AQuantive Buys Performance Media Vertical

Digital marketing firm aQuantive has added to its performance-based media assets with the $21.5 million acquisition of lead-generation firm Franchise Gator, hoping to leverage the company’s technology and systems for expansion.

Franchise Gator offers pay-for-performance advertising to connect companies with potential new franchisees or buyers in more than 100 industry sectors. The franchisor or seller pays a fee when a potential buyer is referred through the Franchise Gator site.

The Atlanta-based company joins Seattle-based DRIVEpm and London-based MediaBrokers in aQuantive’s digital performance media segment. Franchise Gator marks the first of several intended forays into vertical markets, according to Mike Galgon, chief strategy officer at aQuantive.

Where aQuantive’s DRIVEpm business focuses on the cost-per-sale side of performance-based marketing, Franchise Gator’s expertise is in lead generation. AQuantive plans to extend what Franchise Gator has done into other verticals where lead-generation is the goal.

“There’s a whole segment of marketers for whom the end goal is a lead. That segment requires a different set of tools and expertise to manage, and that’s what we get with Franchise Gator,” Galgon told ClickZ. “What they bring to the table are deep competencies in how to operate in getting leads to customers.”

AQuantive will add to Franchise Gator’s platform, taking advantage of the expertise and best practices methodologies in building a platform that creates value for both parties in the transaction. AQuantive is not interested in getting into areas where leads are generated through incentives and promotions, according to Galgon.

“What Franchise Gator does well is create true value for both the consumer and the marketer in the transaction. It solves a problem for consumers by organizing and presenting options and connecting them with marketers. That’s a compelling moment of exchange for marketers as well, helping them reach people who are in exactly that position,” he said. “We will look for other verticals and ways to play in other verticals to leverage that same two-way value exchange, and steer clear of the broad set of opportunities that look like incenting users to convert for things they may not really want.”

AQuantive will bring to the platform its own performance-based marketing expertise, as well as the expertise of its other divisions. “Its full-service franchise marketing platform, coupled with aQuantive’s core digital marketing capabilities, will serve as the ‘must-have’ platform for franchisors in the U.S. and abroad,” Galgon said.

Founded in 2001, Franchise Gator is a profitable business, expecting net revenue of $7.5 to $8.0 million this year. The company will retain its brand identity and keep the management team, except for the outgoing founder and CEO, and its 10 employees. AQuantive hopes to leverage its own expertise in performance-based media to grow Franchise Gator.

AQuantive has seen strong growth lately, reporting overall revenue up 42 percent and earnings per share up 64 percent last quarter. aQuantive’s digital performance media (DPM) segment, recorded revenue of $9.3 million in the quarter, from $5.3 million in the first quarter of 2005.

A follow-on stock offering in April brought in net proceeds of $172.7 million, which the company has earmarked in part for acquisitions. The Wall Street Journal reported earlier this month that aQuantive and ValueClick were close to a merger, but that it fell through. Brian McAndrews, president and CEO of aQuantive, told investors during a conference call following that report, “No discussions are underway or being contemplated with ValueClick.”

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