Now, with the ad network industry in a state of flux due to layoffs and management changes, Real Media and DoubleClick will likely press their advantage as the one-stop shop for global Internet advertising.
"You can almost make the case that DoubleClick has the world covered better than any other advertising network,'' said Dana Serman, analyst with Lazard Freres & Co. L.L.C.
According to Forrester Research Inc., worldwide advertising spending on the Internet will range between $6.5 billion and $7 billion in 2000, with 80% of those revenues generated by U.S. advertisers in the U.S. market. However, by 2004, when worldwide Internet advertising spending surpasses $33 billion, the U.S. share will have dropped to about 66%, Forrester said.
"The growth percentages are going to be largest overseas,'' said Jim Nail, a senior analyst with Forrester. "And these are businesses built on economies of scale. Engage, DoubleClick and 24/7 Media have been aggressive in staking out those businesses. Therefore, I don't think we will see a pure European, Asian or South American ad serving company.''
DoubleClick's international strategy has been twofold. First, it has opened offices in obvious markets such as Japan, the U.K., Brazil and Australia to establish a sales arm for its TechSolutions business. It also used those international companies to establish data centers-server farms capable of analyzing Web site queries and dishing out thousands of ads per minute-in foreign markets.
In carrying out its expansion, DoubleClick de-emphasized the more capital-intensive business of media sales. That's been critical to the company because many foreign markets weren't ready to generate big dollars in ad sales, Serman said. Now, it is populating its offices with foot soldiers ready to sell Internet ads.
"The demand will be there eventually, but not in the form many of the ad server companies expected," Serman said. "DoubleClick went after data centers and supporting international traffic. That put native language speakers in their offices and on the ground.''
Real Media, meanwhile, sought strong local partners. It sold an equity stake in itself to PubliGroupe, a powerful ad sales company in Europe. The move gave Real Media representation by some of the most popular newspapers in Europe.
Bill Furlong, CEO of B2BWorks, said the local partnership strategy is one to emulate. "We've learned from friends and competitors that you have to be deliberate and astute in whom you partner with,'' said Furlong, whose ad network plans to open a European office in early 2001.
Meanwhile, it would be a mistake for 24/7 Media and Engage to take recent corporatewide layoffs as a reason to scale back their global operations, Nail said. Increasingly, advertisers are going to look for global Internet campaigns, staged through headquarters and run through local markets. Without a strong international presence, companies will fall short of being able to provide one-stop world shopping, Nail said.
24/7 Media International has no plans to scale back, said Bob Colvin, president of the unit. Even as it undergoes a painful restructuring that will lay off 200 employees, 24/7 continues to maintain offices in Europe, Asia and Latin America devoted to local people selling ads locally. The division has been conservative in its head count, which will keep it stable amid the downsizing, Colvin said.
"When we were starting in the U.S., we just put people and offices everywhere,'' Colvin said. "Today, internationally, we will start with one or two people and, only when they are working so hard they can't stand it, we'll add a third. We've learned you have to build a staff in accordance with business, not in advance of business.''