Ad networks adjust with diversification

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Eighteen months into the economic downturn, executives at 24/7 Media Inc., B2BWorks Inc. and DoubleClick Inc. remain confident in their respective ad network businesses. With an eye on retaining integrated marketing clients, however, they are also painstakingly building their software and consulting businesses in a bid to diversify beyond their core ad network businesses.

The companies are also working to differentiate their ad network businesses, in bids to not only distinguish themselves from competitors, but also to keep clients—some of whom are seriously doubting the online advertising model—from pulling their budgets.

Countering a soft market

While their strategies have been different, 24/7 Media, B2BWorks and DoubleClick have all sought to counter a collective nemesis: clients’ atrophying ad budgets. "The real challenge is the soft ad market," said Denise Garcia, research director at Gartner Group Inc.

Karen Breen Vogel, senior VP-strategy at Chicago-based online marketing agency B2BWorks, agreed with the caveat that a pro-longed downturn might lead clients to re-evaluate online advertising—and networks—because they are cost-effective. "We can’t control the economic environment right now," Breen Vogel said. "But the difficulties of the economic environment may lead companies to choose online advertising. Given that a client may not have the luxury of a fully integrated program, they may go online, which can work economically in this environment in the short term."

In a bid to expand beyond its core ad network offerings, B2BWorks has aggressively expanded into businesses including e-newsletter sponsorships, software, permission e-mail lists and banner programs. "I don’t even view us as an online ad network anymore; we’re in the business of helping advertisers acquire and retain customers efficiently," Breen Vogel said.

To entice clients into using its ad network business, B2BWorks relies on its reputation as a b-to-b specialist, Breen Vogel said. "Our publishers include VNU, Primedia and Advanstar," she said. "We have the lion’s share of b-to-b sites in our network."

Diversification, 24/7

Like B2BWorks, New York-based 24/7 Media is seeking to strike a balance between building its ad network business, while diversifying into businesses including software development. "We work very diligently with clients on the back ends of their campaigns," said Geoff Judge, 24/7 Media’s general manager-media division.

Much of 24/7 Media’s efforts have been centered on its e-mail list management business, which it began building in 1999. While its list management reputation is still as a business-to-consumer specialist, it has made some headway into b-to-b. For example, it handles The Economist’s international opt-in e-mail list.

To entice b-to-b clients to its ad network business, 24/7 Media touts some of its sites with strong brand recognition, including AT&T Business and

24/7 Media is also struggling to get potential clients to recognize online advertising—and networks—as a viable branding tool. "It’s an uphill battle to get people to realize this works extremely well from a branding perspective," Judge said.

DoubleClick's dare

New York-based DoubleClick has also started a broad diversification program, morphing—with mixed success—into a full-service online ad agency.

Its work has been focused not only on its proprietary DartMail platforms, but also on broader e-mail acquisition and retention programs. It has also taken a lead on wireless marketing, which could be one of the ways it tries to differentiate itself in what are sure to be trying days ahead.

As BtoB went to press, DoubleClick was in talks to buy Real Media Inc. The acquisition would not only put DoubleClick’s diversification strategy into software overdrive, but also eliminate a significant competitor. The deal would also bring Real Media’s coveted b-to-b clients, including Forbes Inc. and Bloomberg L.L.P., into DoubleClick’s fold.

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