ValueClick Quarter Strong, Despite Weak Spending in Some Segments
Finance, healthcare and pharma advertisers reduced spending, but telco and travel ad budgets increased.
ValueClick CEO Tom Vadnais said a late-first-quarter unexpected spike in revenue at MeziMedia, the company’s comparative shopping business, helped the company exceed its performance expectations. But Vadnais and his colleagues said ValueClick did well even without the surprise money which they called “temporary” and unlikely-to-recur.
ValueClick’s quarterly net income was $19.2 million and its Q1 revenue was $176 million. The figures represent a profit gain of 3.2 percent over Q1 2007 and a revenue gain of 12 percent.
While economic weakness hasn’t yet inflictedd much pain on ValueClick or its much larger peers who are reliant on sustained online ad budgets, certain segments are flagging, executives said. ValueClick is seeing declines in spending by finance, healthcare and pharmaceutical advertisers but increases in spending by companies in wireless telecommunications and travel, said COO Dave Yovanno.
One soft spot in the company is its lead generation business, a segment that “continued to be challenged in growing revenue” said the CEO. While some of this might be due to the Federal Trade Commission (FTC) probe of ValueClick’s lead gen practices (an investigation that resulted in the company paying $2.9 million to the FTC three months ago), Vadnais said he believes the lead generation industry as a whole is in a drought.
On the other hand, ValueClick’s affiliate marketing segment “had another good quarter” said Vadnais. He noted the company’s Commission Junction arm saw its United States business grow by 16 percent when compared to the first quarter of 2007.
Asked about competition in the vertical ad network business, Vadnais acknowledged the segment is rough-and-tumble. “There seem to be a lot of people jumping into the ad network business,” he commented.
Yovanno said ValueClick’s advertisers want to “align their brands with specific content” or they want “overall performance and scale” in a campaign. He said ValueClick dominates the market when it comes to the latter but does not want to ignore brand-specific opportunities.
“We do expect to carve out one or two vertical networks that will have independent themes,” said Yovanno. “We do believe an independent vertical network has value. We just don’t see it operating at the same scale of a horizontal ad network.”
