DoubleClick, Abacus Score Direct Hit
With the buzz surrounding target marketing and Internet advertising exploding, it should come as no surprise giants from each of these markets, Abacus Direct and DoubleClick, respectively, would come together in a high-profile $770 million merger.
Abacus brings a treasure chest of consumer purchase data, culled from more than 1,100 retail and catalogue merchants. DoubleClick is best positioned to be the Web’s premier advertising network. As reported in The Wall Street Journal, DoubleClick ceo Kevin O’Connor described a long-term vision of “deliver[ing] the right message to the right consumer at the right time to make targetable, measurable advertising work.”
Eventually. While sophisticated data-mining on behalf of catalogers has proven wildly successful for Abacus, it does seem hard to expect DoubleClick to soon offer targeted Internet banners vis-a-vis instantaneous matches between Web-user profiles and a database of more than two billion consumer transactions. Prediction: DoubleClick will instead emerge by year-end as the leading provider of e-mail marketing, another hot area.
Just as important as the strategic fit between Abacus and DoubleClick is the financial fit. While both companies are growing revenues more than 65% per year, Abacus has generated $11 million of cash flow in the last 12 months while DoubleClick has burned through more than $31 million. (See chart). With an increasingly volatile market for Internet stocks making secondary offerings more difficult, DoubleClick may have bought some breathing room in addition to industry-leading database capabilities.
