GSI Commerce Acquires Pepperjam

KING OF PRUSSIA, Pa. & WILKES-BARRE, Pa.–GSI Commerce Inc. (Nasdaq:GSIC), the leading provider of e-commerce and multichannel solutions, today announced it has acquired certain assets of the Pepperjam affiliate marketing network and the Pepperjam full-service, interactive marketing agency which specializes in search. The acquisition will expand the breadth and depth of GSI’s interactive marketing services capabilities and its reach into existing and new vertical markets. Pepperjam will benefit from GSI’s scale and market-leading position in e-commerce and marketing services. Terms of the deal were not disclosed.

“The acquisition of Pepperjam is a strategic extension of our marketing services business that we believe will enhance growth opportunities for both GSI and our clients,” said Michael G. Rubin, chairman, president and CEO of GSI. “Affiliate marketing is a powerful interactive marketing tool. Last year, our affiliate marketing channel generated more than $100 million in sales for our clients. By owning our own affiliate network, we believe we can more rapidly drive innovation and service enhancements to our clients while also expanding our marketing services offering to a broader universe of prospective clients. We expect the affiliate business to represent an important opportunity over time.”

According to independent firm Forrester Research Inc.’s April 2009 report, “Online Marketing Benchmarks For Internet Retailers,” online retailers spend 20 percent of their online advertising budgets on affiliate marketing and online marketplaces.

“GSI’s entrance into the affiliate network business could provide online retailers with a powerful combination of integrated e-commerce and marketing services,” said Bob O’Keefe, senior director of NFL Direct. “We’re excited about the acquisition and we believe that GSI will help grow our overall affiliate business by taking the Pepperjam network to the next level.”

Pepperjam, located in Wilkes-Barre, Pa., has 48 employees and will operate as a separate business unit of gsi interactivesm, reporting to Nick Pahade, president of gsi interactive.

The Pepperjam network offers many innovative affiliate marketing features that represent key points of differentiation compared to other alternatives, including:

• The Pepperjam Network Transparency System provides advertisers with the disclosure of important information, including reliable contact information, promotional methods, Web site(s), and marketing potential. The system allows advertisers to have more confidence in and more control over the affiliates within their respective affiliate program and also empowers affiliates to build stronger, more profitable advertiser relationships.
• Pepperjam’s premier product feed and store builder technology features products from hundreds of top Internet retailers and allows affiliates to build dynamic e-commerce storefronts in less than 30 seconds.
• The ability for affiliates and advertisers to communicate with each other in real-time through a service called Pepperjam Chat™.
• Source-level tracking and reporting, which is beneficial to search marketing and helps sophisticated affiliates that want to track commissions at the keyword level.
• Pepperjam ADS, a widget that affiliates can use to serve customized contextual ads from one or more network advertisers concurrently.
• A recruitment feature that enables clients to search for new affiliate recruits by categories, by status (pending, not joined), by transparency ranking and by method of promotion.

“This is a great fit for Pepperjam and the hundreds of clients and thousands of affiliates that we serve,” said Kristopher B. Jones, president of Pepperjam. “We are teaming with the leading provider of e-commerce and marketing services which will provide us with strategic guidance and the opportunity to grow our affiliate network.”

“Affiliate marketing is a proven and cost-effective channel for online retailers and marketers,” said Pahade. “Pepperjam is a young and growing company with tremendous potential. In addition to the network, we are also excited that this acquisition expands our presence in agency services for affiliate marketing and search, areas where we already have a meaningful and growing business.”

Gridley & Company, a New York City-based boutique investment bank, provided GSI with advisory services on the deal.

About GSI Commerce

GSI Commerce® (www.gsicommerce.com) is a leading provider of services that enable e-commerce, multichannel retailing and interactive marketing for large, business-to-consumer (b2c) enterprises in the U.S. and internationally. We deliver customized e-commerce solutions through an e-commerce platform, which is comprised of technology, fulfillment and customer care. We offer each of the platform’s components on a modular basis, or as part of an integrated, end-to-end solution. We also offer a full suite of interactive marketing services through two divisions, gsi interactivesm and e-Dialog (www.e-Dialog.com).