SaaS-oriented digital marketing software and IT services specialist dotDigital has confirmed that it is getting out of the marketing services business as previously indicated (see dotDigital dumping dotAgency). The surprise is that it will wind the business down rather than attempt to sell it. Although management said they had considered a sale and there were some potential cash offers, they believe they will achieve a better return for shareholders by running off the existing contracts with the services division which should result in positive cash flow.
Changes in Google’s search engine algorithms meant dotDigital would have had to invest significantly to be able to successfully cross sell search engine optimisation (SEO) services with the rest of its portfolio, hence its decision. The move is another indication of the change in the search and advertising environment on the wake of social media advances. As always, it is where you operate that matters. Blinkx, the video search software provider who acquired in the SEO space, is moving forward an enviable rate (see here and work back).