John Federman, chairman/CEO of Adsmart, expects his company's new consulting division to propel the online ad network forward in its quest to catch New York-based rivals 24/7 Media Inc. and DoubleClick Inc. But it isn't clear how well Adsmart is gaining on its competitors who already carry out consultations of their own.
“We're fast approaching where we will be at parity” with No. 2 player 24/7, Federman said. The executive told DM News that Adsmart, a subsidiary of Internet investing company CMGI Inc., will announce “several” new clients over the coming weeks, including some the company lured away from DoubleClick and 24/7.
The three companies place targeted ads on the Internet. They post clients' spots within their networks of sites, selecting the best affinity destinations that draw the types of customers their clients are looking for. At the same time, the companies provide advertising sales services to the affiliated sites.
Adsmart, Andover, MA, launched its consulting unit in late April, billing it as the first of its kind to be offered by an online advertising network. The division advises Adsmart's affiliated sites on boosting the number of ad impressions they generate and improving their usability. Suggestions might range from ad placement and syndication partners to design tips. Web sites also will receive research on sites' competitive environment and suggestions on how to make their sites more advertiser-friendly, the company said.
Federman said Adsmart saw a window of opportunity for site consulting services: “Our competition wasn't doing it.”
But the firm is not alone in providing consulting services to Web sites, according to 24/7, a network Federman has predicted his firm would eclipse in terms of revenue and number of sites this year. 24/7 has a group called Affiliate Relations whose job is to fulfill many of the objectives the new Adsmart division undertakes.
“They work with the Web site to identify areas that can be causing them revenue leakage,” Leslie Howard, 24/7 vice president of communications, said of the group. “They'll work with Web sites to make recommendations on how they should design their page to accommodate ads [and] the frequency with which they're refreshing ads.” The unit also suggests syndication partners, she said.
A spokeswoman at market leader DoubleClick Inc. said the firm advises its clients on increasing their click-throughs and using DoubleClick's technology, but was unable to specify any consulting services the ad network provides to Web sites.
24/7 does not charge for its consulting services. In contrast, Adsmart charges $7,500 a day after an initial free day. At least one client has signed on for a week's worth of the new service, though Federman said such a long engagement is more the exception than the rule. The company also has bigger plans for its services, hoping to expand them to sites outside its network by July, he said.
All three companies gauge their success largely by how many ads they generate and the number of Web destinations that join their networks. Adsmart's network now includes roughly 220 sites generating 1.2 billion monthly ad impressions. The firm tacked on 45 sites when it bought ad representation concern 2Can Media Inc. this year.
24/7 is scheduled to release its first quarter results next week, at which point it also will announce up-to-date figures on its sites and the number of impressions it generates. As of the end of 1998, the company handled 1 billion monthly impressions and its network included 150 sites — numbers certain to have increased.
24/7 brought in revenue of $19.9 million in 1998, trailing DoubleClick — which had a topline of $80.2 million in the same period — by a wide margin. Neither company makes a profit.
Adsmart parent company CMGI does not separately release revenue figures on the company. But Federman remains confident the firm will push ahead, and the consulting group's work to improve the content of its Web sites is part of that.
“Without any hesitation, we think we're the fastest growing network on the Internet,” Federman said. Online research firm Jupiter Communications forecasts the U.S. Net ad placement market reaching $6.7 billion in 2001.
