Ad network and technology player 24/7 Real Media said it sold its Latin American operations to the unit’s management and regional investors, in a move to cut costs.
Now, a Brazilian group comprised of management and local investors will own the unit, which is to be called Realmedia Latin America, and which has offices in Miami, Fla. and Sao Paulo.
Financial aspects of the sale were not disclosed, though the spin-off retains the rights to sell its former New York City-based parent’s OpenAdStream server in local markets, and will take over local media representation contracts, though not serving contracts.
The new company also will be able to book U.S. advertisers on sites and the portions of the 24/7 Real Media ad network in the region.
The three-year-old unit serves clients including Globo.com, El Sito, Todito.com, Paragon, and MTV Latin America. Local portal Globo and El Sito both had at one point had representation deals with DoubleClick, which closed its regional office early last year, opting to service clients out of its New York headquarters.
Similar to that earlier move by DoubleClick, 24/7 Real Media said the spin-off of Realmedia Latin America would help it cut expenses, while the former parent can still record revenue when the spin-off makes sales of its products.
“The reduced financial commitment, enhanced focus on more strategic areas, and Latin America revenue upside will all contribute toward our drive to profitability, while Realmedia Latin America is able to focus on fine-tuning local solutions for their marketplace,” said 24/7 Real Media chairman and chief executive David Moore. “The local management team’s deep knowledge of the Latin American advertising space and their industry experience, together with our products and support, combine well to create a successful partnership for both organizations. ”
The move continues 24/7 Real Media’s somewhat awkward attempts to reduce its focus to North American markets.
24/7 Media, which merged with Real Media in October, actually exited Latin America last May, closing offices in Mexico, Chile, Argentina, Brazil and Miami. But through the merger with Real Media, the company again found itself doing business in the region.
This time around, however, the Latin American unit has an ad server product rather than just a media business, the earlier focus of 24/7 Media in the region. That fact could prove advantageous to the spin-off, in part because sales of ad server technology and services have, for many firms in the industry, proven to be less impacted by the economic downturn than media representation services.
Additionally, spokespeople pointed to the growth in regional Internet and mobile Web access as factors likely to contribute to its success.
“We have a great deal of confidence in our team and in the growth potential of this market,” said Peter Gervai, managing director of Realmedia Latin America and a former vice president at 24/7 Real Media. “Brazil remains the fastest growing market in terms of Web usage and the number of wireless users is exploding. Our lasting partnerships with many of the major publishers and advertisers throughout Latin America, and the ability of Open AdStream to deliver ads to multiple platforms, makes us extremely bullish on our future.”
Latin America hasn’t been the only international market in which 24/7 Real Media has made efforts to reduce its expenses. In August, 24/7 Media ceased funding its European media network, which closed a month later. Once again, however, the company picked up a media network through the Real Media merger, though spokespeople have indicated that the company considers the properties it represents in Europe as valuable.
