|WRAP Your Email Around This|
Today we are initiating coverage of WrapMail, which has a proprietary platform that enables users to transform their emails into branding and marketing tools. We liked the Company so much we signed up as a client. The founder just bought 700,000 in the open market so he put his money where his mouth is. WRAP could be an amazing and widely used branding tool for any organization. Our long term target is $0.60.
Founded in Florida in 2005, WRAPmail combines its proprietary technology with custom marketing content and provides a next generation marketing e-mail platform for organizations and individuals. The Company provides a "rich" e-mail letterhead solution to organizations and individuals allowing e-mail correspondence to be written on letterhead as opposed to a blank sheet of paper, which is today’s current practice. The Company refers to a "rich" e-mail message as one that includes one or more of the following: graphics, pictures, text, audio, video, animation and links. WRAPmail has developed a platform of rich e-mail software features based on industry standards packaged as an integrated, turnkey server-centric product that resides in the cloud. WRAPmail’s focus is the one-on-one email although email-campaigns may also be accommodated.
The genesis behind the innovative WRAPmail platform is to leverage the ubiquitous yet untapped power of user’s current email and the insatiable desire for traffic to one’s corporate and/or social network site. If used properly, emails, which are sent daily on a person-to-person basis, or a very small group, can become complete and/or complementary marketing tools that promote, brand, sell and cross-sell products and services, and drive traffic to the designated website.
In essence, WRAPmail offers the most cost-effective marketing solution on the market by simply turning every regular one-on-one email into a marketing tool.
As of mid-3Q12, over 6,200 clients have been launched. WRAPmail clients span virtually every industry and include household names such as Verizon (NYSE – VZ), Toshiba (OTC – TOSSY), RE/MAX, and others. In our view, while WRAPmail can be used in any line of business, it is particularly suited to Real Estate, Electronics, Copier Dealers, Automotive and Boat Dealers, TV/Radio, Restaurants, MLM/Network Marketing, Hotels, Cruise, Sports, Attorneys, Newspapers, Builders/Contractors, Financial Services, Travel, Furniture, Education, and Manufacturing.
WRAPmail PRO is tailored for small and medium organizations and individuals. The revenue model is based upon 3rd party advertising as part of the WRAP or above/below the WRAP. Users receive up to 25% of the ad revenue generated which is a very similar model to Google (NASDAQ – GOOG) Adsense.
WRAPmail PRO+ is an ad-free solution where there are no 3rd party ads present (unless the organization/user elects to participate in the ad-share program) and instead elects to pay $50/user/year.
WRAPmail Enterprise is a dedicated server solution which includes full webmail, WRAPmaker, Reporting, Repeater emails and a Campaign module. Enterprise is either hosted by WRAPmail or on clients’ own server. The Campaign module features the ability to send email blasts/newsletters using the same proprietary WRAPmail technology with everything embedded so images display without download. Cost: $3,500/year + $40/user/year. Campaign module: $0.005/email. Hosting is an additional cost.
Each user has access to a dashboard whereby elements of the wrap can be modified (e.g. personalized with a picture and contact information.) This solution is especially suited for the MLM/Networking Marketing and real estate businesses. The Company also offers dynamic links based upon the sender so that tracking from email to order from a website is possible. Plus, email and/or automated delivery of SMS (text message) based upon clicks/website actions is available.
Some of the most popular features include WRAPmaker, a tool which creates WRAPs, and the ability to engage real-time tracking reports and modify settings found on the dashboard.
Over the past few years as the economy has struggled, affiliate programs have thrived as they enable users to generate fees from ad revenue sharing or fee sharing. We believe that the WRAPmail program is robust and very attractive, especially to individuals or sole proprietors, which could drive a real viral engagement.
Free Affiliate program:
All users can sign up for the free affiliate program and receive 10% commission on:
Super affiliate program:
$60 to join gets super affiliates up to 25% commission on:
BEHIND THE SCENES
WRAPmail is a server/cloud- based solution. Users create emails just as they always have, and do not see the rich content. Users are not required to change their e-mail address and the administrator can “construct” with or without the help of the WRAPmail Production & Design team, multiple e-mail letterheads using the included WRAPmaker that allow for including different graphics, links, promotions, surveys and/or audio. With some WRAP solutions, the email makes a “stop” after leaving the user’s desktop and that “stop” is where the email gets wrapped. WRAPmail will either reside on a dedicated WRAPServer or a shared WRAPServer located in WRAPmail’s secure hosting facility. Installation in a client’s data center is also possible.
Webmail users can enjoy the easy-to-use toolbars for Gmail, AOL (NYSE – AOL), Microsoft LIVE/Hotmail (NASDAQ – MSFT), Yahoo! (NASDAQ – YHOO). The toolbar now lets users stay in their familiar webmail interface and when composing an email the WRAP appears in the text area and the user simply types inside it and hits send.
