Zmags' $7M funding aims for richer online shopping experience

Zmags Inc., a rich media marketing company in Boston, has landed $7 million in a debt funding round, CEO Michael Schreck said today.

The company develops a software-as-a-service product that enables marketers to turn static print or PDF collateral into interactive flash format. The result, Schrek said, is a new “shopping discovery” platform for tablets and mobile devices called CommercePro that aims to compete with giants like by taking a different strategy altogether.

“It’s the opposite of Amazon, where you know what you want,” Schreck said, noting that the online marketplace giant tends to cater to customers who know what they want, find it online, buy, then leave the site immediately. The CommercePro platform caters to the casual, social shopping experience that comes with in-store browsing.

Schreck thinks he’s hit on valuable niche that enables retail stores to still gain market share online against “You can’t compete by doing one click better,” he said. “You can’t play by the same rules. You have to play a different game.” He points to three data points that he said Zmags’ rich media platform has achieved: Almost 100 percent increase in online order size; three to six times the amount of time spent on site; and 80 percent of Zmags users visiting every single page. The company has attracted a number of familiar brands and retailers to use its platform, including Kenneth Cole, Neiman Marcus, Dick’s Sporting Goods, Home Depot and Audi.

The $7 million financing Zmags has taken in includes $5 million in debt funding from new investor Square One Capital and $2 million from the company’s existing investors – OpenView Venture Partners and Northcap Partners. This spring, Zmags is planning for a larger, pure equity funding with a lead investor closely tied to the retail industry, Schreck said.

Schreck joined Zmags in May from his former role as a partner at General Catalyst Partners. The company then named a new chief operating officer in August with W. Sean Ford.  Schreck and Ford co-founded online college savings service Upromise Inc. in 1999.