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Search THIS: ValueClick Profile

Search THIS: ValueClick Profile Kevin Ryan
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To: Undisclosed_Recipients
Date: Sat, 07 Feb 2004 02:46:58 +0400 
Subj: FW: You know you are living in 2004 when…


… 8. You’ve sat at the same desk for four years and worked for three different companies.


A dear friend of mine forwarded me a funny email last week. You know, one of those emails with a “guaranteed funny” subject line. Those are great for productivity. Normally, I’d hit the delete button faster than Jesse James would pull a six gun while on a methamphetamine vacation, but something had me reading this one.


After a moment’s grin, I realized number eight hit pretty close to home. I have been working with the same people in as much time and at last count, the name on my paycheck has changed about as many times. Mergers and acquisitions have been the status quo in online marketing since online marketing began. At least one firm is trying to bring all forms of one discipline together to form a performance marketing powerhouse.


ValueClick Inc.—which started as a little cost-per-click banner firm serving up response-based ad inventory on sites that either didn’t or couldn’t sell premium impression-based advertising—exists today as an affiliate and Search Engine Marketing (SEM) company (Commission Junction, beFree), an adserving firm (MediaPlex), a management information systems provider (AdWare) and a pay-for-placement search engine (Search123). But is the all-in-one solution a good idea for performance marketers?


Bricks and Clicks


ValueClick was set to go public on March 31, 2000, with an initial offering of 4 million shares. The IPO was met with cautious optimism since performance marketing was a phrase that had yet to be coined and cost per (insert desired activity here) was not hot on everyone’s agenda. An article published on Forbes.com three days before ValueClick went public suggested the firm would face a grim future unless pay-per-click advertising caught on. Guess what happened next? By November 2002, Forbes.com published another article that categorized ValueClick as a “Cash-Rich Long Shot.”


As someone who survived several mergers and lived to tell about it, my own bias has me saying the easiest part of any merger happens around the negotiating table. The aftermath—i.e., pieces of various firms left in the wake of maximizing shareholder equity—presents a series of challenges. In ValueClick’s case, it represents gathering disjointed entities to move as one. Within that lie a few problems such as reconciling the inherent conflict of interest with owning a search syndicator while maintaining a search marketing offering and having two well-established industry brands delivering the same services.


ValueClick must be doing something right from the Wall Street perspective, because I checked back in with my Forbes.com barometer last Saturday and the MarketEdge Second Opinion Weekly had the company recommended as a buy.


That’s all well and good, but what about the advertisers? Experience has taught us on many occasions that Wall Street darlings are not necessarily the best ad partners. Let’s take a closer look at the building blocks that now comprise ValueClick Inc.


Pieces of Performance


The little-results-banner-ad-company-that-could has done an excellent job of acquiring online marketing disciplines. “People used to hear ValueClick and think cost-per-click banners. Today, performance banners comprise only 6 percent of our revenue,” says John Ardis, ValueClick’s vice president of Digital Direct Marketing and Corporate Strategy.


Putting ad serving company MediaPlex and solutions provider AdWare aside for the moment, ValueClick holds the keys to essential performance marketing components, which also happen to be the hottest points of growth in online advertising.


ValueClick

As an ad network, ValueClick falls among pretty hefty players like Advertising.com, BURST! Media and MaxOnline with one significant twist. ValueClick has been performance focused from Day One, exists today as such, and maintains relationships with nearly 6,000 sites.

Ad networks in general are not the core of an online media plan, according to Underscore Marketing’s Chief Strategic Officer Jim Meskauskas: “The role of the ad network in an online media plan, in my view, is like that of spot fill in a national broadcast plan. Some markets under deliver certain programming on a national basis, so I have to buy spot fill to beef up my communication delivery goals.”
 
Not long ago, I discussed tier two or “alternative” paid search engines. Since authoring that column last July, more than a few things have changed in this space. One provider was purchased and summarily dismantled (Sprinks), others have emerged (Kanoodle), and one search provider brand just got purchased and has experienced a big boost in traffic (Search123).

At first glance, pulling Search123 and ValueClick together could be compared to mating a Rat Terrier with a German Shepherd. However, the second tier search provider was perhaps the biggest winner of all of in the ValueClick acquisitions. Search123 realized a much needed traffic increase from the network. Like Meskauskas’s assessment of an ad network’s role in an online media plan, the second tier search provider serves a similar capacity in a search plan. With a multitude of alternative search sites to choose from, Search123 becomes a much easier choice with ValueClick’s power behind it.

beFree/ Commission Junction

Having purchased beFree in mid-2002, two of the biggest names in affiliate marketing came together when ValueClick completed its acquisition of Commission Junction in December 2003.

ValueClick plans an integration of the two firms this year and clearly recognizes the explosive growth of search. “Affiliate and search marketing could be half our business this year,” says Ardis. Both CJ and beFree boast some pretty big clients like Marriott.com, eBay and Expedia in the affiliate space, and both firms are now offering SEM services.

