|Engage cuts staff to accelerate profits|
CMGI-controlled Engage Inc., a main competitor of 24/7 Media Inc., announced late last week that it will lay off half its staff—about 550 employees—as part of a plan to accelerate profitability,
reports BtoB sister publication Advertising Age.
Certainly, 24/7 Media’s woes reflect of the shrinking online ad marketplace. Many of its customers are simply scaling down ad budgets. And it still has strong supporters in the research analyst community. Jim Nail, senior analyst at Forrester Research Inc., said that 24/7 Media’s ongoing diversification beyond the ad network business into providing Internet technologies and direct marketing platforms is shrewd. "They are very viable," Nail said. But he said the company’s biggest challenge will be carrying out its diversification strategy.
Company CEO David Moore’s office off Herald Square is well-lit with expansive views of Manhattan, befitting his optimistic and engaging manner.
Moore is confident about 24/7 Media’s future. "Internet advertising is a real business," he said. "While our stock price is in the tank, and we can’t employ as many people as we used to, the future is very bright." He said that the online ad market will recover. "Right now, online advertising is not in vogue. Twelve months from now, it will be."
In the coming months, the viability of 24/7 Media will depend at least in part on how well Moore’s can-do ethos can rub off on the company itself.
Parts of 24/7 Media’s businesses are thriving. For example, some of its European units are coming into their own, becoming revenue leaders for their New York-based parent. And the company’s Internet direct marketing technologies are gaining converts. Whether this will be enough to rebuild 24/7 Media’s damaged reputation among Wall Streeters remains to be seen.