Backed by 24/7, Naviant/IQ2 Deal Is Shot Across DoubleClick's BowA sharper picture of what could be a potent weapon in the online ad wars emerged this week when marketing services company Naviant Technology Solutions said it will acquire database concern IQ2.net from IntelliQuest for $46.5 million in cash.
Naviant, Newtown Square, PA, will "deliver a product line to enable marketers to precisely target customers and prospects in both the physical and virtual worlds," said IQ2.net president Charles Stryker, who will take over as president/CEO of Naviant when the deal closes later this month. Current Naviant president Jim Flynn will continue with the company as senior vice president of operations.
With an undisclosed seven-figure investment from online ad network 24/7 Media Inc., the deal's potential for marketers bears a striking resemblance to ad network DoubleClick Inc.'s announcement in June that it plans a $1 billion purchase of Abacus Direct Corp., manager of the largest database of consumer catalog buying habits in the United States.
24/7's investment in the IQ2.net acquisition gives the ad network "preferred customer status," barring competitors like DoubleClick from IQ2.net's information.
At stake in both deals is who can marry Web surfers' clicking behavior with their household demographic and buying behavior, and develop for marketers products that finally deliver on the Internet's long-held promise of being able to serve the right ad to the right person at the right time. Both 24/7 and DoubleClick are banking that offline data will help them target qualified buyers and avoid delivering ads to someone who shows a repeated interest in something but who is not a qualified prospect, as can be the case when serving ads based solely on clicking behavior.
Both networks aim to boost the lowly banner ad's sub-0.5-percent click-through rates -- and generally dismal conversion rates -- and as a result, allow the Web publishers they represent to charge higher cost-per-thousand impression (CPM) rates.
24/7, however, believes IQ2.net data puts it from nine months to a year ahead of DoubleClick in the targeting race.
"The big difference between these two deals is that DoubleClick has no way of taking that offline data and marrying it with their online efforts," said David Moore, president/CEO of 24/7, New York. "They're smart guys and I'm sure they'll figure it out, but it's going to take them two years."
Noting that 24/7 announced plans to build a database with IntelliQuest in October, Moore said, "it's very easy to argue that DoubleClick bought Abacus in a vain attempt to catch up."
DoubleClick officials could not immediately be reached for comment.
And while industry observers question DoubleClick's ability to merge Abacus' data with information collected online, IQ2.net's database has a built-in Internet connection. IQ2.net handles 80 percent of online hi-tech hardware and software warranty registrations for companies like Hewlett Packard and IBM, giving it a database of 12.1 million households of hi-tech product users.
Since the registrations are done online, IQ2.net is able to place cookies for 24/7 into registrants' hard drives. As a result, IQ2.net can identify at least the registrant and the demographics of the registering household as they browse sites under 24/7's umbrella -- 275 properties that 24/7 claims reach 55 percent of all U.S. Web traffic.
The IQ2.net deal is part of 24/7's related goal of offering marketers the means to develop integrated campaigns, which may include regional online and radio advertising backed by inbound telemarketing and outbound e-mail follow-up. To that end, it acquired e-mail company Sift Inc. in a stock swap worth $22 million in March. Sift, Sunnyvale, CA, manages an opt-in database of more than 3 million e-mail addresses, which is available for list rental and can be segmented by demographic, lifestyle or vocational criteria. The firm also maintains an e-mail service bureau and appending service.
"Both those companies [Naviant and Sift] are identifying people online and allowing us to profile them offline and identify them the next time they come into our network," Moore said.
Further, 24/7 is going forward with the deal it struck in October with IQ2.net's soon-to-be-former owner, IntelliQuest, to build a co-op database of Web-site registration data -- dubbed Profilz -- that will allow marketers to target Web surfers by demographics. The IQ2.net and Profilz databases will feed one another. Also, 24/7 will begin pilot-testing the Profilz database by the end of the year, when it is expected to have between 15 million and 20 million names, Moore said.
Through IntelliQuest, IQ2.net also has retained access to First Data Solutions' Donnelley lifestyle and demographic database in technology, telecommunications, cable and utilities. The company said it has more than 200 demographic and lifestyle variables on more than 100 million U.S. households.
"We can do things from a customer management perspective that heretofore haven't been possible other than on individual sites," Flynn said, estimating that IQ2.net has e-mail addresses on 11 million of its 12.1 million households. "We can go to a registration customer like Hewlett Packard and offer them the ability to not only register the product that they ship but also run a campaign immediately subsequent to registration. For instance, we can follow up with an e-mail through 24/7 mail. We can put banners up for those people, and just those people, 60 days from now when we think their ink jet printers are probably running out of ink."
Besides 24/7, investors backing Naviant's acquisition of IQ2.net are TL Ventures, General Electric Co.'s GE Equity, First Union Corp.'s First Union Capital Partners, BCI Partners Inc. and Catterton Partners.
Reportedly, no layoffs are planned.