Ad Networks May Soon Jostle for No. 1

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Internet investment titan CMGI Inc. reportedly will decide in the next two months whether it will merge search site Alta Vista and the two networks in which it has interests into one giant network.

"We're not saying we're integrating or that we're not integrating. It's all possible," said Bill White, president of marketing and strategic operations, Internet group, at CMGI, Andover, MA.

CMGI, which owns a majority stake in No. 4 online ad network Adsmart, announced earlier this month it would acquire No. 3 ad network Flycast Communications Corp., San Francisco, in a stock swap worth $687 million. The announcement came just 10 days after CMGI announced it would spend $500 million to acquire ad management firm AdForce Inc., Cupertino, CA. CMGI, which started out as a direct marketing services firm, also owns 83 percent of Alta Vista, which it plans to make its centerpiece Web property.

Currently, No. 1 ad network DoubleClick, New York, has an exclusive pact to deliver ads to Alta Vista's pages, a contract that guarantees almost half of DoubleClick's sales. Each January until 2002, Alta Vista has the right to pull a "significant" amount of ad inventory from DoubleClick - a right the search engine plans to exercise, said White.

While on the surface, it may look advantageous to become the 800-pound gorilla of ad networks, philosophically, rolling the properties into one network may not be wise, according to White.

"Flycast has hired really great direct marketing people and Adsmart has hired really great traditional marketers who understand branding," said White. "In the next 30 to 60 days, we'll have made those decisions."

Meanwhile, DoubleClick and No. 2 ad network 24/7 Media Inc., New York, at press time were still mum on the rumor that DoubleClick planned to buy 24/7 after the Silicon Alley Reporter stated on its Web site that executives from both companies were in a hotel in Los Angeles trying to cut a deal. However, 24/7 president/CEO David Moore would not rule out any possibilities.

"It's all about price. Are we out shopping the company around? No," he said. "[But] if I were standing up in a board meeting pounding my hand on the table saying that we must not take $100 a share and we must stay independent, they would have me escorted out of the room by a psychiatrist."

DoubleClick cited a policy against commenting on rumors.

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