Sales: $44.9 million (2001)
Stock Exchanges: NASDAQ
Ticker Symbol: VCLK
NAIC: 541810 Advertising Agencies; 541840 Media Representatives
ValueClick, Inc. is a provider of a wide range of interactive and offline advertising and marketing products and services. The company is perhaps best known for its cost-per-click (CPM) Internet advertising model, whereby advertisers are billed only for the click-throughs that their ads achieve. After going public in 2000, ValueClick expanded its line of products and services by acquiring other companies with performance-based advertising and marketing services and technologies. The company also expanded into the European and Asian markets.
Selling Internet Advertising on a Cost-Per-Click Basis: 1998–99
ValueClick introduced cost-per-click (CPC), a new and unique Internet advertising model, to its clients in 1998. Under the CPC model, online advertisers would pay only for the number of clicks that were made on their ads, instead of the traditional cost per impression (CPM) model, which billed advertisers by the number of impressions or views of its ads. Likewise, publishers were paid for the number of clicks rather than for the number of impressions.
The company was formed in July 1997 by Brian Coryat. It began by selling excess online advertising space from web publishers who had leftover CPM ad inventory that remained unsold. ValueClick then sold that space using its CPC model and helped web publishers sell out their inventory. The CPC rates were typically a lot lower than CPM rates, so ValueClick helped establish a floor for Internet advertising rates. In July 1998 the company’s ad network consisted of 4,200 web sites. Toward the end of 1998 ValueClick doubled the rates it paid to web publishers who hosted banner ads for its clients, increasing its scale from a range of 6 to 12 cents, to 12 to 16 cents, per click. Advertisers were charged 50 cents per click, or $5 per thousand, with discounts offered for high volume and ad agencies.
James Zarley became chairman of ValueClick in May 1998 and served as a part-time advisor, with Coryat as vice-chairman. Zarley joined ValueClick on a full-time basis in February 1999 and was named CEO in May 1999. Zarley was an experienced executive with more than 30 years in the technology business.
In January 1999 ValueClick announced that it had signed eight new advertisers, namely Ask Jeeves, CNET, Consumer Reports, Intel Corp., Macy’s, ParentTime, Salon Magazine, and Sony Corp. of America. When ValueClick filed papers with the Securities and Exchange Commission (SEC) in October 1999 for a forthcoming initial public offering (IPO), it had 25 million active banner ads and a growing base of advertisers. Recently added advertisers included Audi, Bausch & Lomb, Goto.com, and Hoovers Online, among others. ValueClick organized its network of available ad space into the following categories: Consumer, Technology, Entertainment, E-Commerce and Shopping, and Sports and Recreation. For 1999 ValueClick had revenue of $20.3 million and a net loss of $2.5 million.
Rapidly Growing Company Going Public: 2000
In January 2000 online ad agency DoubleClick Inc. invested $85 million—$10 million in cash and $75 million in stock—in ValueClick for a 30 percent interest in the company. At the time ValueClick’s ad network consisted of 11,000 web sites. The company reported that it served 1.3 billion ads in December, a figure that grew to two billion ads for January. The investment from DoubleClick enabled ValueClick to expand into the United Kingdom, where it opened a European sales office.
Meanwhile, ValueClick was preparing to go public. Investment banking firm Goldman, Sachs & Co. was selected as the lead manager, with Salomon Smith Barney and Wit Soundview Technology as co-managers of the IPO. The recent investment from DoubleClick improved the company’s valuation and enabled ValueClick to reduce the number of shares offered from five million to four million and increase the offering price range from $9-$11 to $11-$ 13. ValueClick went public in the last week of March 2000, and shares rose to a high of about $20 in April.
Two months later ValueClick conducted another IPO on the Tokyo Stock Exchange for its Japanese subsidiary, a joint venture between ValueClick and Jafco Co. Ltd. that was formed in late 1998. ValueClick Japan was the largest Internet advertising network in Japan, serving ten million banner ads a day on more than 4,000 web sites.
ValueClick continued to grow during 2000. In October the company announced that it would relocate its corporate headquarters in California from Carpinteria to Westlake Village, which was closer to Los Angeles. It also opened a new sales office in San Francisco. The company’s sales force had tripled in size since December 1999.
ValueClick improved its reporting capabilities in October 2000 with the acquisition of StraightUP!, a marketing analysis firm. StraightUP! provided a range of campaign management services for advertisers. Its eTrax and eTrax Enterprise systems enabled advertisers to track gross response, multiple conversion metrics, cost per action, and lifetime value of newly acquired customers.
ValueClick also expanded into e-mail marketing in October 2000 with the introduction of a new opt-in e-mail solution that included targeted e-mail to individual consumers, newsletter services, special banner and e-mail packages, and access to more than 25 million double opt-in e-mail names in more than 120 interest categories. Double opt-in e-mail names were those people who indicated they were interested in receiving unsolicited e-mail announcements about products and services in specific areas of interest, and then confirmed their interest.
ValueClick continued to pursue its strategy to acquire companies with performance-based advertising solutions and technologies with the acquisition of advertising agency On-Response.com, Inc. and ClickAgents.com, Inc., a provider of performance-based Internet advertising solutions. The acquisition of ClickAgents, whose clients included Microsoft, MTV, the Discovery Channel, Salon.com, and AltaVista, expanded the performance-based banner advertising options that ValueClick could offer. The acquisition of OnResponse enabled ValueClick to introduce cost-per-acquisition pricing in Europe starting in January 2001, in addition to its cost-per-click, cost-per-lead, cost-per-sale, and cost-per-action services.
