USA Today Buys Ad Network Banquet

Committed to sports

USA Today announces its second sports-related deal in as many days: It has purchased sports site and ad network Banquet.

Banquet operates BNQT.com, an aggregation site offering coverage of eight different action sports like skateboarding and motocross. BNQT.com pulls video, photos and blog posts from across the 'net to populate its hub for sport enthusiasts, most of which are 12-34 and male.

The company also owns Cold War Collective, an ad network that extends to over 20 sites that cover action sports. The network offers banner, text and video ad inventory.

Like its deal with CSTV — announced yesterday — USA Today's purchase of Banquet is designed to expand sports coverage, especially in niche markets.

Display Meet Email Ads: Datran Acquires Chintano

Written on

August 8th 2007

Acquiring contextual and behavioral targeting ad network Chintano, Datran Media will be incorporating the site with their existing email based ad network, EO.com.

EO.com was launched this year and was to serve as an email ad network for publishers of newsletters and email lists. These clients can incorporate ads from marketers, but what the firm realized was that there is a demand for site-based display ads. Hence, the acquisition of Chintano.

Chief revenue officer for Datran Media, Sean O’Neal said, “We had been working with Chintano for quite some time to help us explore the display advertising opportunity and the ad network opportunity [and] we had a string synergy with them.”

The company believes that what will ultimately set it apart from its competitors will be the offering of email and display advertising simultaneously. Terms of the deal were not disclosed.

Tags: ad serving, chintano, datran media, email, eo.com and Web Sites

Hearst Ups Digital Ante: Buys Kaboodle

by Erik Sass, Thursday, Aug 9, 2007 8:30 AM ET

HEARST CORP. WENT DIGITAL SHOPPING--AND it came home with Kaboodle Inc. Billed as a "social shopping community," it allows members to browse and share product recommendations. The new acquisition will be jointly managed by Hearst Interactive Media and the Hearst Magazines digital media unit. Kenneth Bronfin, president of Interactive Media for Hearst, predicts that "Kaboodle will bring to social shopping what MySpace has brought to social media." He added that the acquisition "will enable Kaboodle to further expand its content and service offerings, while also significantly increasing its advertiser base." Kaboodle's novel take on social networking brings together consumers on the basis of their product tastes. It combines the social network function with an e-commerce platform. The site, which launched in 2006, attracts over 2 million unique visitors a month. Cathleen Black, president of Hearst Magazines, touted the synergies that will result from the purchase: "We think Kaboodle has terrific potential for many of our brands, especially in the fashion, beauty and consumer technology categories. Our readers will be able to find the products featured in our magazines, shop electronically with their friends and get their feedback." The Hearst-Kaboodle deal is just the latest in a series of acquisitions of online-only companies by magazine publishers that want to increase their online audience and build online distribution platforms for their content. In July, Hearst bought Ugo.com, described as "a first-stop destination for the latest news and content on games, movies, television, film, DVDs, music, sports, women and comic books." It mostly targets a young male audience, including more than 11 million unique visitors in the U.S. In January, the company acquired eCrush.com, along with related sites eSpin.com and HighSchoolStyleBoard. The first two sites currently have about 3.4 million registered, active users. Other magazine companies have followed suit. Time Inc.'s Sports Illustrated bought FanNation.com, a social networking and news site for sports enthusiasts, in February. The site will serve as a model for social networks built around Time Inc.'s other magazine brands. And in April, Hachette Filipacchi purchased JumpStart, an online automobile ad network, which is being integrated with the publisher's CarandDriver.com, RoadandTrack.com and CycleWorld.com properties. JumpStart's network of sites, which include NADAguides.com, Vehix, and J.D. Power & Associates Autos, reach 5 to 7 million potential car buyers a month.

Equity Firm Invests in NBC Universal-News Corp. Online Venture

By BRAD STONE

SAN FRANCISCO, Aug. 8 — The joint venture between NBC Universal and the News Corporation to bring their television shows and movies onto the Internet still lacks a Web site. It still has no name. It also has yet to announce a clear mission that persuades the large number of skeptical observers that real-world rivals can cooperate online.

But the company, still known only by the working name of “New Site,” now has some deeper pockets. Providence Equity Partners, a media investment firm based in Rhode Island, has invested $100 million for a 10 percent stake in the joint venture, people with knowledge of the deal said.

The investment will allow the companies to accelerate the introduction of their service and the transfer of NBC and Fox films and television shows into Internet-friendly video formats. Adding Providence as a partner also spreads the financial risk of the networks and will no doubt make the venture more palatable to the boards at General Electric and the News Corporation, which, respectively, own NBC and Fox.

Providence is led by Jonathan M. Nelson, who sits on the boards of MGM, Warner Music Group and the Yankees Entertainment and Sports Network. He has a long history of investing in media properties like local newspapers, television stations and cable networks.

More recently, Providence has invested in new media venture like NexTag, an online comparison shopping site, and WhitePages.com.

Providence Equity Partners and the News Corporation declined to comment on the deal, which sets a value on the joint venture of $1 billion.

Todd Dagres, general partner at Spark Capital, a media and entertainment-focused venture capital firm, said it was a startlingly rich valuation for a company that could most likely not be sold or go public, considering NBC and the News Corporation hold large stakes. “It’s a sign of the times when a company that didn’t exist a couple months ago can raise this kind of money,” he said.

