Vocus tackles digital marketing, hires hundreds

Vocus President and CEO Rick Rudman greets job-seekers at Vocus, a Beltsville-based software company. Vocus started with less than 100 employees in Atlanta; they expect to expand by hiring about 1,000 employees by the end of 2013.

Vocus Inc. is hiring hundreds of people, betting big that it will become a leading digital marketing firm for small and medium-sized businesses.

The Beltsville-based technology company is on track to hire around 500 people this year at its headquarters and other locations. And it intends to hire at least 200 more next year, company officials said.


Vocus CEO Rick Rudman calls online and social media marketing a multi-billion-dollar opportunity, as businesses shift spending from traditional media, such as television and print, to digital.

"We're in a very large untapped market, in the digital marketing space," Rudman said. "Our job is to help companies be found via the modern marketing channels."


Founded 20 years ago, Vocus started off selling software for public relations professionals and political action committees. It went public in 2005, selling $45 million of stock. In recent years, the company beefed up its focus on social media, search engine and digital marketing, selling software suites that help companies monitor their brands online and engage with their customers.

Rudman demonstrated the company's bold ambitions last year, when Vocus spent $12 million on a new 93,000-square-foot headquarters building, which was modeled after the town of Seaside, Fla. (Nearly $2 million came from Prince George's County and state tax credits, grants and loans to persuade the firm to stay and grow in the county.)

County officials will tour the Vocus headquarters next week as part of a tour of five companies that are growing in the county, said Barry L. Hudson, communications manager for County Executive Rushern L. Baker III.

"We're going there because they're a major employer in the county, and a pretty innovative company," said Hudson.

Vocus' offices feature an interior "Main Street" with a coffee shop, gym, spa, indoor basketball court, and meeting rooms modeled after a barber shop, a record shop and a surf shop. Every day, a different caterer serves food to the staff for low prices. On a recent Thursday, Expressway Pit Beef of Odenton set up tables and served pit beef and ham sandwiches to staffers.

In February this year, Vocus agreed to buy iContact, a North Carolina-based email marketing firm for $170 million. It was a move that initially confused investors, sending the company's stock down 40 percent, from $22.55 to $13.53, in a single day. The stock has since rebounded to close Friday at $17.92 a share in Nasdaq trading.

Tom Roderick, an analyst with Stifel Nicolaus in Chicago who tracks the company, said the company is positioning itself on the leading edge of digital marketing.

Vocus can offer customers email marketing, social media monitoring and engagement, Facebook applications, public relations tools and search engine marketing.


"This is the new wave in marketing — there's definitely a shift away from print," Roderick said. "Even in digital, it's now moving more toward social media."

Whereas Vocus used to offer a couple of marketing and PR technology solutions, Rudman said the company now offers a comprehensive suite of products that his sales staff can pitch to mid-size and small businesses. That's the sweet spot for Vocus, he said.

And he wants his company to be one of the players that leads what he sees as the inevitable consolidation in the digital marketing industry, which has a handful of big players but is dominated largely by small, niche companies.

At a recruiting fair last week, Vocus attracted nearly 400 people to its headquarters. The company is hiring for positions from sales and marketing to programmers and information technology experts. It intends to roughly double its sales force, to 500 people in the coming year.

"We're looking for smart and talented people who are passionate about helping our customers grow their business, and who want to join a company where the opportunity is unlimited," Rudman said.

The company employs 1,200 people worldwide, including 700 in Beltsville.


In a research note to investors earlier this year, Roderick said he sees good potential in Vocus up-selling its digital marketing suite to iContact's 70,000 customers. The analyst estimated the company could pull in as much as $5.1 million in additional revenue by cross-selling Vocus products to iContact's customers.

The company sells its technology products to other companies using a "software-as-a-service" model, where software and data are centrally hosted and used by Vocus customers over the Internet rather than stored on their own local computers. Vocus sells its products at an average price of $3,700 a year, according to Roderick.

For the quarter ended June 30, Vocus reported revenue of $43.6 million and a profit of $2.5 million excluding unusual and non-recurring transactions. When those costs were included in the second-quarter results, Vocus posted a $5.2 million loss, compared with a $760,000 loss in the same three months last year.

Rudman said the company will use its cash flow to fund its expansion through next year.

To fund growth, Vocus will squeeze its profit margin — lowering it from 13 percent in the past to about seven percent, Roderick estimated.

Competitors both big and small are circling the digital marketing market. One of Vocus's larger competitors is Constant Contact, a Waltham, Mass.-based company that had $214 million in revenue last year, $100 million more than Vocus.


Consolidation in the industry already has started. Earlier this year, Salesforce paid $689 million to buy Buddy Media, a prominent social media marketing technology company. And Oracle paid $300 million for Vitrue, another social media marketing technology firm.

Spending on digital marketing is expected to grow from $37 billion this year to $55 billion by 2016, according to eMarketer.

Vocus's long-term goal is to grow as the market for digital marketing expands.

"We expect to become a billion-dollar software company," Rudman said. "There's room for a few of us."