Engage Bids Adieu to Online Ad Serving

The dismantling of Engage continued Wednesday, as the managers of the company’s online advertising division bought the unit.

In the deal, the Raleigh, N.C.-based management team gained control of the Engage’s ad-serving products, AdManager and AdBureau. The new company, Accipiter Solutions, has the same name as the ad division had before Engage purchased it in 1999, during its buying frenzy at the height of the dot-com bubble.

“We’ve brought back all of the staff that was with Engage that was responsible for the AdManager and AdBureau products,” said new CEO Brian Handly. “The good news is we have a startup mentality with a mature product and an experienced staff — and revenue.”

Andover, Mass.-based Engage’s exit from the online advertising business altogether is not surprising. The struggling company has undergone a vast restructuring, while facing delisting from Nasdaq. Engage has turned its focus to digital asset management, closing or selling off its ad-related units throughout last year.

In September, Engage extricated itself from the aegis of parent company CMGI in a deal to cancel $60 million of debt in exchange for quarterly payments tied to Engage’s operating income. At the same time, the company shook up its management team, bringing in John Barone to head the company.

The uncertainty of Engage’s commitment to AdManager and AdBureau hurt the unit, said Jeff Wood, Accipiter’s vice president of sales. While customers were satisfied with the product, he said, Engage’s corporate focus was elsewhere.

“Over last couple of years, it was difficult for our customer base to understand where Engage was going in the future,” Wood said. “This makes it very easy for our customer base to see where we’re going.”

After shopping around the unit to other online ad firms, Handy and other unit executives put together a deal to buy the company, funding the purchase without outside financing from venture capitalists or banks. He said the company would be profitable from the start, after taking out the overhead from Engage.

While taking back its original name, Accipiter will not have the services of its founder, Chris Evans. The company will remain based in Raleigh, with about 20 employees.

Engage’s disengagement from its online advertising business was most evident in the release this summer of AdManager 6.0, which was billed as a huge step forward with surround-session capability and rich-media improvements. Despite the improvements, Handly said Engage did little to promote it to customers.

AdManager and AdBureau boast over 300 clients, including Microsoft, E! Networks, and Travelocity. However, in its last quarterly financial report, Engage said product revenue fell 60 percent compared to the previous year, pinning the blame on decreased sales from AdManager and ProfileServer.

“Engage obviously had a lack of focus on the online side,” Handly said. “Our company is solely focused on the online management end. We can grow the business the way it can grow.”

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