The idea behind affiliate marketing contains a simple performance requirement, yet SEM and affiliate marketing seem to go together like fly fishing equipment and snow shoes. The agenda of search marketers and their affiliates are notoriously in conflict as advertisers often find themselves in competition for the same keyword search. Worse, the disciplines required for effectively managing a comprehensive search program are fundamentally different. On the other hand, it might be helpful to have the same people policing affiliates and providing SEM services to at least nip self competition in the bud.

There is also the small problem of owning a paid search provider in the face of offering SEM services. Hopefully, if you have hired an SEM consultant/agency/brother-in-law, you can count on them to provide you with unbiased advice as to where you should be investing your advertising dollars. It would be difficult to explain a Search123 exclusive paid search program with Overture and Google around. Then again if you are using the MediaPlex platform to serve ads into a ValueClick campaign, you are not really using a third party, are you? Clearly, there are some issues to be addressed here, and based on my experience in working with each of these firms, I’d say they are well on their way to creating some much needed synergy.

How Much Value?


This week, ValueClick announces fourth quarter and fiscal year 2003 results. Pulling the pieces of any post merger organization together is no small task and the challenge for ValueClick should be centered on the ability to effectively combine essential competencies in harmony while maintaining its established credibility in each discipline.


From my own experience, I can tell you my desk and office have moved over the years, but I am surrounded by some of the most intelligent and honorable people I have ever met with a common goal and desire for success. That, my friends, is what really helps any organization fly despite post merger chaos; I can only wish the same for ValueClick.



iMedia search columnist Kevin Ryan’s current and former client roster reads like a “who’s who” in big brands; Rolex Watch, USA, State Farm Insurance, Farmers Insurance, Minolta Corporation, Samsung Electronics America, Toyota Motor Sales, USA, Panasonic Services and the Hilton Hotels brands, to name a few. He is currently Director Market Development of IPG’s Wahlstrom Interactive where he provides guidance in directional online marketing to Wahlstrom’s prestigious list of clients and sister agency brands. No, Kevin is not saying Jesse James abused methamphetamine, but then again he wasn’t with him 24 hours a day.


Meet Kevin Ryan at Search Engine Strategies on March 2, 2004.

iMedia: What is the biggest misconception about LinkedIn that you've heard circulating among the marketing community?


Hoffman: There are two perceptions that we bump into: First, because our advertising business is only about a year or so old, there are some marketers who aren't aware that we accept advertising. Let me make it very clear: We do!


Second, there is a perception that professionals are primarily looking for jobs on LinkedIn. Finding new career opportunities or finding potential employees is definitely something we do and do well. However, it's not the only reason people are using LinkedIn. Outside research by Anderson Analytics confirms that less than a quarter of LinkedIn members are actively looking for work. We see hedge fund managers doing research on LinkedIn. We see business development professionals brokering deals on LinkedIn. We see executives asking their networks for advice on which advertising firm they should use. In fact, executives from all Fortune 500 companies are LinkedIn members.


We are more of a business professional community than we are a job site. We're increasingly seeing marketers recognize the potential of advertising on LinkedIn since LinkedIn has an audience that is made up of senior professionals who are serious about their careers.


iMedia: What are a couple of your own personal "best practices" for professionals looking to present and promote themselves on LinkedIn?


Hoffman: I actually think every individual is now an entrepreneur, whether they recognize it or not. The average job length is now around two to four years. That makes you a small business. You are the entrepreneur of your own small business. How do you get to your next gig? How do you progress in your career? All these things now fall on the individual's shoulders. They're essentially entrepreneurs in terms of the business of themselves and how they drive that. So how do you get your next job opportunity? How do you get a promotion? All of that stuff comes from how you manage the network around you. Which is, by the way, what gave me the idea for LinkedIn.


That being said, I have two pieces of advice: Get prepared and get involved.


First, invest some time in making sure your profile is complete. We offer a lot of advice on the site and at our learning resource, and there was a good piece loaded with advice here on iMedia Connection recently. But at the very least, make sure you provide a descriptive headline for what you do, provide a summary of your professional accomplishments and skills, and provide your entire work history. Be selective in the recommendations you make and those you solicit and accept, and also be selective in building out your network; who you're connected to (and who you're not) says a lot about you as a professional.


Secondly, get involved with your network. Share advice and insights in Answers, join the professional groups that matter to you, and use the Status feature to let your network know what you're up to. Put the LinkedIn Application Platform to work -- you can use the SlideShare application to share presentations, you can track what's being Twittered about your company using the Company Buzz app, and you can share recommendations about books with your network.

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iMedia: What's the biggest misstep you've seen people make when presenting themselves professionally on LinkedIn?


Hoffman: There are a small number of members that see "connection building" as a sport and try to connect to as many people as possible, but in all honesty, that's not going to serve you well. It dilutes the power of your network. It's more powerful to have a small network of high-quality connections that you want to see updates from and keep in touch with than it is to have a large network of loose connections you don't know very well.


