WordStream Tries to Tame a River of Search Marketing with Software for Small Businesses

With all the hoopla around social media and other newfangled marketing tools, people sometimes forget that Google is a $30 billion business—thanks mostly to paid search advertising.

Not Larry Kim. His startup, Boston-based WordStream, specializes in search engine marketing software. That means helping businesses make their paid text ads appear high up on the page, next to the most relevant search results—say, for instance, when people search on Google for car insurance. The approach sounds almost quaint, but the idea is what Kim calls “automated expertise”—basically, providing software as a service to help businesses navigate Google’s AdWords platform, as opposed to a consultant who charges $1,000 or more per job (and then goes away).

The company is releasing a free tool today, called AdWords Performance Grader, and it’s geared toward small- and medium-sized businesses. As Kim explains, the software analyzes their AdWords account, shows them where they’re doing well and not so well, scores them compared to other advertisers spending a similar amount, and suggests ways to do better, such as adding certain keywords, excluding others, and adjusting the text in their ads.

It’s part of a big push by WordStream to add thousands of more users this year. The company has been growing fast, bringing in record revenues in each of the last four months, says Kim, the founder and chief technology officer. The startup currently has hundreds of customers, he says.

WordStream started in 2007 and has raised $10 million in venture funding from Sigma Partners and Egan-Managed Capital. The company went through a restructuring in the past year, which included bringing on new CEO Ralph Folz, who previously co-founded digital marketing firm Molecular (bought by Isobar in 2005). WordStream currently has 35 employees.

Kim originally came to Boston in 2000 and worked as a software engineer and then a search marketer and consultant for six years. He started developing the core technology behind WordStream to make his consulting work more productive. In the past decade, he has lived the classic consultant-to-startup life, including early days of working out of a Panera Bread café (free Wi-Fi) and the trials and tribulations of hiring a team and putting a product out there.

Paid search seems pretty complementary to what some bigger marketing-tech companies around Boston, like HubSpot and Constant Contact (NASDAQ: CTCT), are doing. Those firms provide a mix of social media marketing, e-mail marketing, customer relationship management, and search engine optimization. But WordStream is here to remind us that good old-fashioned search marketing is alive and well, in the form of automated software.

“We think it’s a billion-dollar market opportunity,” Kim says.

True, but who wouldn’t? The challenge for WordStream lies in continuing to develop a product that resonates with core users, and getting the word out more broadly about its offerings. We’ll be watching to see if today’s release helps the startup reach the masses.

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