Engage Upgrades Ad Software, Faces Delisting Threat and CMGI Offer

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Amid speculation of more restructuring at former online media company Engage Inc. and Nasdaq's recent threat to delist the now-technology-only firm, executives are pounding the pavement offering sneak previews of AdManager 6.0 to be debuted in June.


Among the new capabilities that Engage's newly enhanced ad management software will offer is the ability for publishers to offer so-called eSessions, a campaign tactic unveiled in November by New York Times Digital in which the publisher allows single advertisers to follow users throughout their sessions on the site.


AdManager 6.0 will let publishers define how many page views constitute a session, according to Engage executives.


Also, though Engage abandoned its online media network strategy in September, the company claims a market remains for the ad profiling technology that originally drove that business. As a result, AdManager 6.0 offers an automated version of Engage's anonymous profiling technology.


Engage's original premise was that users would never be comfortable giving personally identifying information online.


Engage placed cookies (tracking technology) in computer hard drives to monitor Web surfers' clicking behavior across its network. It then scored their interests in marketing categories such as autos, consumer electronics or sports on a so-called recency, frequency and duration (RFD) basis.


The idea was that as someone got closer to buying, for example, a car, they'd visit auto-related sites more frequently and the visits would last longer, resulting in a higher score in that category. Once they bought the car, their behavior would change and their auto-related scores in Engage's database would drop accordingly. Theoretically, Engage's customers would be able to serve ads just as prospects' interest in their product or service peaked.


Critics said that without personally identifying data, it would be impossible to know whether that Porsche buff was a 16-year-old.


Apparently, the critics were on to something.


"[Anonymous] profiling did not have demand in the marketplace on a network level," said Jordan Shultz, vice president of sales of Internet advertising and marketing solutions, Engage, Andover, MA. "Where it does have marketplace demand is at the Web site level."


For example, e-commerce sites can use Engage's profiling technology to monitor individual users' interest in products on an SKU level and serve promotions accordingly, he said.


And though Engage no longer markets its anonymous profiling technology as a replacement for transactional information, "it provides a more complete view of customers' interests," Shultz said. AdManager also can serve content based on information in marketers' internal databases, Shultz said.


Engage plans to debut AdManager 6.0 officially at the @d:tech Los Angeles online advertising trade show June 19-21. The new version also offers enhanced rich media capabilities and some automatic optimization functions.


News of the release follows Nasdaq having threatened last week to delist Engage for failing to meet requirements including that its shares bid for at least $1. Engage, which also offers so-called digital asset management solutions, has until June 14 to regain compliance and has requested a hearing with Nasdaq officials.


Also last week, CMGI proposed buying all the shares of Engage it does not already own. CMGI owns about 75 percent of Engage. Under the proposal, each share of Engage would be exchanged for 0.2286 of a share of CMGI stock.


The deal, which values Engage's stock at 24 cents per share, has prompted speculation of possible restructuring at Engage. Company insiders have reportedly said the company is considering merging Engage with e-mail marketing services firm yesmail.com, another CMGI subsidiary.


Engage's board of directors has appointed a committee of independent members to evaluate CMGI's offer and should decide in four to six weeks, Shultz said.


Last week, Engage said that revenue for the third fiscal quarter of 2002 would be $5.3 million to $5.6 million, down from $6.1 million in the second quarter. Engage estimated its third-quarter net loss from operations to be $7.2 million to $8 million, or about 4 cents per share.


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