Search THIS: ValueClick Profile

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.

 

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