DoubleClick will shut down its Australian office and transfer operations to its Hong Kong office, finalizing the switch by the end of this week, according to a statement released by the New York-based company Tuesday.
“It is with deep regret that DoubleClick has decided to close its Australian Media operations,” said DoubleClick’s president of global media, Barry Salzman. “As a global organization, it is critical that we continue to reassess the way we allocate resources between countries and businesses to maximize value for our shareholders.”
The decision to close the Sydney office comes as a surprise considering the strength of the company’s global advertising network. DoubleClick posted fourth quarter revenue results of $US132 million, with pro forma gross profit at $US73.4 million, both figures 41 percent higher than 1999-2000.
“It is essential that we assess each market individually and align DoubleClick’s resources with market opportunities,” Salzman said of the decisions to shut down specific locations and businesses.
“Right now in this location, market demand is coming from TechSolutions, providing publishers and advertisers with outsourced advertising technology and services.”
According to outgoing CEO Jason Ward, who himself is set to cease working for the company at the end of April, the failure of the media business is attributable to the downturn in the global internet economy, as well as in Australia. “DoubleClick need to refocus their resources and business on profitable areas,” saying that the move, which includes similar closures in Brazil and Finland, is a matter of “managing costs to maintain profitability.”
Ward said he couldn’t comment on further closures.
Ward also qualified the announcement, saying that only the media and sales and support that is being moved to Hong Kong, while media staff are being considered “redundant.” The company’s TechSolutions business, and staff linked to the company’s DART product range are to stay with the company’s remaining Australian offices.
BMCMedia.com are likely to gain the most from today’s announcement, though all companies involved in the online ad-market locally will be concerned about the effect of a depressed online market.
Other players in the local interactive market had varied reactions to the DoubleClick announcement. Yahoo’s National Sales Manager Craig Galvin, while expressing his sympathies for DoubleClick’s sales team, said it was a shame that the decision does “reinforce our belief though that 2001 will be a period of consolidation where networks like Yahoo have the opportunity to gain greater market share and deliver even more solutions to local marketers”.
Additionally, some local competitors had reservations about the success of the online ad firm, with one competitor saying that the company “came here, tried to muscle and bully their way into this territory, and the locals have beaten them at their own game.”
DoubleClick and BMCMedia are thought to have commanded an equal share of the market with 8 percent each.
Despite the announcement, Ward is positive about the possibilities for the ad sector in the long-term future.
“DoubleClick is still very viable globally,” Ward said. “DoubleClick still has a business in Australia, but it is a technical business and there is no change in level of support for Australia. … all we’re doing is shutting down one section of the business. Absolute viability for media businesses in this country in the next 9 months is going to be very difficult.”
Others in the industry see no shortfall in demand for new technology advertising formats, with one interactive agency executive saying he could see growth in the email and SMS markets.
“Someone out there is panicking, from our perspective it’s all going well,” he said, adding that his company just completed an email campaign that saw half a million emails go out, while another local company had bought a campaign structured around sending 300,000 SMS messages a month.
“The basic problem is that so many companies out there started and all the they saw was the World Wide Web,” said the executive. “We get click-through rates of up to 15 percent, while the industry standard is 0.3 percent.”
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