24/7 Media Dumps Exactis
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The slimming down continues at 24/7 Media, which Friday announced that it was selling Exactis, its e-mail delivery unit, to financial services and transaction firm Experian, for cash proceeds of about $13.5 million.
Recent weeks have seen the New York-based firm sell off Sabela, an Australia-based ad serving firm, and its loyalty marketing product. But now, the cutting has very clearly gotten serious.
24/7 Media acquired Denver-based Exactis.com last February for about $475.6 million in stock and other securities, with about $61 million of that total going purely to technology. At the time, 24/7 said it intended the purchase to provide delivery services attached to its 24/7 Mail list brokering and management services.
That acquisition had come amid a growing arms race among rival ad networks for dominance in all sectors of online marketing -- especially e-mail. In December 1999, holding company CMGI -- which owns ad network Engage -- bought e-mail delivery firm yesmail.com, just as competing network DoubleClick acquired Opt-In E-mail to counter 24/7 Media's early lead in the sector.
Now, 24/7 Media appears willing to concede the e-mail delivery arena to competitors like DoubleClick, which has continued to beef up its e-mail business through this year -- first with an attempted acquisition of NetCreations, and then with the successful purchase of FloNetwork.
New York-based 24/7 Media does still maintain its e-mail list management business, which chief executive David Moore said would continue to be a major part of the company's core asset portfolio.
But on the technology side, company executives said Exactis hadn't been living up to expectations, though it's not certain exactly how the unit had been performing since its purchase. 24/7 Media lumps its revenues into its Technology division, which also includes its Website Results search engine optimization unit, and its nascent e.Merge broadband services bureau. During last quarter, the Technology division pulled in a combined $10 million in revenues.
However, Moore told internetnews.com that Exactis had sucked up "seven figures a month" in operating costs since the purchase.
"It needed resources that we were not able to provide," he said. "So the purchase does two things for us -- it puts money in the bank, and reduces the amount of money we had to spend on it."
Through terms of the deal with Experian, which is subject to undisclosed closing conditions, 24/7 Media will designate Experian as its preferred e-mail delivery provider.
Orange, Calif.-based Experian, meanwhile, said the purchase would beef up its e-mail delivery infrastructure. The credit transaction and financial services firm handles b2b e-mail campaigns for clients' customer retention and acquisition efforts.
Experian said it would combine its own direct marketing product set with Exactis' e-mail capabilities, to provide businesses with a complete CRM and direct marketing solution, while continuing Exactis' opt-in e-mail policies.
"With the sale of Exactis, 24/7 Media has achieved two major objectives which are to improve the company's cash position and to refocus our attention onto the company's core competencies, network ad sales, e-mail list management and brokerage, ad serving, and search engine optimization," Moore said.
"Overall, it's a great move for us for us to be able to sell Exactis ... We are making changes to the company that will allow us to survive in this type of marketplace," he added. "We don't see a big resurgence in advertising dollars over next six to 12 months. I wish I did, but we're running the business based on the marketplace that's there today. Our goal is to be one of the ones standing when smoke clears, with a larger market opportunity."
24/7 Media's Tom Detmer, who joined the firm last June as head of Exactis.com, leads the e-mail unit again on its way out. He was demoted from chief operating officer and president to general manager of Exactis in March.
But it's not unfamiliar territory for Detmer, who previously worked at Experian prior to joining Exactis.com.
"We are excited to be part of the Experian family," Detmer said in a company-issued statement. "This transaction offers our customers and employees tremendous value. Experian's direct-marketing solutions, coupled with our vast knowledge of the permission-based e-mail marketing space, will provide a significant competitive advantage for our customers and prospects."
Moore, meanwhile, hinted that 24/7 Media wasn't done with the cuts -- with future reductions potentially coming in its fledgling e.Merge broadband unit. Detmer told internetnews.com earlier this year that e.Merge -- formed from the 2000 acquisition of iMAKE -- remained potentially lucrative for the firm, but admittedly was somewhat removed from 24/7 Media's traditional focus on Internet marketing.
Moore was evasive on questions about future cuts among e.Merge, though he said the company considered Website Results -- another potential candidate for cutting -- as "a key component of our core asset portfolio."
"What we are driving toward ... is a focus on electronic media and technology, which has been our core competency all along," he said. "Our Web site network, e-mail list management business, Website Results ... the three of those businesses work very well and complement one another."
Moore also said the company's flagship ad serving product, 24/7 Connect remains "very important to us too," despite problems rolling out a third-party ad serving version of the service (to date, it serves ads only on 24/7's site network), which prompted the earlier purchase of Sabela Media.
"It's taken us a little longer than we expected to be ready to license [Connect] on a third-party basis, but it will be ready in the future," Moore said.