Pay-for-performance ad network and server ValueClick Tuesday snapped up another quasi-competitor, announcing that it has acquired affiliate advertising firm onResponse.com in a cash and stock deal valued between $3.4 million and $20 million.
Similarly to ValueClick, West Palm Beach, Fl.-based onResponse.com offers cost-per-lead and cost-per-acquisition banner ad and newsletter campaigns for clients including Intuit, Doubleday, NextCard and Excite@Home.
Unlike its buyer, onResponse hosts but does not target ads. The company built its base of about 8,000 affiliated publishers largely through a referral system, in which affiliates receive a share of ad revenues from sites they refer. Through the deal, ValueClick also gains sweepstakes and discount marketing site freebieclub.com, which onResponse operated.
“Our philosophies mirror each other exactly,” said onResponse president and chief executive officer Scott Averbach of the merger. “onResponse’s vision has always been to expand our offerings to our clients and to develop a global Internet presence, and joining forces with the world’s leader in performance-based advertising is a logical next step.”
Under the terms of the agreement, ValueClick will pay $800,000 and issue 750,000 shares of VCLK stock. Based on its new unit’s revenue and earnings performance, ValueClick may also pay up to $16.6 million in stock over the next two years.
Westlake Village, Calif.-based ValueClick said the move would help it offer additional customer acquisition tools to advertisers, and more ways for Web publishers to monetize their inventory. Executives are also betting that the acquisition of onResponse, which is profitable, will reinforce ValueClick’s bottom line. ValueClick became cashflow positive last quarter, and expects to hit operational profitability in the first quarter of 2001.
“onResponse represented the ideal acquisition target for ValueClick because it is a well-managed, profitable leader in a complementary area of performance-based online advertising,” ValueClick chairman and chief executive Jim Zarley said.
“The combination of onResponse’s cost-per-acquisition model with ValueClick’s breadth and scalability offers online marketers a very reliable and cost-effective way of growing their businesses. Offering performance-based affiliate marketing solutions was a critical component of our strategic plan, and onResponse was a natural choice for us, given their proven track record of success.”
ValueClick has been busy of late — it recently acquired reporting and traffic analysis firm StraightUp! and onetime rival ClickAgents.com, boosting its product line and network reach. It also recently rolled out an email marketing product, and a wireless ad network in a deal with NTT DoCoMo.
“By acquiring another profitable, like-minded company, ValueClick is reinforcing its worldwide leadership in pay-for-results online advertising, the fastest growing segment of the online advertising industry,” Zarley said. “This quarter we’ve demonstrated our commitment to acquire well-managed, market-driven companies that enhance the offerings of our core business.”
Shares of VCLK were trading 0.71 percent down at press time, at $4.34.
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