Think Partnership has acquired Missouri-based Litmus Media and will incorporate its pay-per-click (PPC) search ad network, click fraud prevention and shopping cart abandonment tools into its portfolio of interactive advertising companies.
“As click fraud continues to artificially increase the cost of online advertising, erode the return on investment to advertisers, and continues to reach beyond search marketing into affiliate marketing and display advertising, we feel that Litmus’ reliable solution to protect our advertising clients’ investment is a key ingredient to being more effective in maximizing the ROI from their online advertising spend and provides us with a competitive, proprietary, competitive advantage in the marketplace,” Scott Mitchell, president of Think Partnership, said in a statement.
Litmus runs the ValidClick Search Network which serves PPC search advertising, local search advertising, shopping comparison and coupon content to search engines and Web directories. The company says it has over 1,000 search engine partners that process over 90 million searches per month.
ValidClick uses its FeedPatrol click fraud prevention technology in its own network and also licenses it to other PPC networks, search engines and content providers. Litmus sells its Second Bite technology to online retailers to combat abandoned shopping carts with automated, permission-based email messages sent to abandoners with special offers to entice them to complete the transaction.
Litmus also operates an online yellow page service, local city directories, a meta-shopping search engine, coupon search sites, and an affinity-based Web search engine.
Think expects to incorporate the various Litmus technologies into several of its subsidiaries, including the Kowabunga! and Primary Ads affiliate networks, and its MarketSmart Interactive paid search agency
Litmus generated over $2 million dollars of pre-tax earnings in the 12 month period ending September 30, 2005. Its management expects Litmus to grow to approximately $4 million in pre-tax earnings this calendar year.
Think paid $6.5 million in cash, and another $6.5 million in stock upfront. Litmus’ management can potentially earn another $19.95 million in cash and stock through performance-based earnouts over the next 3 years. Think financed the deal through the sale of $26.5 million of convertible preferred stock.
“Both click fraud and shopping cart abandonment are huge issues facing the online advertising industry and we are excited to be able to offer our technologies through all the Think companies to address these issues for advertisers,” said Litmus CEO John Linden.
Both Linden and Litmus President and General Counsel Tobias Teeter will continue to run Litmus Media from its Kansas City, Missouri headquarters.
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