DoubleClick plans to add a search and affiliate marketing business with yesterday's acquisition of Performics in a cash deal worth up to $65 million.
DoubleClick, New York, said it signed a deal that would result in the company's entry into the search marketing business thanks to Performics' bid-management tool, which lets advertisers automate paid-search, paid-inclusion and comparison-shopping listings across different search engines.
DoubleClick will pay $58 million in cash, with another $7 million based on Performics hitting financial performance targets. The deal is to close within a month.
Performics, Chicago, helps advertisers manage their search campaigns across top search engines, including Google and Yahoo. It manages the campaigns to maximize return by automatically adjusting bids based on each keyword's performance at the search sites.
“This is very similar to how advertisers and agencies currently use our ad-management product to manage thousands of campaigns across multiple sites,” DoubleClick CEO Kevin Ryan said in a conference call.
DoubleClick plans to integrate the Performics search tool with its DART online ad platform, renaming the product DART Search. It will let advertisers using the DART platform construct, track and measure their various online ad campaigns — from search to rich media to e-mail — from one platform.
“We have clients who buy hundreds of thousands of keywords,” Ryan said. “It's extremely time consuming. Technology needs to be the answer.”
In addition to search, Performics provides an affiliate platform for marketers to manage and track affiliate sites. This part of the business represents half of the company's revenue, Ryan said, though DoubleClick expects the search business to grow more quickly.
Performics has 130 employees and boasts 200 clients including AOL, Eddie Bauer and Kohl's. DoubleClick said Performics' sales would grow 50 percent this year compared with 2003. DoubleClick said the deal would add $10 million in sales this year.
DoubleClick said it would offer the search and affiliate marketing products on their own in addition to integrating them within the DART for Advertisers platform.
DoubleClick ad management rival Atlas DMT, a unit of aQuantive, already offers advertisers search management through its acquisition of Go Toast in December for $13.9 million. Companies like Did-it.com also offer tools and services for managing search bidding as their sole focus.
“The question is whether this DART Search product is going to be right up there with the very best technologies,” Did-it.com CEO Kevin Lee said.
Performics would fill a pressing need for DoubleClick to participate in search marketing, which accounted for 35 percent of ad spending last year, according to the Interactive Advertising Bureau.
As more advertisers devote a greater share of their online marketing budgets to search, DoubleClick heard from clients that they wanted a way to manage the complex search-bidding process alongside their other online initiatives, Ryan said.
“We believe this acquisition will reinforce our position as the most comprehensive marketing platform available for marketers, advertisers and Web publishers,” he said.
Jupiter Research analyst Nate Elliott said Performics will let DoubleClick play a more active role in search marketing through its services offering.
“When search engine marketers look to outsource, the primary thing they're looking for is help with strategy,” he said.
The acquisition comes after DoubleClick readied its own internally developed bid-management tool for testing. Ryan said the company would use some elements from that tool with the Performics technology.
He said DoubleClick would confine participation in the search business to providing technology and services instead of creating search campaigns for businesses.
“You should absolutely not expect us to get into the creative space,” he said.