*DoubleClick Goes 'Bargain Basement' With Lower Traffic SitesDoubleClick Inc. this week will to debut an Internet advertising network that departs from the company's prevailing strategy by selling banner space to lower traffic sites on a nonexclusive basis and for lower rates.
"If it sounds like we're speaking to direct marketers here, we are," said Andy Jacobson, vice president and general manager at the new DoubleClick unit, called Sonar Network. It will exist separately from the New York company's two existing networks.
The move by the Internet's No. 1 ad placement company marks another industry step toward a more response-oriented approach that is primarily accountable to ad buyers rather than sites running ads. DoubleClick traditionally has been known as a firm representing high-traffic, marquee Web sites, charging ad buyers high costs for every thousand ad impressions.
This month, DoubleClick also bought 30 percent of ValueClick Inc., an ad network that charges for each consumer who clicks through banner ads rather than on a CPM basis. The investment followed ad placement rival Flycast Communication Corp.'s introduction of its own cost-per-click program.
Also this month, Engage Technologies Inc. threw itself into the ad-placement fray and said it will pursue a performance-based advertising approach that "primarily serves marketers" rather than Web publishers. Engage, Andover, MA, plans to acquire Flycast and advertising network Adsmart for $2.46 billion in stock.
Jacobson said DoubleClick realized that by accepting only the larger clients that could afford ads on well-known Web sites, it was turning away plenty of business to competitors like Flycast or 24/7 Media Inc. Jacobson, who previously was vice president of sales at the DoubleClick Network, said the company essentially was losing $1.5 million a month in revenue.
"As a sales guy, that is brutal to watch. That's $18 million a year that we're just saying 'No' to," Jacobson said.
The new Sonar network requires sites to generate a minimum of 100,000 monthly impressions. It is divided into 16 affinity groups made up of specific types of consumers - for example, those who peruse auto sites. By way of comparison, one of DoubleClick's two existing networks places ads only on sites that generate at least 1 million monthly impressions. The other requires a minimum of 2 million impressions, an exclusive ad-placement relationship from the site, and it sells ads on a site-specific basis.
Jacobson said he expects Sonar's CPMs to come in "somewhere between 24/7 and Flycast." The network also is designed to let marketers go online to check the performance of their banners, cutting out poorly performing sites or redirecting the number of impressions to sites that are doing well.
"Direct marketers typically find it really important to keep a hand on a campaign, not just have somebody tell them that we're 'auto-optimizing,' " Jacobson said.
Apparently, Sonar has been well received so far. Jacobson said his 25-person sales force has been talking up the network for about a month and has already signed up 90 sites representing a billion monthly impressions. When asked about the 11.11 million impressions-per-site average those figures add up to, Jacobson said some sites in the new network have low profiles but still generate considerably more than the 100,000 impression minimum.
DoubleClick expects Sonar to surpass 2 billion monthly impressions before the end of the first quarter. Still, Jacobson made it clear that the company has no plans to abandon its strategy of representing the marquee Web sites through its other networks.
"There's really nobody who's competing well with us in that space," he said. "In fact, that's one of the reasons we've put together an entirely separate network with its own sales staff. We don't want to confuse that message. That's still what the DoubleClick network will stand for."