DoubleClick Buys Technology Assets From L90
Financial terms of the deal were not disclosed. However, DoubleClick is rumored to have paid $20 million for L90's adMonitor ad-serving and tracking platform and its ProfiTools marketing platform.
The deal bodes well for DoubleClick's cross-town New York rival Real Media, which is now positioned as the No. 2 player in what is essentially a two-company market.
"We look forward to working with L90's third-party ad-serving clients to ensure a smooth transition to our DART technology or AdServer software, and look forward to a long relationship with L90 as a DART customer," said Chris Saridakis, senior vice president of Global TechSolutions at DoubleClick.
However, it is unclear how many of these clients will want to continue with L90 now that it is outsourcing its ad serving to DoubleClick. L90 won a number of clients from DoubleClick in recent months, and they may be reluctant to work with DoubleClick again. In July, L90 said it enticed 10 Web publishers to switch to its adMonitor service from other ad-serving technologies.
Mark Naples, vice president of marketing for Real Media, said the company would welcome those clients not interested in working with DoubleClick.
"We will be in touch with those clients and will make it very palatable for them to come to us instead of DoubleClick," he said.
Meanwhile, L90's sale of its technology to DoubleClick enables L90 to focus on its core competencies -- media and direct marketing.
"This deal strengthens L90 from a financial perspective," said John Bohan, L90's president/CEO. "It's much more cost-effective to outsource our ad-serving needs."
The transaction is expected to cut L90's quarterly loss by $2 million to $3 million, he said.
Under the transaction, L90 will continue to support its third-party ad-serving clients for the next 30 days. Clients then will be transitioned either to DoubleClick's DART or AdServer systems. The deal gives DoubleClick access to L90's 1,700 adMonitor clients. The AdServer system serves more than 4 million impressions a month.
Tom Sebastian, L90's chief financial officer, said the company's technology business, while generating about 75 percent of the company's gross margins, never generated enough gross profits to cover its costs.
DoubleClick in November 2000 sued L90, charging that the Los Angeles company infringed on DoubleClick's DART technology patent for delivering targeted ads. L90 countersued DoubleClick, accusing it of fraud and seeking to have its patent overturned. The DoubleClick and L90 lawsuits were dismissed with prejudice, and each party will grant the other "certain rights in certain of their respective patents."