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AllAdvantage Axes 150, "Refocusing" Business

Ad-sponsored surfing company AllAdvantage confirmed that it has cut 35 percent of its staff -- about 150 -- and is revamping itself into a B2B play.

The staff cuts primarily will come from the ranks of AllAdvantage's B2C software developers.

"We don't plan on developing new B2C services. What we plan to do instead is to throw our resources into two sets of B2B objectives," said company spokesman Alex Gourevitch. "We really are re-balancing, refocusing our resources."

Hoping to cash in on its sales staff and its ad-targeting technology, AllAdvantage's new businesses include becoming a specialty ad rep firm, and a database management application service provider.

In its B2C practice, AllAdvantage rewards users with cash or sweepstakes entries, in return for surfing using a floating window, which displays banner ads targeted based on surfing habits. The company anticipates that its experience selling this ad space will make it suitable to moving other types of online ad inventory that isn't found in Web pages.

For one, the company said it envisions its sales force repping for marketing technology companies that build ads into desktop applications -- these include Radiate, EverAd, and Conducent. The company declined to comment on potential clients.

"These are the types of companies our ad sales network is destined to work with," Gourevitch said. "We have expertise in managing targeted inventory and selling inventory on those types of applications."

AllAdvantage's other new business will be in ad targeting and customer database management, on an ASP basis.

"Our expertise here is in proactively managing lots of data about users, and using that data to communicate back to those users," Gourevitch said. "A lot of companies, like us, have persistent desktop [advertising] ... and they don't necessarily know how to manage desktop impression management. What we've learned to do in terms of data management is something we think a lot of companies might be interested in. We think there's demand already."

Gourevitch said the company wasn't planning on pulling the plug on its sponsored ad-surfing business, but said that most of AllAdvantage's remaining staff is being transitioned to the new B2B efforts.

At any rate, industry watchers have expected news of cuts and a serious revamping of AllAdvantage's model for some time; sponsored surfing firms -- with high costs and revenues that continue to sag as dot-com advertisers struggle with marketing budgets -- are struggling to find ways to secure a path to profitability.

One player, Los Angeles-based mValue, shuttered its doors permanently in October, after having tweaked its payment system several times.

Hayward, Calif.-based AllAdvantage also retooled its payment model in past months, first reducing the maximum cash it paid users, and then offering sweepstakes entries as an alternative to cash. Last year, the company also came under heat from users for tardy payments. The company also filed for an IPO earlier this year, which it withdrew in June.

In September, AllAdvantage began to give signs that it was moving into what would become one of its new business areas, striking a technology licensing deal in Japan.

But whether technology will pan out as a viable business for AllAdvantage remains to be seen. So far, the company hasn't announced whether it's landed any clients other than the one it has in Japan. And that company -- AllAdvantage Japan -- is actually a joint venture between itself and a major investor, Softbank.

"They happen to have our own name, but that's incidental here," Gourevitch said. "We're actually licensing our technology to, really, an outside company ... and that proves that the new businesses are not planned in the abstract."