DoubleClick Sinks $85 Million into ValueClick

Ad solutions firm DoubleClick Inc. Thursday made a strategic investment in cost-per-click ad network ValueClick, throwing in stock and cash worth $85 million in exchange for a 30 percent stake.

The deal also gives DoubleClick warrants to buy another 15 percent of ValueClick in the next 15 months. ValueClick in October filed for an initial public offering hoping to raise $57.6 million, but its stock has not yet started trading. This deal will bring ValueClick $10 million in cash and $75 million in DoubleClick stock.

DoubleClick’s move gives it an entry into the cost-per-click ad serving space, an area especially favored by e-commerce companies seeking to drive traffic to their sites. A competitor in the ad serving space, Flycast Communications, recently launched a cost-per-click network, saying it was a low-risk buy for advertisers and a good way for smaller Web sites to bring in revenue.

As DoubleClick sees it, there are a few pieces missing from its ad serving repertoire, including a network aimed at bulk buyers, a cost-per-click network, and a barter business. This investment address one of those deficiencies, and the company is currently looking around for other remedies — investments, acquisitions, etc. — to round out its offerings.

“What we’re doing is filling out our product line,” says Jeff Epstein, executive vice president at DoubleClick.

The two companies will continue to have separate sales forces and won’t cross-sell one another’s products, but Epstein says each will refer advertisers to the other.

Today’s deal also calls for DoubleClick to integrate its DART ad serving technology into ValueClick’s in-house proprietary system.

ValueClick served 1.3 billion ads in December 1999, and its network consists of more than 11,000 sites. Presumably, the integration will boost ValueClick’s ability to target advertising.

“Our flexible technology platform and our business model have created an exciting opportunity for us to form technology partnerships that give our customers additional targeting capabilities,” says James Zarley, chief executive officer of ValueClick.

ValueClick says it’ll use the $85 million to continue growth and expansion, which may include acquisitions. The new funding, though, won’t derail plans for an IPO, the companies said.

The deal calls for DoubleClick to take two seats on ValueClick’s seven-member board of directors.

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