E-mail Is DoubleClick's Next Frontier

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Internet ad network DoubleClick Inc. confirmed last week that it is pursuing an e-mail strategy in the wake of its proposed acquisition of co-op database company Abacus Direct Corp.


"We will have an e-mail product, at the outside, by the end of the year," said DoubleClick President Kevin Ryan. As for whether DoubleClick plans to develop the product internally or to get e-mail capabilities through acquisitions, he said, "We will do a little bit of both. We're in conversations with lots of different players."


DoubleClick announced last week it plans a $1 billion acquisition of Abacus, a firm that manages the largest database of consumer catalog buying habits in the United States.


"Very simply, the combination of DoubleClick and Abacus is about delivering the right message to the right consumer at the right time and helping companies to maximize their return on their advertising and marketing investments, whether those are brand advertisers or direct marketers," said Kevin O'Connor, chairman/CEO of DoubleClick, New York.


Combining the Abacus data trove - information on what people buy and how much they spend - with DoubleClick's ad placement technology and network of 1,500 Web sites seems to add up to an online targeting bonanza.


The rub for DoubleClick, on more than one count, is that matching Abacus' data to DoubleClick marketing techniques requires knowing online consumers' addresses. Households are the core units of Abacus' database, which holds information on 88 million homes. About 1,100 catalog players contribute data to Abacus and the firm filters and models that information into one giant database.


Before a cataloger sends its mailing lists to the printers, Abacus, Broomfield, CO, looks at the full purchasing history of each household the catalog plans to target and plucks out the ones that are unlikely to be buyers. The company charges 4 cents for each suppressed name, and the cataloger avoids wasting money by mailing to dud addresses.


But most Web sites don't collect a mail address that DoubleClick could match up against the Abacus database. Down the line, it might be able to collect names at more points on its network, but the consumer data could be of limited immediate use.


"The challenge is going to be tying postal addresses to e-mail addresses to cookies with enough quantity to make it a workable product," said Eric Zilling, executive vice president of ALC Interactive, the online arm of mailing list company American List Counsel, Princeton, NJ.


"If they can combine Abacus data into DoubleClick's new e-mail capabilities as well as their ability to serve ad banners, it should be a great combination," said Zilling. "The trick is going to be getting enough overlap between the two databases and doing it in a way that doesn't violate peoples' privacy concerns."


The merger already has set off alarm bells among privacy advocates, who said the deal will result in personal information being shared for purposes other than those originally stated.


The merger partners contend they give consumers the option of removing themselves from the database, and DoubleClick's O'Connor said any e-mail marketing the company might carry out would target only those consumers who have chosen to receive promotions.


Meanwhile, Abacus' founder Tony White said he is confident the two companies can improve banner performance with buying behavior information from his company's database.


"At the end of the day, what really indicates who somebody is and what they're interested in is where they've plunked their money down in the past," he said. "You incorporate actual purchase information, and I bet you we can get those banners to work."


White is also betting that third-party offers in shipping notification e-mails with clickable links to catalogers' e-commerce sites will be a hit among Abacus' clients.


Consumers will open the e-mail because they'll want to hear from notifying firm. Plus, with the help of Abacus' data, the third-party offer will be one to which the recipient is highly likely to respond.


"Because we already have the name and address, the order blank is already filled out. All they have to do is check 'buy,'" White said.


For Abacus, being acquired by DoubleClick lets it move quickly into cyberspace, a frontier that is taking business away from catalogs. Though the larger catalogers are ideally structured for Net marketing, they have been slow to move online. Now, Abacus wants to help ease those firms into cyberspace. White said there's a big market among catalogers looking online for the same standards of targeting they're accustomed to in the offline world.


"It is not an overstatement to say that over the last 12 to 18 months my conversations have been absolutely dominated by this topic," White said.


Some industry watchers suggest that people who shop online are a different audience than people who like to buy through catalogs. But White frames all such consumers as "non-face-to-face" buyers who have several traits in common.


"They're used to things like being required to pay for shipping. They're also used to things like occasionally getting a product that isn't exactly what they wanted," he said, citing data that indicates consumers often browse catalogs for what they want and then place their orders through the Web.


He said Abacus has no plans to slow the pace at which it is striking deals offline. Centrobe, Boulder, CO, a firm that advises businesses on customer management, signed an agreement this month to provide its publishing clients access to Abacus data.


Abacus and DoubleClick expect to complete their stock-swap merger late in the third quarter, creating a new company with a market value of $4.9 billion. DoubleClick has never made a profit, but now forecasts moving into the black earlier than its previous estimate of next year's fourth quarter. Abacus has been regularly profitable. The company posted revenue of $47 million in 1998, compared with DoubleClick's $80.2 million in the same period.
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