• by Gavin O'Malley  @mp_gavin, March 3, 2008

Attracted by an envious roster of media and agency clients, Mzinga, which builds social networks for businesses, has acquired rival software provider Prospero.

Mzinga, which only launched last November, just closed a round of financing worth nearly $30 million--more than half of which is being used to buy Prospero, a source close to the deal said.

For that price, Prospero is delivering some serious media and retail clients, including ESPN, ABC, Fox News, and Babycenter.com, along with top agency partners like Digitas and Avenue A|Razorfish, the digital agency now owned by Microsoft.

"It was a very influential factor in the acquisition," said Karen Leavitt, chief marketing officer at Mzinga, regarding Prospero's existing clients.

Mzinga, which means "beehive" in Swahili, is itself the result of a merger between white-label social network provider Shared Insights and Web-based corporate learning company Knowledge Planet.

For a fee, Mzinga helps corporations create both internal and consumer-facing social networks made up of blogs and profile pages, wikis, polls, calendars, forums, file uploading tools, and group pages, among other features.

In addition, Mzinga uses semantic analysis and concept matching to find meaning in the discussions going on, while ranking conversations and comments based on frequency.

Self-service offerings from Mzinga run about $1,000 per month, while full-service packages can cost companies upwards of $15,000 a month.

Its existing business is largely represented by companies in the fields of finance, health care and professional services, including Putnam Investments, Northwestern Mutual, American Diabetes Association, Coventry Healthcare, Accenture, and Mercer.

In addition to a more diversified client base, combining the resources of Mzinga and Prospero gives the two companies far greater odds of success, according to Rusty Williams, Prospero co-founder and vice president.

"The point is to grow fast enough to meet the growing market demand," Williams said. "The combined companies will get us there faster."

Post-acquisition, Mzinga's network is made up of 130 business clients, which make up a total of 14,000 individual communities, Leavitt said. Those communities are then made up of 27 million registered users, and approximately 30 million monthly unique visitors.

At launch back in November, Mzinga reported $17 million in annual revenues and 100 employees. Now, with Prospero on board, Mzinga is on target to reach $30 million in revenue this year, according to Leavitt.

And, despite competition from a growing list of rivals--Leverage, Lithium, LiveWorld, Networked Insights, and Pluck, just to name a few ---Mzinga's Leavitt believes market demand will continue to outpace available resources.

"Communities are creating a whole new highly measurable channel for marketing investment," Leavitt said. "Depending on the industry vertical, I'm betting that 40% to 50% of companies will have chief community officers by 2010."