The bigger and more frequent mistake we see people make is not completely filling out their profiles. By having a profile on LinkedIn, professionals have the ability to put the right information in the hands of potential clients, partners, and employers. Essentially, you have the opportunity to make a case on the web for why someone should work with you or hire you. If you fill out your profile completely, you're putting your best foot forward online, and that's important in an age where people are doing a Google search on you before meeting you in person.


It's worth noting that this is a smart community of professionals, and they'll see through attempts at blatant self-promotion. If you're in the Answers section of LinkedIn looking for potential new clients, showcase your professional value with selective and well-thought-out questions and answers that truly add value to the community. That approach is more likely to win you new clients and also help you build better business connections.


iMedia: It's been reported that 80 percent of the $100 million LinkedIn has raised is still in the bank. What are you planning to do with all that money?


Hoffman: We've been profitable for two years now so we raised the money to give us options, whether that's through acquisitions, international expansion, or even for the development of new products.


iMedia: What will the next generation of LinkedIn look like? Where are you looking to make changes, and what new features or capabilities are you looking to add?


Hoffman: We're constantly thinking about ways we can help professionals achieve their goals quicker and more efficiently by leveraging their networks. Our goal is to help professionals find the experts and information they need to quickly answer tough work-related questions.


We're also looking at ways that we can help companies and the enterprise as a whole. For example, we just recently announced a partnership with IBM where LinkedIn functionality will be integrated into Lotus Notes, giving people easy access to their network while they're using a communication tool.


iMedia: From a business standpoint, how would you like to see LinkedIn evolve? You've hinted at an IPO in the past. How feasible is that in this economic climate? Alternately, from an acquisition standpoint, what types of companies do you see as being the most appropriate suitors for LinkedIn?


Hoffman: Since we're independently owned and profitable, we are building a company and a product to help professionals throughout their entire careers. We're passionate about building a company that will help professionals do their jobs better, and we hope to make the world a better place as a result of improving productivity on a global scale. We've always believed that there would be an IPO in our future, and since we are profitable, we can do that when it feels right.


iMedia: Generally speaking, what's the most prominent demographic on LinkedIn? What age group or demographic are you missing, and how do you plan to attract them (if you're interested in attracting them at all)?


Hoffman: Most of the third-party measurement firms (like Nielsen and Quantcast) all say the same thing: that the typical LinkedIn member is in their early 40s, is making over $100,000 per year, is well-educated, and is likely to be a decision maker in their company. Anderson Analytics found that "senior executives" make up 28 percent of the LinkedIn membership, which would amount to about 10.6 million people.


When you use those same measurement services to compare LinkedIn's audience against the traditional business sites, it appears that LinkedIn's members are younger but making more money and have more responsibility in their companies. To us, that says there's a "new breed" of professionals emerging online that may not be found on a traditional business media site: A driven audience who recognizes that their professional network can help them excel in their careers. That's the audience we intend to serve now and in the future.

iMedia: LinkedIn has gone to great lengths to distinguish itself from many of the other social networks out there, such as Facebook and MySpace. (To use your own metaphor: MySpace is the bar, Facebook is home, and LinkedIn is the office.) But do you still see these networks as your competition in a sense? And if not, who (or who else) would you consider to be LinkedIn's main competitors?


Hoffman: The main difference is that LinkedIn is 100 percent professional. When people are on LinkedIn, they're actively looking for new clients, seeking and sharing advice and insights, and advancing their careers. It's where professionals go to get business done. If you're looking to compare LinkedIn to, say, other professional networking sites, there simply isn't another site that even comes close to us in size since we have over 39 million members around the world.


We're frequently seeing LinkedIn included on the same media plans as The New York Times and The Wall Street Journal. We feel that that change is occurring largely because of the professional audience LinkedIn serves and the business answers that our audience is looking to address.
 
iMedia: While LinkedIn, Facebook, and MySpace are certainly the social networks being discussed the most, the broader landscape is a crowded one. How do you think this field will shake out? In other words, is a fractured landscape sustainable? Or at some point do you think users will grow weary of maintaining multiple profiles and looking for a one-stop social network shop?


Hoffman: Our research indicates that people will always want separation between work and play, and so we absolutely believe that people will have no problem maintaining two social profiles -- one used almost exclusively for work and business, and the other used primarily for communicating with friends and family. Beyond that, it's hard to imagine people wanting to maintain dozens of separate networks.


iMedia: In addition to your activities at LinkedIn, you're a well-known and well-respected Web 2.0 investor. How has the current economy influenced your activities on this front? And what online technology sectors, outside of social networks, have caught your attention lately?


Hoffman: I actually find Twitter and that space to be quite interesting. In fact, last year I invested in a company called Ping.fm, which is a simple service that allows you to post to multiple social networks with a single message. The ability to broadcast yourself quickly to large audiences across multiple platforms is something I'm intrigued by.



Lori Luechtefeld is editor of iMedia Connection.

Kevin Ryan founded the strategic consulting firm Motivity Marketing in April 2007. Ryan is known throughout the world as an interactive marketing thought leader, particularly in the search marketing arena. Today's Motivity is a group of...

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