24/7 Media Sells E-Mail Marketing Division to Experian
The sale comes at a time when 24/7 Media is in desperate need of cash, having burned through more than $15 million in 2000. The company ended the year with $28.9 million in cash but reduced that to just $13.7 million in the first quarter of this year.
The sale of Exactis is 24/7 Media's third transaction this month. On May 3 it sold the intellectual property of Sabela Media Inc., its Australian ad tracking, serving and research subsidiary, to cross-town rival DoubleClick Inc. 24/7 Media acquired Sabela Media in January 2000.
One week after the transaction with DoubleClick, 24/7 Media announced the sale of its AwardTrack loyalty software division to Pass Privilege Inc. It acquired AwardTrack in February for about $75 million in stock.
While New York-based 24/7 Media did not disclose the financial terms of the Sabela Media and AwardTrack deals, it said in a conference call with analysts that these deals, along with the sale of securities, netted it $6.3 million in the second quarter.
On that call, David Moore, 24/7 Media's CEO, said the company's main goal was to reduce its cash burn and to raise additional capital.
"The next nine to 12 months remain challenging," Moore said. "We are raising cash and reducing our cash burn. We are optimistic about reaching profitability."
But that might be easier said than done.
24/7 Media reported a first-quarter net loss of $78.7 million on revenue of $25.2 million, up from a loss of $23.8 million in first quarter 2000.
Revenue from the company's e-mail marketing business continued to decline in the first quarter, falling to $3.9 million from $6.9 million in the year-ago quarter. In fourth quarter 2000, the company reported e-mail revenue of $4.1 million, which includes results from its list management and database businesses. The Exactis division delivered more than 500 million e-mail messages a month, the company said.
With the sale of Exactis, 24/7 Media hopes to concentrate its e-mail activities on list management and brokerage, Moore said.
Tom Detmer, who stepped down as chief operating officer and president of 24/7 Media on March 27 to resume his previous role as general manager at Exactis, will remain with the e-mail marketing division. He will continue to run Exactis from its Denver location.
According to Jay Schwedelson, corporate vice president at Worldata/WebConnect, a Boca Raton, FL-based provider of opt-in e-mail and list brokerage services, 24/7 Media is desperately trying to keep the wolf from the door.
"24/7 is struggling to stay alive and was looking for any suitor who was willing to talk," he said. "Exactis is not nearly as large of a player as it once was in the e-mail distribution business, but Experian will possibly be able to leverage its ongoing client base to resurrect the business."
The Exactis acquisition provides Experian with an e-mail marketing infrastructure, which it plans to combine with its direct marketing and customer relationship management services.
However, Experian, Orange, CA, may have gotten more than it bargained for. Exactis is embroiled in a lawsuit with Mail Abuse Prevention System LLC, Redwood City, CA, over Exactis' listing on MAPS' Realtime Blackhole List.
A trial originally was scheduled for May 21 but was postponed until July to give both sides more time to prepare.
MAPS' RBL is a list of more than 4,000 networks that MAPS considers to be friendly, or at least neutral, to spammers that use these networks either to originate or to relay spam. The service claims to block about 40 percent of all suspect e-mail.
"It should be interesting to see what happens with the MAPS lawsuit that is still yet to be settled," Schwedelson said. "If that does not go in the favor of Exactis, then Experian may have more hurdles to jump than just reviving revenue streams."
MAPS originally listed 150 Exactis e-mail servers on its RBL in early November. In a statement at the time, MAPS said Exactis' servers were listed because Exactis had "repudiated a previously negotiated agreement to implement measures which would have prevented unsolicited bulk and commercial e-mail from being sent" through its e-mail servers.
MAPS and Exactis have been at each other's throats for more than a year over Exactis' e-mail policies. MAPS wants Exactis to adopt verified opt-in list management practices for its e-mail lists as well as for those of its clients. Verified opt-in refers to the practice of asking consumers for permission to send commercial e-mail and then requiring the consumers to respond to a verification of that permission.
Matthew Besler, an Experian spokesman, said the company plans to complete the Exactis acquisition before the MAPS lawsuit comes to trail.
MAPS could not be reached for comment.