Can DoubleClick Make It?

  |  October 19, 2000   |  Comments

Dana would like to think this is a facetious question. After all, DoubleClick has an enormous presence in the Internet advertising industry. Yet DoubleClick's stock chart, like so many right now, looks like waves dying on a beach. The wave hit land last Friday, when DoubleClick was Wall Street's disaster du jour.

I'd like to think this is a facetious question. If DoubleClick goes, the Internet advertising industry will lose one of its most important assets.

DoubleClick has 1,500 sites on its web ad network, giving it enormous reach. DoubleClick's DART is used heavily to evaluate the return on campaigns. The company has moved smartly into the email business, most recently through its pending acquisition of NetCreations.

Those are all good reasons for you to have a soft spot in your heart for DoubleClick. I have more personal reasons.

Back in 1994, two months after I took my first full-time job in a decade, I went to the Christmas party for CMP Media's Atlanta office. There I met the man who was selling ads for my magazine, Interactive Age, throughout the Southeast. He said a friend of his named Kevin O'Connor had asked him to leave CMP for his new firm, a web ad agency to be called DoubleClick. The company moved its offices to New York just a few months later, but I've always considered it Atlanta born.

Yet DoubleClick's stock chart, like so many others right now, looks like waves dying on a beach. The wave hit land on Friday, when DoubleClick was Wall Street's disaster du jour (on a day when the entire Nasdaq rose nearly 250 points).

The reasoning behind that disaster should make you very afraid. DoubleClick's quarterly earnings weren't to blame. Instead, the company simply warned that total ad revenues for the coming quarter and 2001 might prove disappointing. Their trouble, in other words, is based on your trouble.

I don't really think DoubleClick is going under, but I do see a future in which old-line Madison Avenue firms buy up Internet assets, ruin some of them, yet dominate the market because they own the pieces that control it.

WPP Group PLC, for instance, could buy DoubleClick right now at a healthy premium to its current price without breathing hard. (WPP, which is based in London, is currently valued at about $9.6 billion against DoubleClick's $1.4 billion.) WPP would have a lot of incentive to do that, to get not only DART but also Abacus, the direct marketing database giant DoubleClick bought for $1 billion a year ago.

WPP recently became the largest worldwide ad agency after buying Young & Rubicam, leapfrogging rivals Omnicom and Interpublic. Among WPP's other assets are J. Walter Thompson, Ogilvy & Mather, and Hill & Knowlton. Omnicom and Interpublic, by the way, could also swallow DoubleClick with no trouble.

This is quite a comedown from the situation of a year ago, when DoubleClick was worth nearly twice that of the largest conventional ad agencies. Sort of makes you sorry it didn't swoop in with that Confederate money the way AOL did and pick up some real businesses, doesn't it?

This isn't just an academic exercise. When companies get lost as divisions of larger outfits, service quality often suffers. Corporate cultures clash and people leave -- it's as common as the cold. If DoubleClick's service gets worse, our whole industry is going to have pneumonia.

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ABOUT THE AUTHOR

Dana Blankenhorn

Dana Blankenhorn has been a business reporter for more than 20 years. He has written parts of five books and currently contributes to Advertising Age, Business Marketing, NetMarketing, the Chicago Tribune, Boardwatch, CLEC Magazine, and other publications. His own newsletter, A-Clue.Com, is published weekly.

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