Ad-serving firm Engage exited the online advertising market Sept. 13, and said it would completely focus on its multichannel software products.
The Andover, MA, company sold its AdKnowledge business to online marketing and technology firm Bluestreak for an undisclosed amount, and said it would discontinue the rest of its media operations Sept. 28.
It will cease to serve advertisements on its network Sept. 23. Engage will offer a special outsourced ad-serving offer to Web publishers affected by this decision.
The news is just the latest industry reaction to the depressed online advertising market. 24/7 Media also recently closed its European network.
“We didn't want to be in the business of trying to survive a difficult year or two of draining resources at the expense of the software part of the company,” said Mark Horan, spokesman for Engage. The company acquired software firm MediaBridge last year and didn't want the downturn in the ad market to impact that business.
In addition, parent company CMGI did not renew its $50 million financial commitment to the firm last month.
“We are now focused solely on the fast-growing market for content and advertising management software,” said Tony Nuzzo, CEO of Engage. That market is expanding, Engage said, and spending in the category is expected to reach $10 billion by 2004.
Engage will focus on producing software for print, direct mail and online marketing, including ad proofing, trafficking and serving tools.
Meanwhile, the largest short-term challenge is transitioning AdKnowledge's customer base to Newport, RI-based Bluestreak. Although Engage is firm on the late September deadline, many customers — ad agencies in New York — are dealing with the aftermath of the attacks on the World Trade Center.
“It's nearly impossible to get a hold of people. Some people are not physically at their offices, or there are busy signals because there are not enough lines available,” said Annette Tonti, chairman of Bluestreak.
Many of AdKnowledge's approximately 100 customers are in New York, while some are in Chicago or on the West Coast. Some are also in Europe.
Prior to Engage's Sept. 13 announcement, Bluestreak left messages for as many customers as they could reach.
Next week, Tonti expects New York clients to be much easier to reach.
Bluestreak will also consider hiring Engage's 20 AdKnowledge employees (Engage currently has 125 total), but is still reviewing where they can fit in. “We're certainly interested in a lot of their folks,” Tonti said.
Tonti believes the acquisition, which includes transitioning a “significant portion” of AdKnowledge users to the Bluestreak platform, assists Bluestreak in becoming a leading ad-serving firm, despite the downturn in the market.
“Part of the reason that it's difficult to make money [in the online ad business] is that it is a market under transition. That is a good thing: Marketers want much more exact measurements. We never believed that a measurement of a click is a good measure,” Tonti said.
Instead, Bluestreak measures branding factors, such as the time that customers interacted with the ads, how long they played a video and other statistics. In addition, its servers are more equipped to handle large rich media files than some firms that “built these servers back in 1994,” Tonti said.
Meanwhile, Engage said it would provide additional financial information about how the transition affects the company in its fourth quarter report.