COMPANY PROFILE
Something doesn't ad up
By Lawrence Aragon
Redherring.com
July 30, 1999
An ETrade ad asks, "If your broker is so great, why does he
still have to work?" You could ask a similar question of one of its ad agencies, Modem Media.Poppe Tyson (Nasdaq:
MMPT): "If you're such a great
Internet advertising agency, why
can't you sell yourself to
Internet-hungry Wall Street?"
When Modem Media.Poppe
Tyson (MMPT) came out, it
didn't need to advertise. The
Street was so desperate for just about anything
Internet related that MMPT IPO shares opened 244
percent higher than their offer price of $16. Four
months later, they're hovering around $22.
The question now is, Does MMPT have legs, or is it
fated to remain a Flounder? Despite backing from
True North, the world's sixth-largest ad agency and
MMPT's majority owner, the company doesn't have a
compelling story. It creates Web advertisements, and
that puts it smack in the middle of a highly competitive
market.
"In the last year and a half, everyone and their friggin'
uncle is doing interactive marketing," snips Joan
Voight, reporter at large for AdWeek magazine.
MMPT ranks No. 13 in AdWeek's list of the top 50
interactive agencies, ranked by revenues, with
estimated sales of $24.8 million for the first half of the
year. To get to the top, it must battle through some
bigger, better-branded competitors, including
Razorfish ($25 million), Agency.com ($47 million),
and No. 1 ranked USWeb/CKS ($73 million).
MMPT also faces a less forgiving stock market. The
novelty has worn off interactive agencies, and they're
now being evaluated on actual revenues, not just
potential, Ms. Voight says.
Revenues have climbed steadily at MMPT for the
past four years, but like nearly all Internet companies
it has yet to post an annual profit.
There is no disputing that online advertising is a
growth market. Internet-based ad revenues in the
United States topped $1 billion in 1997 and are on
pace to hit $5 billion next year, according to Jupiter
Communications.
MMPT has built up quite an impressive roster of
clients, including Amazon.com, Citibank, and IBM.
But it has no magic way to hang onto big-name
clients, which presently account for more than half its
revenue. In July AT&T, its largest client, took its
interactive ad business to the Strategic Interactive
Group. Poof! MMPT's revenues dropped some 20
percent.
Bottom line, there are too many variables in MMPT's
equation to determine if it will rise above the noise.
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