March 2, 2004 11:15 AM PST

DoubleClick buys marketing software maker

NEW YORK--Online ad specialist DoubleClick on Tuesday bought marketing technology company SmartPath, in a bid to gain a stronger foothold in software sales.

New York-based DoubleClick, which sells online advertising and marketing services technology, acquired SmartPath for an undisclosed sum. SmartPath is a 35-person company based in Morrisville, N.C., that has software designed to help companies plan, manage and budget marketing campaigns in various media.

DoubleClick plans to add the software to its own suite of marketing automation products, with the hope that it will help bolster sales for the tools, which plan and analyze the effect of online advertising and direct marketing.

"We need it to integrate the whole marketing system," said Kevin Ryan, chief executive officer for DoubleClick. SmartPath's software could make DoubleClick more important to marketing planners, he said.

The deal was announced at DoubleClick's annual Insight conference here, where online advertising and analytics customers are abuzz in a sense of industry turnaround. The dot-com bust precipitated a decline in Internet ad sales in recent years, but the industry has seen renewed growth in the last two quarters.

DoubleClick's Chief Executive said he expects online advertising to rise about 15 percent to 20 percent this year. The company's sales for online ad technology increased by about 7 percent quarter-over-quarter and 9 percent from 2002 to 2003.

The Internet is also gaining recognition for its influence over buyers in industries like travel, automotive, movies and prescription drugs at the expense of television, according to DoubleClick's second annual Touchpoints survey. TV's influence over consumers has declined in the past year.

Last week, DoubleClick also received a welcome nod from traditional ad agencies. Donovan, the entrenched billing system for ad agencies, now works with DoubleClick's media planning and buying tools, a first for true media convergence within ad agencies.

Adding to its business collection
Aside from SmartPath, DoubleClick is taking on several new businesses this year. By the end of the second quarter, it plans to launch a bid management tool designed to help advertisers place text ads with search engines such as Google and Yahoo, according to Ryan. With the tool, the company hopes to capture a thriving segment of the online advertising business, search engine marketing, and one that it has seen go largely to small, niche companies like GoToast.

Still, DoubleClick has to play catch up in this market, where bid-management companies have already created businesses worth around $10 million, Piper Jaffray senior analyst Safa Rashtchy said.

DoubleClick also aims to improve its positioning in rich media advertising. It recently launched Dart Motif, a tool for creating, trafficking and delivering rich media ads to complement its online ad delivery technology. Ryan said he expects Dart Motif to generate $5 million in sales this year and as much as $10 million next year.

Demand is there. Usage of rich media ads grew to nearly 40 percent of all DoubleClick ads served in the fourth quarter last year, up from 28 percent in the first quarter.

Still, companies such as rich-media ad company Eyeblaster have been enjoying success in the creation and delivery of rich media ads already, forming major partnerships with Yahoo and AOL.

Making it personal
Another area of consideration for DoubleClick is in online ad targeting and personalization through its product Boomerang. Boomerang, which uses anonymous consumer data to deliver ads to customers who have previously visited the marketer's site, is drawing renewed interest from advertisers after years of falling under the radar.

Yet any kind of customer profiling and targeting is a sensitive subject for DoubleClick, considering the intense scrutiny it came under by privacy advocates in the late '90s. At the time it had proposed combining online and offline data of consumers. Still, some industry executives have said that privacy concerns have lessened over the years for online advertising.

DoubleClick's Ryan said that he expects SmartPath's business to grow rapidly. SmartPath is the second-largest standalone marketing resource management company, and Ryan thinks it will eventually make up a larger portion of what research firm Gartner expects to be a $100 million industry. He also said it will likely double its staff in the coming year.

SmartPath's software costs businesses between $300,000 and $400,000, DoubleClick said. The online ad company said it plans to sell maintenance services along with the software.

 

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