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‘Click’ Merger Highlights Advertisers’ Interest in New Web World

When do three and 12 add up to one?


When ValueClick Inc., the 12th-ranked advertising network, completes its merger with FastClick Inc., the third-ranked advertising network. Then it will achieve the No. 1 spot, according to comScore Media Matrix June data.


The all-stock deal is valued at $214 million. But in the wild world of Internet advertising, what does being “the No. 1 ranked ad focus network” mean?


Companies such as Santa Barbara-based FastClick group Web sites and offer space on them as a package to advertisers.


The top-ranked advertising network has been Baltimore-based Advertising.com Inc., which was acquired by America Online Inc. last year. Its network of Web sites and search-driven advertising strategies reached 78 percent of all U.S. Web surfers. Yahoo! Inc. properties reached 70 percent of the online audience, placing it at No. 2.


Search advertising, in which ads appear that are related to user searches, is the fastest growing area of online advertising, according to Eric Martinuzzi, senior research analyst at Craig-Hallum Capital LLC. Ads placed with search engines such as Google Inc. or Yahoo represent about 40 percent of online ad dollars. “The rest of online spending is where ValueClick plays,” he said.


Companies like ValueClick and FastClick have created networks of smaller Web sites where a vendor might want to place an ad. “If I’m a travel company, I want great exposure in the travel category,” Martinuzzi said. “I’ll go to the obvious places the AOL travel sites, the Yahoo Travel but beyond that, I’m not going to pick up the phone and call every Web site that has a travel bent to it.”


FastClick has about 9,000 Web sites in its network; it will be combined with ValueClick’s smaller network.


ValueClick provides other services, such as creating sweepstakes and other marketing campaigns for advertisers, placing links to specialty retailers on general-interest Web sites, and running customized campaigns for clients.


Its larger scale is aimed at attracting more publishers, which should lead to more viewers. “As you sign up more advertisers, they create more demand for your distribution partners, which partners like,” Martinuzzi said. “And then they can charge a higher price for space on their site.”


Despite the Internet’s popularity, online advertising has not quite caught on so quickly. Of the estimated $250 billion advertising market, only an estimated 4 percent is spent online. That compares with estimates that people consume about 14 percent of their media online.


(Santa Barbara-based FastClick agreed to be bought for about $10 a share, well below its April IPO price of $12, but at a premium over its closing price of $8.85 the day of the announcement.)


ValueClick claims it’s not trying to compete against its Pasadena neighbor, Yahoo! Search Marketing (formerly Overture Inc.).


“We believe the likes of Yahoo and ourselves are all working to try and get more of the total ad-spend dollar, as opposed to fighting over the 4 cents,” said Gary Fuges, a ValueClick spokesman.

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