Let's roll back in time for a bit and look at what they were asking about Doubleclick a few months ago. Will Wall Street buy 'em? You bet, check Doubleclick's stock price today: Up 8 3/16.
The article below also indicates that Zulu will be "watching."
Hah!!!
Zulu hasn't been watching. Zulu has been building.
Zulu, according to Blue Fox's observation, probably didn't get credit for its Netscape work on the list that was published today that had Doubleclick listed number three. Where would Zulu have ranked if it had gotten the advertising credits that were accorded to Netscape instead of Zulu? (see BlueFox post: Message 5066468 )
From The Red Herring:
WILL WALL STREET BUY
DOUBLECLICK?
Probably. But the question over the
long term is whether advertisers will
buy banners.
By Dan Mitchell
February 18, 1998
Internet ad network DoubleClick is expected go public
this week amid mounting skepticism. First, the company
is losing money. Second, the ultimate success of the
banner-ad model, on which DoubleClick has placed
nearly all its bets, remains far from certain. One fact,
though, stands out from the rest: DoubleClick derives
nearly half its revenue from a single source -- Digital
Equipment's AltaVista search engine.
With Compaq in the midst of buying Digital, AltaVista's
future is unknown. If AltaVista were for any reason to
drop DoubleClick, the network would lose one of its 66
members -- and 45 percent of its revenues. That's not an
impossible scenario: Digital has dithered plenty over what
to do with AltaVista, and the DoubleClick contract
includes a 90-day exit clause.
"What Digital was going to do with AltaVista is probably
what Compaq will do with it," says Evan Neufeld, an
analyst at Jupiter Communications. But in the long term,
"if I were at DoubleClick, I'd be worried with what's
going on at AltaVista," he says.
The company is in its pre-IPO "quiet period" and officials
can't comment. But the firm has defended its reliance on
AltaVista and a handful of other companies (65 percent
of its revenues come from just four Web publishers) by
pointing to the close ties it enjoys with those firms.
DoubleClick employs a similar argument when it comes
to the lack of growth in its network. The number of
member firms has hovered around 60 for well over a
year, but the company says it wants it that way -- so it
concentrates on the revenue potential of its member
firms, not on membership numbers.
Still, with the Web growing the way it is -- and with
several publishers actually starting to earn profits -- it's
hard to understand the logic behind a no-growth
strategy.
Part of the problem is the fact that bigger sites such as
Yahoo are using their own sales forces. And those big
sites dominate the Net advertising market. "Just like in all
media, all the cream floats to the top," says Mr. Neufeld.
"People thought it would be different; they thought the
top 200 or 300 sites would succeed." The trend toward
managing ad sales in-house will continue, and as the pool
of experienced Web salespeople grows, even smaller
companies will have an easier time hiring them.
For companies with their own sales forces, DoubleClick
offers Dart, its ad-targeting service. Here, the company
has snared some big-name customers, including ABC,
CBS, and The Wall Street Journal. But this sector,
which includes such players as Focalink, NetGravity, and
Accipiter, is at least as competitive as the network
space. And it's exposed to possible risk from
government regulation: Dart makes use of users' personal
information to target ads. While the FTC is holding
hearings this spring on consumer privacy, it's unlikely --
but possible -- that regulation would affect Dart much.
Of more long-term significance, there are already signs
that eventually, even the smallest publishers will serve up
their own ads as ad-serving software gets cheaper and
easier to use
For all the risk exposure, DoubleClick remains the
Number One ad network, thanks largely to having been
so early to market. And others in the network space,
including Softbank Interactive (recently bought by
Zulu-Tek) and 24/7, will watch closely to see whether
Wall Street endorses the business model. But none of
these companies has yet earned a profit, and Barron's
may have had it right this week when it warned "those
enraptured with price-to-earnings ratios" that, for them,
there may be safer plays out there.
Need to know the basics of Web advertising? Get briefed.
Advertisers were looking "beyond the banner" even as far
back as October 1996.
Do you pay any attention to those busy little ads on Web
pages? We hope so. Let us know.
|
