Viewpoint to Buy Unicast for $7.4M

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Viewpoint, an online video provider, announced yesterday it agreed to purchase rich media ad company Unicast for $7.4 million.


The acquisition would combine Viewpoint's Internet graphics and delivery systems with Unicast's rich media ad technology. The deal would let advertisers simplify the rich media buying process, giving them access to multiple forms of graphical advertising from one location.


Jay Amato, Viewpoint's CEO, said the deal was likely one of many in the fragmented rich media industry, which includes small specialty companies like Eyeblaster and PointRoll as well as DoubleClick's newer Motif product.


"No one company really provides a viable, well-managed, uniformly reported solution for a whole suite of advertising products," he said.


Most of Unicast's executives will move to Viewpoint. Unicast CEO Richard Hopple will depart from the company's daily operations. He will join Viewpoint's board of directors once the deal closes, which is expected by Jan. 3.


The deal calls for Viewpoint to pay Unicast shareholders $7.4 million, mostly in the form of stock. Viewpoint said it might raise capital to finance the cash part of the deal.


The transaction price is much lower than recent deals in the direct response side of online advertising, such as AOL's $435 million deal to buy Advertising.com. Unicast was formed as a joint venture of Publicis and BBN Technologies and was backed with $15 million in venture capital from Grace Capital, Intel and private investors.


"There is the implication that they weren't making as much money as one would think when you look at the overall picture of online advertising," said David Hallerman, an analyst with eMarketer.


Rich media advertising, which publishers often use to appeal to brand advertisers, has begun to grow quickly, though it remains a tiny part of the Web ad market. Advertisers spent $368 million on rich media in the first half of 2004, according to the Interactive Advertising Bureau, up 23 percent from the same period in 2003. However, rich media spending represented 8 percent of online ad spending in the first half of 2004.


"It's been overshadowed by paid search, but its growth rates are still strong," Hallerman said.


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