WRAPmail has nearly unmatched delivery capability. Emails that have been sent are always delivered and they show up without red x’s where there are pictures and links (unless delivered to a non-standard email client), as opposed to most mass-email programs. WRAPmail has completely tested Microsoft Outlook, Lotus Notes, Mac Mail, Entourage, Gmail, Yahoo!, AOL, Hotmail, MSN among others and the solutions are 100% compatible. The innovations continue and some of the latest solutions are:
The size of WRAPmail’s addressable market is enormous. The Radicati Group estimates that by 2013 there will be nearly 1.9 billion email users sending over 500 billion emails---per day. With hundreds of billions of email messages estimated to be sent daily by the end of 2013, if the Company were to only capture 0.05% of all emails in which a revenue share opportunity was generated though a click-through, plus limited penetration on the enterprise and WRAPmail Pro+ offerings, the Company could generate tens of millions in revenue, with high operating profitability.
As noted in the figure below, according to industry experts IAB, Internet advertising revenues in the United States totaled $31.7 billion for the full year of 2011, a 22% increase over 2010. What we find interesting is that email comprises the smallest portion of all ad spending. However, given the crossover of the WRAPmail offering, we believe that it would fall under both email and display-related revenue, thus demonstrating a huge revenue opportunity that represents tens of billions.
Regardless of the market size, WRAP’s business opportunity is two-fold: 1) Be the first vendor to broadly offer rich one-on-one email wrapping to organizations and individuals and 2) Create a brand new advertising revenue stream by incorporating 3rd party ads inside personal one-on-one emails. As new distributors are brought on and a new sales team built, investors can expect a full court press for the sign-up of new clients.
Rolv E. Heggenhougen, CEO
Mr. Heggenhougen has founded and managed technology organizations in Norway, Sweden, Denmark, Latvia, Switzerland, Germany, China, Australia, and the US. His first company; iGroup ASA (OSE: IGR) went public in 2001. From 1989 to present, he has served as Founder & Chairman of McKenzie Webster Limited, a technology investment and consulting company and etechnologycorp, a Connecticut- based technology company. Mr. Heggenhougen holds and has held several BOD-positions in private and public companies in Europe, Australia and the US.
Greg Partin, CTO
Over 15 years in the field of software development of enterprise systems. Fluent in multiple technologies such as .NET, HTML 5, Ajax, MVC, WCF, SQL, Web services and cloud-based architecture and design. Bachelor’s degree in Computer Science from Bowling Green State University, Master’s degree in Computer Information Systems from Nova Southeastern University
Mr. Partin has held numerous different leadership positions in several different internet-based companies.
In our view, WRAP, as the only offering of this type in the market, has significant advantages over traditional branding and marketing tools and strategies.
In our view, WRAP’s biggest risks are the timing and scale of new user sign-ups, particularly in the enterprise space. A secondary concern would be the typical balance between the advertiser-supported level of service and the fee-based solutions. Furthermore, it is a bit early to gauge CPM (impressions) or CPC (cost-per-click) rates that will be used in revenue generation and revenue sharing until a critical mass of users is in the WRAP ranks. Execution risks in sales and the management of marketing and distributors could push meaningful revenue generation out to a later date, or in a smaller ramp, thus impacting the Company’s revenue ramp or time to significant profitability. Competition from larger firms or even from newer entrants is a typical concern and is also consistent with firms of WRAP’s size and standing.
We believe that WRAPmail’s unique and innovative email branding platform could represent the next phase of broad-based website and organizational branding and marketing. Moreover, as the Company gains critical mass, it is likely that the service is used as an “always-on” marketing tool in conjunction with mass marketing campaigns. With hundreds of billions of email messages estimated to be sent daily by the end of 2013, if the Company were to only capture 0.05% of all emails in which a revenue share opportunity was generated though a click-through, plus limited penetration on the enterprise and WRAPmail Pro+ offerings, the Company could generate tens of millions in revenue, with high operating profitability.
In the near term, aside from new major sign-ups, there are a number of milestones ahead. These include new distributorships abroad, sales and marketing hires in the U.S. and prospective strategic partnerships in the CRM, Hosting and Lead generation space.
As noted above, given the viral nature of the service, WRAP could generate as many as 500,000 new users in the next 2-3 years and one of the secondary drivers could be the affiliate revenue potential, along with its positioning as a solid corporate citizen in the community with its promotion of the optional RSS feed from the Center for Missing and Exploited Children.
Separately, the recently announced open market purchase of 700,000 of WRAP stock by the Company’s founder should provide a great deal of confidence in WRAPmail’s future prospects.
As WRAP gains critical mass, it could be considered as an M&A candidate by external email client providers, or other players in the email marketing arena. Thus, our price target of $0.60 reflects the future value of WRAP’s revenue and users. We rate WRAP Speculative Buy.
Analyst: Robert Goldman
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