Gomez Inc

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GOMEZ INC.

Gomez Inc., formerly Gomez Advisors, was founded in 1997 by Julio Gomez, John Robb, and Alexander Stein. Just four years later, Gomez had secured the leading position among Internet research firms that served both consumers and e-business firms. The company evaluated over 6,000 e-commerce sites using its "Internet Scorecard," which ranked the performance and quality of World Wide Web sites in various industries such as finance and banking, travel, airline, and other retail-based sites. The firm also developed GomezPro, a subscription-based Web site that catered to businesses, and GomezNetworks, a division that offered real-time Web site and transaction performance measurement and diagnostic services. Through its Internet Quality Measurement (IQM) Program, the company helped its customers evaluate and compare its offerings, measure and monitor its performance against others in its industry, and develop online strategies.

DEVELOPMENT OF THE INTERNET SCORECARD

In 1997, Gomez, Robb, and Stein created Gomez Advisors as part of The Ashton Technology Group. Operating as a subsidiary of the group, Gomez was first focused on evaluating the online services provided by brokers. With a goal of improving the online experience for consumers, the company established its Internet Scorecard in June 1997 and began rating various Web sites. Gomez ratings—rankings based on various criteria—soon became quite popular in the brokerage industry. Receiving top accolades from Gomez was considered a coup among industry players. A 1999 BusinessWeek Online article claimed that "for online brokers, getting a top rating from Gomez Advisors Inc. is like winning an Oscar."

The Internet Scorecard ranking consisted of roughly 150 different criteria points. Gomez collected data on those points by visiting Web sites, conducting business and using customer service on those Web sites, and monitoring performance. The online sites were then ranked by Scorecard categories, which included ease of use, customer confidence, on-site resources, relationship services, and overall cost. Ease of use, for example, used between 30 and 50 criteria points such as functionality, simplicity of opening an account or making a purchase, and ease of Web-site navigation. Customer confidence used criteria such as the availability and depth of customer service options, and the ability to resolve customer service issues. The On-site resources category was rated based on criteria such as product availability, and Relationship services were based on criteria such as online help, advice, frequent buyer incentives, and personalized data. The Overall Cost category was ranked using criteria such as average cost for typical services and additional fees related to shipping and handling.

The Scorecards were then listed on the Gomez Web site. For example, a consumer who wanted to find information on different full service broker Web sites could go to the Gomez site and peruse the broker Internet Scorecards that the firm had listed. The consumer could view the ranking listed by overall score, or view the ranking by individual category such as Ease of Use. A profile of each company was listed as well and offered information on the pros and cons of the site and how the company performed in each category.

EXPANSION

In April of 1999, Gomez sold 1.1 million shares as part of a private placement effort; Ashton kept a 28 percent interest in the firm. Using the $5.5 million it raised, Gomez began to broaden its marketing efforts and also started to develop new products. During that year, Gomez expanded into rating the online efforts of companies in other industries. Touting itself as "The E-Commerce Authority," the company launched scorecards for airlines, apparel retailers, consumer electronics and computers retailers, drug stores, furniture stores, grocery delivery services, hotels, loan and insurance providers, pet stores, sporting goods retailers, and toy stores.

In late 1999, Gomez also formed several key partnerships as part of its brand recognition effort and in order to gain an increased presence on the Web. In October, it teamed up with Hoovers Online, a provider of business news and company information. As part of the deal, the Gomez Advisors Internet Broker Scorecard became part of the Hoovers Stock Web site. It also partnered with Marketwatch.com, the operator of the CBS.Marketwatch.com Web site, and America Online. As a result, Gomez's financial-related scorecards became available on both sites.

As Gomez entered the new millennium, it began to focus on providing services to businesses as well as consumers. In March 2000, the firm launched GomezPro.com, a business-to-business site created to help companies in their e-commerce efforts. Through its IQM Program, the site offered e-commerce tools, quarterly Internet Scorecard reports, custom advisory services, and market research studies. That same month, Gomez also developed a Merchant Certification program designed to reward the efforts of online merchants in over 25 different industries, as well as foster consumer confidence among online shoppers. Merchants that met eight different criteria, such as having customer support access and published privacy policies, received a Gomez PASS seal. If the merchant met more advanced criteria, it received a PASS PLUS seal. By May 2000, over 2,000 online merchants were part of the program.

Gomez also continued to form alliances as part of its growth effort. The firm joined with InfoSpace, a provider of information and commerce infrastructure services, to provide InfoSpace customers access to Gomez certified merchant information. The firm also teamed up with Yahoo! Inc. to provide its Internet Banker Scorecards on the Yahoo! Finance banking center Web site. CNET.com, an online technology information site, also began using the Gomez Merchant Certification program on CNET Shopper.com.

In order to strengthen its foothold in the business services market, Gomez announced the formation of GomezNetworks in September 2000. This new division was developed to provide real-time Internet site and transaction performance measurement and diagnostic services. The firm hoped to use the network division in conjunction with GomezPro to capture increased business from online firms looking to compare their e-business initiatives against others in their industry.

The following month, Gomez announced that it was pulling the plug on its upcoming initial public offering. Citing weakening market conditions as the cause, Gomez instead secured private financing from Softbank Ventures Inc. and various other investors. The firm utilized the funds for continued development of new marketing and product initiatives designed to cater to both consumers and businesses. While a September 2000 Washington Post article reported that Gomez had become "a top spot for comparing the cost and quality of Internet brokerages, banks, and other e-commerce services," the firm also continued to promote the services offered on GomezPro and GomezNetworks to businesses. By securing customers such as Charles Schwab, Lycos, JP Morgan, Intel, America West Airlines, and Dollar Rent-a-Car, Gomez appeared poised for future growth.