DoubleClick invests $85 million in Net ad network

Internet advertiser DoubleClick today said it has invested $85 million in ValueClick, an Internet advertising network, hoping to break into the performance-based advertising market.

The investment--$75 million in DoubleClick stock and $10 million in cash--gives DoubleClick a 30 percent equity stake in ValueClick. DoubleClick also received a warrant to buy another 15 percent of ValueClick within 15 months.

ValueClick said it plans to use the new capital to fuel its growth and expansion efforts, including acquisitions, as well as to further develop its performance-based advertising solutions, which use a cost-per-click model. The funding, however, will not change ValueClick's plans for additional financing or other sources of capitalization, the company said.

Analysts said there has been increased grumbling by advertisers that click-through rates at online sites are too low, making performance-based advertising, which tracks click-through rates, more sought after.

"DoubleClick's investment in the (performance-based network) will become increasingly important as advertisement buyers look for varied models for buying online advertising," said Patrick Keane, an analyst with research firm Jupiter Communications. "For DoubleClick to offer different kinds of solutions is attractive and makes sense."

With the investment, DoubleClick will gain two seats on ValueClick's board of directors.

ValueClick, which uses an in-house ad serving solution, said it served 1.3 billion ads in December 1999. ValueClick's performance-based banner advertising solutions use a "cost-per-click-through" pricing model where advertisers pay only for click-throughs to their Web sites.

The company will work with DoubleClick to integrate its proprietary technology platform with DART, DoubleClick's full-service ad serving solution.

ValueClick said it has created technology designed to aggregate thousands of Web sites. The company has more than 11,000 sites in its network and serves ads that reach 25 percent of U.S. Internet users, according to Media Metrix.