CMGI Closes AdForce

Internet holding company CMGI made it official on Tuesday: it’s shuttering ad serving firm AdForce.

While the news is disappointing, it’s not surprising. In March, CMGI announced that it was looking for a buyer for AdForce, which it said had been seriously impacted by the slowdown in online ad revenues. That search evidently failed to turn up interest in the unit.

“AdForce was unsuccessful in its exploration, and has exhausted all of its resources,” said CMGI chief executive David Wetherell. “As a result, it is shutting down its operations.”

It’s the end of a sad chapter in the once-highly regarded company’s history. October saw CMGI relegate AdForce from a full-fledged CMGI subsidiary to a unit of Cupertino, Calif.-based content delivery firm CMGion — a company that has yet to launch and has been in “stealth” mode for nearly a year.

Before that shift, industry watchers had wondered how AdForce — which CMGI acquired in September, 1999 — would relate to the holding company’s other online ad firm, Engage, and its email marketer, yesmail. Prior to the acquisition, AdForce had an agreement with Engage to handle its ad serving. But since then, Engage had developed its own ad serving platform, which today comprises a major portion of its business.

Now, Andover, Mass.-based CMGI’s Wetherell said the company considers yesmail and Engage its only viable online ad service providers.

It’s unfortunate news for AdForce — which employed about 250 at last count — but it’s also alarming to the company’s client-partners. Publishers using the AdForce technology will now be forced to transition to a new system, and will bear the costs of changing all of the ad tags on their sites. CMGI didn’t say what would be done, if anything, to help transition customers to another company’s technology.

One big client, 24/7 Media, may be especially hard hit. Since December, Alley-based 24/7 Media has worked to transition its own ad serving clients from AdForce over to its own Connect technology. That transition was finished in the U.S. earlier this year — but AdForce’s demise now leaves the company’s overseas units in a lurch.

24/7 Media’s new chief operating officer, Tony Plesner, told internetnews.com that the company hadn’t really planned for an AdForce closure, and is thinking about how to speed up its European transition plans.

“We have been planning to put Connect into Europe, and we need to understand the timing of [the AdForce shutdown],” Plesner said. “We’ve talked in the past about taking six weeks to commence the cutover, and we need to sort of look at whether we can do that in a faster track or fashion, or in a more comprehensive, multi-locational fashion, rather than the original country-by-country approach.”

Further complicating matters is that 24/7 Media is looking for a partial or outright buyer for its European operations. Thus, the upshot is that if 24/7’s new regional partner has its own ad serving solution, time and money spent on an expedited European expansion of Connect would largely be wasted.

Regardless, Plesner said the company is determined to move forward with a Connect rollout in Europe, “on the basis that we don’t know what the future holds, and we don’t know whether we’ll end up with a partner with its own serving solution, or no ad serving solution,” he said. “We’ll do everything in our power to make sure our current business is protected … and that we can keep serving ads in the same fashion.”

“In the future, if it turns out that a partner of ours has their own ad serving solution, we’ll cross that bridge when we come to it,” he added.

Plesner declined to go into detail about the status of 24/7 Media’s search for a European joint partner or buyer, saying only that “sometime in the next month, we should be in a good place to understand what we’re going to do next.”

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