It was just a few months ago that investors couldn’t get enough of Westlake Village’s ValueClick Inc., a big player in the burgeoning field of online advertising.

But in May, days after its stock hit a four-year high, the company reported slowing revenue growth. Since then, shares dropped more than 30 percent, wiping out some $600 million in market capitalization.

Blame it on Google Inc. and other Internet giants.

Analysts are sounding alarms that so-called “ad networks” such as ValueClick, which act as brokers connecting websites with advertisers, are being surpassed by newer “ad exchanges,” such as Google’s DoubleClick Ad Exchange, which act as a kind of stock market for ad buyers and sellers to make direct deals in real time.

“Ad networks are certainly losing share to the online exchanges,” said Mark Zgutowicz, an analyst at Piper Jaffray & Co. in Minneapolis. “ValueClick’s clients are becoming more sophisticated at doing what ValueClick has done for them. They can go in and take out the middle person, which is ValueClick, and buy (ads) at a lower price.”

Ad networks have long been a crucial part of Internet advertising. Operators of the networks pay websites for the display space, then sell it to advertisers and ad agencies on a cost-per-click or cost-per-impression (or view) basis.

But in recent years, ad exchanges have exploded and now handle about 20 percent of online display advertising. Other leading players include Yahoo Inc.’s Right Media subsidiary. Citing the threat from the exchanges, Zgutowicz downgraded ValueClick from “overweight” to “neutral” last week, causing shares to plunge 10 percent to close at $14.10 on June 28.

But ValueClick is disputing the dire predictions for its future and maintains that it often accesses exchanges itself to get the best deals for customers.

“We’ve been very clear that ad exchanges are complementary to what we do,” company spokesman Gary Fuges said.

Growth slowdown

After shares bottomed out during the worst of the recession in early 2009, ValueClick had seen a steady rise in revenue, profits and share price. Net income hit $101 million on sales of $560 million last year, both figures substantially up from a year earlier. Its share price, around $5 in early 2009, topped $20 this February and stayed about that level or higher into May.

But revenue growth in its core business slowed down in the fourth quarter. While first quarter revenue was up by nearly one-third, the company missed its own projections. The company has also issued a second quarter revenue forecast lower than Wall Street estimates.

Zgutowicz believed the slowdown was indicative of the pressures from newer ad exchange services, which are user friendly, allowing buyers and sellers to easily log in and rapidly consummate a transaction.

Operators of the exchanges receive a fee for every transaction. In January, Google announced its exchange ad business had grown 130 percent in one year, helping push its display ad business revenue to about $5 billion annually.

Colin Sebastian, an analyst at Robert W. Baird & Co. Inc. in San Francisco, said that he was also concerned about ValueClick’s ability to compete against Internet giants.

“The longer-term concern would be how relevant is an ad network in the display advertising space online?” he said.

But company spokesman Fuges said ValueClick is “agnostic about exchanges.” In fact, it sometimes participates in them. For example, it might go to Google’s Ad Exchange to buy display space on behalf of advertising clients, much like a broker might place an order on the stock exchange. When it does, ValueClick uses proprietary technology that helps advertisers target certain kinds of Internet users.

Some analysts believe such practices will lead to shrinking margins, since the ad networks have to pay exchange fees to buy space. Fuges said ValueClick has not experienced that.

Others in the industry also believe ad networks and ad exchanges can co-exist. Jason Fairchild, chief revenue officer at Pasadena ad exchange company OpenX Technologies Inc., which has seen a 700 percent increase in revenue in the last year, said that companies such as ValueClick have adapted.

“Ad networks are evolving to this new world and are buying from exchanges directly,” he said. “ValueClick adds a lot of unique value around targeting certain users. The ad networks that won’t do well in this world are the ones that don’t add any value in technology.”

Indeed, one of ValueClick’s recent moves that appears to have been successful is its $295 million acquisition in August of Chicago-based Dotomi. The company developed a technology to find the most effective website placements for specific ads.

Other struggles

However, ValueClick has had struggles outside of its core ad network business. Those other units include a stable of websites such as Investopedia.com and an affiliate marketing business, which connects third-party marketers with retailers such as Amazon.com Inc.

The company has announced it’s looking to own and operate fewer websites, which haven’t been as profitable. What’s more, growth in affiliate marketing has slowed down due to economic troubles in Europe and new tax laws stateside.

Affiliate marketers are third-party websites such as MyBargainBuddy.com that are paid by retailers to advertise their goods. ValueClick’s affiliate marketing business, Commission Junction, connects such sites with retailers. But new state laws in New York and California taxing Internet sales accounted for some slowdown in Commission Junction’s revenue growth last year. California’s tax led to well-publicized threats by Amazon to cut affiliate connections.

ValueClick has weathered ups and downs before, most famously a 2008 Federal Trade Commission probe into whether it was selling advertisers personal information gathered from consumers though offers of free gifts. It paid $2.9 million to settle with the government.

The company also had issues fully staffing its new mobile advertising unit, Greystripe, which it acquired last year to position it for growth in the rapidly expanding market. But it has said the troubles have since been resolved.

“I think ValueClick has an ability to adapt,” Sebastian said. “Despite the challenges, they’ve been a survivor.”

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