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Terra Lycos Buy Bolsters DM Division

Terra Lycos bought online lead generation firm GetRelevant for an undisclosed amount of cash, the Spanish Internet service provider and Web site network operator said yesterday.

The buy signifies Terra Lycos' increased focus on direct marketing services as a growing revenue stream, said Dean Macchi, director of direct marketing at Terra Lycos.

Negotiations for the purchase reportedly began in May.

The No. 1 reason for the purchase was GetRelevant's technology. However, about a dozen of GetRelevant's employees — the company's staff peaked at 25 recently before a round of undisclosed layoffs — will be employed in Terra Lycos' San Francisco office.

“It was primarily a technology buy with the added value of retaining some of the key people and a portion of the revenue stream,” Macchi said.

GetRelevant has a network of more than 100 Web sites. When people sign up for various offerings on them, such as a newsletter subscription, GetRelevant serves ads targeted by marketer-selected criteria and charges marketers by the lead.

“We currently have co-registration technology, but GetRelevant offers us more sophisticated technology in that it enables dynamic co-reg [pronounced co-rej] offers,” Macchi said.

Mitchel Harad, GetRelevant's co-founder and CEO, will not remain with the company. Co-founder and president Rich Roberts will. Neither was immediately reachable for comment. The two founded the company in March 1999. It debuted under the stated premise that ad buyers were getting ripped off in online marketing deals and that the future of online marketing was in pay-for-performance deals where the advertiser pays only for some predetermined action like filling out a form or making a purchase. However, pay-for-performance was a tough sell in 1999 when advertisers were spending money on online advertising like they were firing it out of cannons.

But with pay-for-performance deals having become Internet advertising's bread and butter, sources say, the marketplace has more than its share of fly-by-nights on both sides of the transactions. On the buy side, companies reportedly sometimes claim that leads delivered were no good, and that they'll only pay a portion of the bill. On the sell side, some companies represent lists of names as having been opted in when they weren't, and leads are often not as qualified as companies selling them contend. As a result, quality leads and clean data are reportedly often a point of contention between buyers and sellers in these deals.

“Part of what GetRelevant's technology does is provide clean data on the back end,” Macchi said. “We have a process to scrub that data and make sure it's quality, and then the client is only paying for quality names.”

Demonstrably clean data also theoretically helps collect full payment for services rendered.

The GetRelevant network brings with it about 18 million page views and 80 million impressions monthly, Macchi said, representing an “extreme” increase in Lycos' co-registration business. He also said that Terra Lycos' existing co-registration inventory often is mostly sold out, which is not the case with its other online advertising inventory.

“I don't think any site can say from a banner standpoint that they're at or near sold out, but our co-reg inventory is,” Macchi said. The majority of the inventory is sold on a cost-per-lead basis, he said.

Terra Lycos' co-registration service is aimed at U.S. advertisers for now, but plans are in the works to roll it out globally at an undetermined time, he said.

Terra Lycos said in its second-quarter earnings statement that its media business, including advertising, integrated marketing solutions, electronic commerce and content and portal services subscriptions, accounted for 60 percent of revenue, and that its access and communications services business accounted for 40 percent.

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