* Behind the DoubleClick Merger
But challenges lie ahead for the merger, which provoked questions about how the new entity will operate and cries from privacy advocates almost as soon as it was announced.
"Very simply, the combination of DoubleClick is about delivering the right message to the right consumer at the right time and helping companies to maximize their return on their advertising and marketing investments, whether those are brand advertisers or direct marketers," said Kevin O'Connor, chairman/CEO of DoubleClick, New York.
Indeed, combining that Abacus data trove -- information on what people buy and how much they spend -- with DoubleClick's ad placement technology and network of 1,500 Web sites seems to add up to an online targeting bonanza.
The rub for DoubleClick, on more than one count, is that matching Abacus data to DoubleClick marketing techniques requires knowing online consumers' addresses. Households are the core units of Abacus' database, which holds information on 88 million homes. About 1,100 catalog players contribute data to Abacus and the firm filters and models that information into one giant database.
Before a cataloger sends its mailing lists to the printers, Abacus, Broomfield, CO, looks at the full purchasing history of each household the catalog plans to target and plucks out the ones that are unlikely to be buyers. The company charges 4 cents for each suppressed name, and the cataloger avoids wasting money by mailing to dud addresses.
But most Web sites don't collect a mail address that DoubleClick could match up against the Abacus database. Down the line, it might be able to collect names at more points on its network, but the consumer data could be of limited immediate use.
"From what I understand about this deal, the immediate benefit for DoubleClick is Abacus' technology," said Marissa Gluck, online advertising analyst at Jupiter Communications, "not necessarily the database, but the filtering and modeling technology to understand what makes a person likely to buy based on past purchases."
Because DoubleClick doesn't own the sites in its network, there also are questions about whether those sites will want to share data on the surfers who peruse their pages, she said. Whether they do or not, the merger already has set off alarm bells among privacy advocates, who said the deal will result in personal information being shared for purposes other than those originally stated. Consumer privacy groups said they have a complaint with the Federal Trade Commission in the works.
The merger partners contend they give consumers the option of removing themselves from the database, and DoubleClick's O'Connor said any e-mail marketing the company might carry out would target only those consumers who have chosen to receive promotions.
For Abacus, being acquired by DoubleClick lets it move quickly into cyberspace, a new frontier that is taking business away from catalogs. Though the larger catalogers are ideally structured for Net marketing, they have been slow to move online. Now, Abacus wants to help ease those firms into cyberspace. Abacus chairman/CEO Tony White said there's a big market among catalogers looking online for the same standards of targeting they're accustomed to in the offline world.
"It is not an overstatement to say that over the last 12 to 18 months my conversations have been absolutely dominated by this topic," White said.
Some industry watchers suggest that people who shop online are an entirely different audience than people who like to buy through catalogs. But White frames all such consumers as "non-face-to-face" buyers who have several traits in common.
"They're used to things like being required to pay for shipping. They're also used to things like occasionally getting a product that isn't exactly what they wanted," he said, citing data that indicates consumers often browse catalogs for what they want and then place their orders through the Web.
He said Abacus has no plans to slow the pace at which it is striking deals offline. Centrobe, Boulder, CO, a firm that advises businesses on customer management, signed an agreement this month to provide its publishing clients access to Abacus data. In May, Abacus agreed to replace Acxiom Corp.'s SmartBase cooperative database with its Alliance database.
Abacus and DoubleClick expect to complete their stock-swap merger late in the third quarter, creating a new company with a market value of $4.9 billion. DoubleClick has never made a profit, but now forecasts moving into the black earlier than its previous estimate of next year's fourth quarter. Abacus has been regularly profitable. The company posted revenue of $47 million in 1998, compared with DoubleClick's topline of $80.2 million in the same period.