesses create, manage and search-optimize blogs. As Web sites morph from standard stagnant formats into interactive portals in which information is exchanged and updated daily, Baggott said he's confident Compendium can be the cornerstone of a company's marketing plan.

Blogs are increasingly popular. Search engine Technorati tracks 112.8 million blogs worldwide and estimates that an average of 175,000 new blogs come online every day.

"We see lots of clients de-emphasizing a traditional Web site and moving to a blogging platform," he said. "People aren't looking for [Web addresses] anymore; they're looking for keywords."

Search-engine optimization is a technique that helps Web sites rank high in search results. The aim is to appear within the first few pages of a search, where exposure is better and visitors are more apt to browse.

While the technology is common, Baggott and Sales, 27, think the proliferation of blogging gives them an advantage. Web users are more apt to encounter a Web site if it involves a blog.

Others share their sentiments. The two raised $225,000 from local angel investors at Compendium's formation last year and attracted another $1.1 million in funding from investors in July. They used the money to recruit key employees, continue developing the software, and start marketing and sales.

They've recently completed the third stage of funding, raising $1.5 million for further hiring and growth.

One of the roughly 30 investors in the venture is Bob Compton, who provided early financial backing to ExactTarget and Aprimo Inc., another Indianapolis software company. Both filed plans for initial public offerings last fall.

Market wide open

Compendium's downtown office is at 55 Monument Circle, the historic building that houses Starbucks on the ground level. The company is in the midst of taking over most of the top floor-the 14th-due to its growth. Owners project hiring seven employees a month this year to develop software and business, and manage accounts. Attracting college graduates from Indiana schools is a priority.

As one might expect, personnel straddles generations X and Y. Employees' knowledge of social media compensates for any lack of sales experience, Baggott said. In fact, the top sales rep is a mere 23 years old.

"That might not work in medical sales, but it works here," he said.

Owners declined to divulge revenue projections for this year, but expect the company will grow tenfold from last year. Compendium so far has amassed 130 clients, ranging from a large national publishing company to the mom-and-pop Greenfield Liquors, which maintains a wine blog.

Other local subscribers include Clarian Health and Community Health Network, the Ice Miller LLP law firm and The Estridge Cos. custom home builder.

Ice Miller has four blogs addressing legal topics as well as industry-related issues. Steve Humke, a partner in the firm's private equity and venture services group, said the software maximizes its ability to present its message.

"A lot of us are not quite as [technologically] gifted, so blogging is a bit intimidating," he said. "This technology allows you to put it out there without knowing how to read code, almost."

Sales are generated through yearly subscriptions, which can cost as little as a couple of thousand dollars to as much as hundreds of thousands of dollars, depending upon the number of blogs. Business is cultivated from trade shows, networking, online pay-per-clicks, e-mail advertising and webinars.

"When you have a product that you can sell to almost every business in the country, it's not a lack of opportunity," Baggott said. "It's how you execute that."

If at first you don't succeed

The Pittsburgh native speaks from experience. Upon graduating from liberal arts school The Evergreen State College in Olympia, Wash., Baggott spent time in Chicago and metropolitan New York gaining direct-marketing experience at R.R. Donnelley and Sons Co. He and his wife, the sister of Dorsey's wife, ultimately moved to Indianapolis for qualityof-life reasons.

Baggott purchased Sanders Cleaners and Laundry Inc. in 1992 and had planned to build a large chain of dry cleaners by tracking customer habits through database marketing. He had been experimenting with e-mail marketing since the early days of America Online and thought direct-mail campaigns were too expensive and yielded spotty results.

His virtual newsletter advertised specials at the shop and provided clothescleaning tips. Customers also e-mailed Baggott with dry-cleaning questions. But Baggott's lack of pants-pressing skills, coupled with a large amount of debt he had incurred, led him to sell the business in 2000.

In the meantime, the business ideas he and Dorsey had been kicking around led to the formation of ExactTarget.

That's where Baggott met Sales. The Columbus, Ind., native who graduated from DePauw University spent two years at ExactTarget as an Orr Fellow, a program that aims to keep college graduates in Indiana. From there, she went to locally based Resort Condominiums International LLC as an online marketer before ending up at ChaCha Search Inc., tech guru Scott Jones' human-assisted Internet search engine.

Sales arrived at ChaCha in 2006, at the very beginning. The experience she gleaned at the startup made the decision to help launch Compendium easier, she said. Meanwhile, though content at ExactTarget, Baggott believed the idea behind Compendium was so compelling that he could no longer wait to launch the company. He remains an ExactTarget board member and shareholder.

"Chris is a brilliant entrepreneur and a true visionary in the Internet-marketing industry," Dorsey said. "I am very proud of what he has accomplished at Compendium."

Whether Compendium rivals ExactTarget's success remains to be seen, but for now, Baggott and Sales "just love this idea."
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