Online Buying Binge
Call it competing in Internet time. Just a few months ago, interactive advertising services firm DoubleClick seemed destined to emerge as the leading Web-based advertising network, with only one comparably sized rival (24/7 Media) and the acquisitions of Abacus Direct ($1 billion) and NetGravity ($530 million) under its belt.
But in a matter of two weeks, Internet venture capital company CMGI Inc. (an early investor in Lycos and GeoCities) gobbled up three of DoubleClick’s smaller competitors: Flycast Communications ($650 million), AdForce ($500 million), and AdKnowledge Inc. ($193 million), spending more than $1.3 billion in aggregate. Add to this roster AdSmart and Engage Technologies, two additional firms controlled by CMGI, and CMGI’s ad network is instantly on par with DoubleClick’s. Assuming the deals go through, CMGI will offer a one-stop shop that helps clients plan online ad campaigns, matches ad buyers and sellers, and targets, delivers, measures, and analyzes Internet ad programs.
The objective? The $2.2 billion market for online ad revenues. DoubleClick and CMGI combined have actually spent more on acquisitions in the past six months than the entire potential market. Certainly, both companies are betting that online ad spending will continue to grow at least 50% per year for several years to come. But will there be room for both?