Toward the end of 2000 ValueClick announced that it would acquire Z Media, Inc., a leading co-registration company that provided qualified e-mail subscribers to advertisers and direct marketers. Z Media shareholders would receive approximately 2.7 million shares of ValueClick, which were valued at about $11.7 million at the time of the agreement. The acquisition was completed in February 2001 and added Z Media’s co-registration network of some 4,000 web sites to ValueClick’s offerings for both marketers and publishers. Z Media became ValueClick’s e-mail marketing business unit. By May 2001 the division had ten million opt-in e-mail names under management.
The year 2000 was a good year financially for ValueClick. The company reported a 129 percent increase in revenue compared with 1999. Annual revenue for the year was $56.7 million. The company reported pro forma income of $6.8 million for the year, which included interest income and excluded certain noncash accounting items and nonrecurring merger-related costs. The company ended the year with $126.1 million in cash and marketable securities and reported positive cash flow generation of $7 million for the year.
Adding New Advertisers and Services: 2001
At the beginning of 2001 ValueClick announced that many of its new advertisers were those who previously employed only traditional media. They included Ticketmaster, Nabisco, General Mills, Citibank, and other traditional advertisers. Newly added Internet-related advertisers included BlueNile, the Motley Fool, and MySimon.com. Many well-known advertising agencies also were utilizing the ValueClick network, including Saatchi and Saatchi and others. Later in the year ValueClick added many more advertisers from traditional industries such as consumer packaged goods, retail, pharmaceuticals, financial services, publishing, travel, automotive, and communications.
In the second half of 2001 ValueClick acquired Mediaplex, Inc., a San Francisco-based provider of technology solutions for advertisers and marketers, for $43.9 million in stock. Mediaplex specialized in real-time ad serving technology as well as technology for e-CRM (Customer Relationship Management). The acquisition strengthened ValueClick’s financial position as well as expanded its digital advertising services; the combined companies would have about $150 million in cash following the acquisition. Mediaplex continued to operate as a wholly owned subsidiary of ValueClick, focusing on ad serving, CRM e-mail, and publisher-side ad management technology.
ValueClick, Inc. came to market in 1998 offering a new and unique Internet advertising model to clients—the performance-based cost-per-click (CPC) model. Since then, ValueClick has grown exponentially from being a one product company to a global company offering a variety of traditional and interactive marketing solutions with enviable balance sheets and $270 million in the bank. In short, ValueClick, Inc. has positioned itself as a global media and technology leader in the advertising realm.
The acquisition of Mediaplex also included Adware, Mediaplex’s offline advertising company. Adware also became a wholly owned subsidiary of ValueClick and became the company’s application service provider (ASP) for offline marketing communications. Adware offered a range of hosted services to help advertisers monitor their media planning, buying placement, and billing activity.
A strategic partnership with EyeWonder, Inc., a creator of instant streaming video technologies for Internet and wireless devices, enabled ValueClick to offer instant streaming video and audio advertising. The streaming banner ads would be powered by Eye Wonder’s EYERIS technology.
ValueClick also introduced a new e-mail and lead generation solution called UltraLeads in the second half of 2001. Offered for sale or rental, UltraLeads’ lists were created by capturing data from web sites on potential customers. Interested users were then sent an advertiser’s e-mail immediately with the requested information. UltraLeads enabled advertisers to create an ongoing interactive marketing program with qualified prospects. Later in the year ValueClick introduced a next generation e-mail solution that combined UltraLeads with MOJO Mail, the company’s e-CRM solution, to bridge the gap between customer acquisition and customer retention e-mail marketing.
Annual revenue for 2001 declined to $44.9 million. The company reported a pro forma operating loss of $1 million and a net loss according to generally accepted accounting principles (GAAP) of $7.2 million, compared with a GAAP loss of $55.3 million in 2000.
Adding More Advertising and Marketing Services: 2002
In the first half of 2002 ValueClick acquired Be Free Inc., a provider of performance-based marketing services and technologies, for 43.4 million shares valued at $128.5 million. Be Free’s technology tracked the activities of visitors to web sites and helped companies create marketing campaigns targeted to individuals. Be Free’s more than 240 customers included Sprint Corp., Verizon Communications Inc., Travelocity.com Inc., and IBM Corp. Be Free became a wholly owned subsidiary of ValueClick, specializing in online affiliate marketing solutions. The acquisition strengthened ValueClick’s financial position, with the combined companies having more than $270 million in cash and interest-yielding securities. ValueClick projected that it would reach a breakeven point before noncash and nonrecurring charges in the fourth quarter of 2002.
ValueClick Europe also continued to gain new customers. In April 2002 the company announced the addition of five new automotive clients, including Fiat, Renault, Alfa Romeo, Peugeot, and Lancia.
Since acquiring several companies that offered performance-based advertising and marketing solutions, ValueClick has been able to offer advertisers as well as web-based publishers a comprehensive range of media and technology solutions. Its products and services included offline as well as interactive marketing solutions. The principal operating units of the company operated under the names ValueClick, Be Free, Mediaplex, and Adware.
ValueClick Europe (United Kingdom); ValueClick Japan.
Principal Operating Units
Be Free; Mediaplex; Adware.
24/7 Real Media, Inc.; DoubleClick, Inc.
- ValueClick, Inc. introduces a new Internet advertising model, cost-per-click (CPC).
- ValueClick goes public.
- ValueClick acquires Mediaplex and Adware for $43.9 million in stock.
- ValueClick acquires Be Free for $128.5 million in stock.
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—David P. Bianco
"ValueClick, Inc.." International Directory of Company Histories. . Encyclopedia.com. (September 22, 2018). http://www.encyclopedia.com/books/politics-and-business-magazines/valueclick-inc
"ValueClick, Inc.." International Directory of Company Histories. . Retrieved September 22, 2018 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/valueclick-inc
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