Continuing its string of purchases, direct marketer Naviant has added the e-mail unit of online ad network 24/7 Real Media
to its stable of subsidiaries, creating one of the largest players in the space.
Under the agreement between the two firms, Boca Raton, Fla.-based Naviant will spend up to $4 million for an 80 percent stake in 24/7 Real Media’s list management business, which will be spun off as a Naviant subsidiary called 24/7 Mail, Inc.
Terms of the sale stipulate that $1 million be paid immediately on the deal’s closing, $1 million be paid in installments throughout the remainder of the year, and up to $2 million be paid quarterly over three years if the unit meets certain gross profit requirements.
Naviant also has an option to acquire 24/7 Real Media’s remaining minority stake in the business.
The two companies have worked together since 1999, when 24/7 Media (which merged with Real Media in October 2001) signed a deal with the e-mail marketer to “cross-pollinate” each other’s profiles.
Under the new arrangement, 24/7 Real Media now agrees to market the e-mail addresses managed by 24/7 Mail, as well as those administered by Naviant’s other on- and offline subsidiaries. Naviant also becomes 24/7 Real Media’s preferred e-mail marketing partner through the arrangement.
Naviant, which, in a recent buying-binge picked up eDirect, SweepsClub.com and offline direct marketer Data One Marketing, now administers more than 100 million opt-in e-mail addresses. (The firm’s closest rivals manage in the neighborhood of 50 million.)
The new 24/7 Mail will take on most of the 24/7 Real Media employees previously working within the unit, which for the present will continue to be housed in 24/7 Real Media’s Manhattan offices.
“We’re extremely pleased about what this new venture means for our clients and for 24/7 Mail’s clients and are delighted to be working closely with 24/7 Real Media,” said Naviant Chief Executive Mike Brauser. “Our clients will be able to select their marketing targets from the largest permission-based e-mail database in the industry — a fully branded set of consumers that generate tremendous results.”
For 24/7 Real Media, the move decreases the firm’s reliance on income from media — which contributes about two-thirds of its quarterly revenues — in favor of concentrating on higher-margin technology sales. (The company also continues to sell ad inventory on its roster of online properties.)
The firm, which is looking to reach breakeven in fourth quarter this year, also gains needed cash through the deal. Potentially, there’s also the opportunity for referrals for 24/7 Real Media’s U.S.-based ad serving, search engine optimization and online sweepstakes services.
“We are delighted to complete this sale in a manner that enables us to focus on our core businesses while still participating in the future success of this division,” said 24/7 Real Media Chairman and CEO David Moore. “The cash proceeds raised from this transaction solidify management’s confidence that 24/7 Real Media will have the resources necessary to execute its business plan and reach breakeven in Q4.”
The sale recalls DoubleClick’s
sale of its list management unit to infoUSA
in March. Similarly, that move lessened the online ad leader’s dependence on the wiles of the media market, in favor of a greater focus on technology.