RealTime IT News

DoubleClick Buys L90's Technology Business

Online advertising giant DoubleClick is boosting its already-dominant third-party ad serving business with the purchase of technology from a chief rival, Los Angeles-based L90.

Through the acquisition, DoubleClick gains access to the nearly 1,700 publishers and advertisers using L90's outsourced ad serving product, adMonitor, which the company plans to phase out. DoubleClick said it would offer those clients the option of migrating to its own ad serving ASP, DART, or to its AdServer software.

Meanwhile, L90 -- which will focus on its online media sales and direct marketing businesses -- will become DoubleClick's first customer to switch over from adMonitor, having signed a five-year deal to use DART to serve its ads.

In addition to its ownership of adMonitor, DoubleClick also gains L90's ProfiTools suite of advertising products, which includes more specialized online ad products like sweepstakes, co-registration and pop-ups.

Financial terms of the deal were not disclosed.

Clearly, the agreement is a win for DoubleClick, removing a highly respected competitor from the field and increasing the Alley-based giant's lead over remaining rivals in the ad serving space, which include 24/7 Media and CMGI's Engage.

"Today's announcement is a strong testimonial to our dedication to being the leader in providing ad serving solutions," said Chris Saridakis, who is senior vice president of DoubleClick's Global TechSolutions unit. "We look forward to working with L90's third-party ad serving clients to ensure a smooth transition to our DART technology or AdServer software, and look forward to a long relationship with L90 as a DART customer."

The deal also could pave the way for more changes at DoubleClick. Earlier this year, the company announced that it would focus on selling DART and other online advertising technologies, believing that the technology business would fare better than its media sales practice during the downturn in ad spending. To that effect, DoubleClick in recent months reduced staff and reorganized its media division. (Others, like Engage and Real Media, have undertaken more extensive efforts to exit the ad sales business.)

Now, with L90 effectively taking on an outsourced ad sales role -- moving inventory that would be served via DART -- DoubleClick's media group could see still more changes.

Meanwhile, Tuesday's deal leaves L90 with only its media sales and direct marketing businesses, despite having recently been viewed by many industry-watchers as one of the few threats to DoubleClick's dominance in the ad serving space.

But L90's president and chief executive John Bohan told internetnews.com that the news is actually a win for the company, which can better its bottom line by concentrating on fewer lines of business.

"Times are a-changing," he said. "I think with the soft marketplace, companies need to concentrate on their core businesses. We started as a media sales network, and that's where we're returning. And, in addition ... we solidify our balance sheet position by having north of $60 million in the bank ... and being within striking distance of breakeven. There's not a whole lot of companies in that position in this space."

Additionally, Bohan said that L90 is positioned to make a go of selling online media, despite the fact that competitors are rushing to reduce their exposure in that space.

"If you look at the Internet, there are probably a handful of companies that are going to have their own in-house sales forces, you can probably count them on one hand," he said. "After you get through that handful of Web sites, everything else I believe falls to L90. The only companies positioned to represent all those sites are L90 and DoubleClick's media sales force, and being a pure-play media sales company, we believe we're in a greater position."

Meanwhile, Bohan suggested that the benefits accruing to Web site publishers and advertisers would outweigh the disadvantages of having fewer choices remaining in the marketplaces.

"By spinning off the technology division, it allows us to concentrate much more on our media sales effort ... which will provide advertisers with better marketing solutions and the Web site publishers with what we believe will be more money," he said. "It's not important what technology platform [advertisers and publishers] are using ... by partnering with DoubleClick, we can offer clients the same technology offerings as adMonitor and at the same time, have more focus in our media sales effort."

The news comes less than a day after sources said DoubleClick also is in talks to acquire the ad serving software of New York-based Real Media -- another smaller player that had won a considerable amount of respect as an alternative to DART and DoubleClick. Those talks are still ongoing, say sources close to the firms.