Starting upKevin O'Connor and Dwight Merriman founded high-tech startup DoubleClick in 1996 with the help of interactive advertising leader Poppe Tyson (now Modem Media). They received $2 million in start-up funding from Poppe Tyson's parent company, Bozell Jacobs (recently acquired by True North), which now owns 6 percent of the company's stock. DoubleClick is now the leading marketing strategy provider on the World Wide Web, offering precisely targeted advertising options on more than 1,500 sites worldwide.
Mmmm... cookies
The backbone of DoubleClick's business is a group of integrated proprietary technologies, the first of which is the DoubleClick Network. It is the first advertising network on the Internet and consists of more than 1,500 high-traffic sites, which are divided into seven categories. This is used in conjunction with the company's Dynamic Advertising Reporting and Targeting (DART) technology - now an industry standard for the management of online advertising campaigns. DART monitors user activity using "cookies" - little bits of code stored on the consumer's hard drive and passed to the web server through a browser. This information is recorded to create consumer profiles, which are then matched up with target profiles selected by the advertiser. DoubleClick is then able to deliver targeted banner ads to individual browsers. In conjunction with DoubleClick's wide variety of ad vehicles, this technology enables advertisers to create highly targeted online campaigns and better control reach and exposure. But many consumers see this process as an invasion of privacy once they find out their hard drives store Internet browsing histories accessible by outside parties.
Two clicks will take you there
DoubleClick Direct provides instantaneous reporting of user activity, which allows direct marketers to view responses to their campaign in "real time" and modify it accordingly to increase effectiveness. DoubleClick Darwin is an "intelligent marketing" application that systematically matches up and places advertiser banners on the web sites most likely to generate high response rates. Finally, the company offers advertising coverage on various levels. With DoubleClick Local, regional and local advertisers can take advantage of affordable, highly targeted Internet marketing confined to regions defined by zip code, state, or area code. DoubleClick International covers a network of sites in more than 80 different countries, in a number of different languages. In addition to offering comprehensive planning, tracking, and reporting for online advertising campaigns, DoubleClick licenses its DART technology to individual web sites that sell ad space. In addition to its seven American offices, the New York-based company has eight foreign outposts in Canada, Asia, Europe, and Australia. In May 2000 the company announced the opening of a Latin American sales office in Miami.
Doubleclick opens with a bang
Some say DoubleClick is the new Yahoo! - there's as much hype surrounding the high tech startup as there has been surrounding Yahoo!, and both companies have made their founders extremely rich. Soon after DoubleClick's launch in 1996, Fortune magazine named it one of the "Hip, Hot, and Happening Companies" of the year. The company's online banner ads reached 10 million users in just five months, beating the record of every measurable media vehicle in history. As of June that year, DoubleClick had reached more users than online media giants America Online, CompuServe, Microsoft, and Prodigy. The company's rampant expansion during its first 18 months earned it the New York City Partnership's "Growth Company of the Year" award in 1997. When it went public in February 1998, its stock shot up 71 percent on the first day of trading, and the company raised $60 million in its initial offering.
Counting on Abacus
In June 1999, the company announced a merger with Abacus Direct in an all-stock deal worth $1.7 billion. Abacus, a traditional direct marketing company, owns a database of consumer catalog-buying behavior called Abacus Alliance. DoubleClick will benefit from the company's arsenal of consumer data - which includes purchasing information from more than 1,110 catalog merchants. The new company will retain the DoubleClick name, and Kevin O'Connor will continue as CEO. Tony White, chairman and CEO of Abacus, will serve on DoubleClick's board and supervise Abacus' expansion onto the Internet.
Backing down amid privacy concerns
DoubleClick's data collection practices led to a Federal Trade Commission investigation in February 2000 after the Electronic Privacy Information Center filed a complaint. The investigation focused on DoubleClick's effort to create a database of individuals' online habits, which it then matches with their addresses, phone numbers, and purchasing preferences. In addition, six private lawsuits have been brought against DoubleClick, most of which allege that DoubleClick has improperly collected and used information on Internet users in violation of federal law. These lawsuits come on top of a suit filed in May 1999 by 24/7 Media alleging patent infringement on its "On-Line Interactive System and Method for Providing Content and Advertising Information to a Targeted Set of Viewers" patent. 24/7 Media wants to bar DoubleClick from using the patent as well as recover monetary damages from DoubleClick. In March 2000 the company bowed to the pressure from privacy advocates and backed off plans for the online database, admitting it was a "mistake", especially "in the absence of government and industry privacy standards." In January 2001, the FTC ended its investigation on DoubleClick. The commision found no wrong doing on the part of the company, stating that it had never used consumer information "for purposes other than those disclosed in its privacy policy."
Rapid expansion
In 1999, DoubleClick announced that it would acquire NetGravity for $530 million. NetGravity sells software that enables web producers to control and monitor the advertisements on their sites. The move will grant DoubleClick more versatility as it will now be able to offer its own DART system or NetGravity's alternative. In addition, DoubleClick signed a 10-year lease for new office space in Manhattan starting in 1999. The office is expected to house all of the company's Manhattan-based employees under one roof. The company's growth is due in part to the success of its ad network stock, which rose throughout 1999, and its DART system. Through the DART system, the company created 15 partnerships with clients, allowing advertisers the ability to control their own ad campaigns.
The expansion continued in 2000. In May DoubleClick acquired 60 percent of Flashbase, a company which offers design and management of online sweeptstakes. The company also acquired e-mail marketing company NetCreations in October in a stock swap valued at $191 million, enhancing DoubleClick's e-mail marketing capabilities.
DoubleClick Shopping
Doubleclick also facilitated e-commerce within the company in 1999 by creating DoubleClick Shopping, which the company hopes will create more revenue from existing advertisers. Beginning in 2000, the company will begin offering four e-mail direct marketing products that will help advertisers target potential customers. In addition, the company is expanding internationally with the launch of Doubleclick Benelux, an Internet advertiser in Belgium, Luxembourg, and the Netherlands, and through an international ad partnership with CBS Marketwatch.
Click-per-click advertising
DoubleClick's ability to track the "click-through" rate of ads was greatly enhanced by the purchase of a 30 percent stake in online advertising company ValueClick in January 2000. As part of the $85 million agreement, DoubleClick will be allowed to use ValueClick's cost-per-click advertising network, in which an advertiser pays only if a user clicks through on its ad. ValueClick stands to gain both from the infusion of capital, which will be used for growth and expansion, and from the use of DoubleClick's DART technology.
Management shakeup
Following a drop in stock prices and much controversy over DoubleClick's privacy policy, the company announced that founder Kevin O'Connor would step down as CEO. DoubleClick's former president and COO Kevin Ryan, who has been at the company for three years, would take over as CEO. O'Connor would remain chairman.