The joint venture between NBC and the News Corporation was announced in March, six months after Google purchased the Internet phenomenon YouTube for $1.65 billion in stock. Though NBC and News Corporation executives have said the venture is not a direct rival to YouTube, they have had complex and testy relations with the popular video site over the posting of their copyrighted material without their permission.

Viacom, which held discussions on joining the venture but has decided against it, is suing YouTube for $1 billion on the ground of copyright infringement.

Executives at NBC and the News Corporation have said that New Site would accept user-generated content but would primarily serve as a way to show their collective libraries of film and television shows in a protected, high-quality format.

The venture will also put their content in front of people in a variety of places online. In addition to putting the video on its own site, the venture has syndication agreements with the News Corporation’s MySpace social networking site, Yahoo, Microsoft’s MSN and Time Warner’s AOL.

The sizable investment from Providence Equity Partners may not quell doubts that the two big media companies will get along. Ventures where decision-making is split between two parties with diverging agendas often struggle, and the News Corporation and NBC Universal doggedly compete on TV and in theaters.

Roger McNamee, a partner at private equity firm Elevation Partners, said there were few examples in business history where joint ventures succeeded. “The simple question is, are they organizing for success?” he said.

It remains unclear how much autonomy the joint venture will have and to what extent it will have to answer to its media parents.

The companies have said the venture would begin this autumn. The service will let users watch television shows like “Heroes,” “24,” “Saturday Night Live,” and “The Simpsons” as well as movies like “Live Free or Die Hard” and “The Bourne Ultimatum.”

Both companies already make some of that content freely available on their own Web sites and have put it up for sale on Apple’s download service, iTunes.

The joint venture recently leased office space in Los Angeles and hired a chief executive, Jason Kilar, a former Amazon.com executive. About 120 people work for the venture, according to published reports.

iCrossing Doubles Size With Proxicom Buy

iCrossing Doubles Size With Proxicom Buy
by Gavin O'Malley, Tuesday, Jul 31, 2007 6:00 AM ET
MORE THAN DOUBLING IN SIZE overnight, the search-centric iCrossing has acquired Web development agency Proxicom for an undisclosed sum. Growing from 200 to 550 employees, the merger is in line with iCrossing's grand designs to become a top full-service digital agency.
"If you're going to be optimizing pages, you might as well build them," reasoned iCrossing President Don Scales. The two companies had been in talks for about three months prior to Monday's announcement, he said.
Making the deal possible, iCrossing just received $62 million in funding from Goldman, Sachs and existing investors Oak Investment Partners, RRE Ventures and StarVest Partners L.P.
Proxicom gives iCrossing access to an entirely new roster of clients--as there is virtually no overlap between the two companies, according to Scales. Of particular note is Proxicom's automotive vertical, which includes Chevron and Toyota. Dupont is another key Proxicom client.
The acquisition marks one of several recent growth initiatives since the addition of Scales, former CEO of Omnicom's Agency.com.

Guide to Taking Money

http://www.dmconfidential.com/blogs/column/Digital_Thoughts/1352/

Those doing lead generation occupy an enviable space. It's a business that has faired well during the ad recovery, and despite some hiccups that arose as a New Century imploded, more verticals than not have an optimistic outlook. Unlike the ad network technology space, instead of a flurry of acquisition activity, deals have occurred steadily, the most recent being a majority investment into Nextag that valued the comparison shopping and lead generation firm north of one billion dollars. Many of the people that I've met in the lead generation space didn't enter lead generation with a grand vision. They saw it as a chance to make money, and usually they had some prior Internet advertising experience as well as some vertical expertise. Much of that prior work experience came at another cash flow focused startup, not at a venture backed firm. Even as they grow now, they don't necessarily think about having outside investors.

If you find your business in a state of growth where having access to more money could help you grow faster, such as pay for more affiliate traffic, then you might consider taking in funding. If you have a technology or process that has played a crucial role in your growth and find that you could do so much more if you could hire more engineers or perhaps sales people to bring in the clients, here too you might want an outside investor. Obviously, having outside investors is not for everyone. They will hold you accountable and push you for results. They will challenge you and have no problems replacing you. For these same reasons they can also become a huge catalyst to growth and guide you towards an exit bigger than you would have thought. And, even if you ultimately decide not to accept funding, the process can add a lot of value. This week, we thought we'd share with you our thoughts on what to expect if you start to engage outside investors from outside the industry and tips for when you do meet.

What to Expect:

· Think High School - Investors come in all types. The ones who came from our industry or work in our industry still, you probably won't think of them as investors. For lack of a better description, they feel like one of us. Others won't, and those we describe here. While a slight over-generalization, some of the ones we have met give off the same vibe as Hollywood A-Listers or the in-crowd at high school. They have their circle, and they look very critically upon those outside the circle. You are there because you might need something of them. Almost all of them have made their money, so they can afford to view you, not with disdain, but indifference. Dealing with them comes with a lot of rejection and comments that an outsider not having to live the day to day can afford to make. It's a different story when you've created the next Facebook. Then, you're like the college quarterback coming back on winter break. The cheerleaders will want your attention and the other jocks will too. If they don't, then you can chalk it up to jealousy, and you won't care anyway. Dealing with some investors is a "what can you do for me" environment.

· Superman or Vampire - An investor can do a lot of things for you, and most have dual developed dual personalities. On the one hand, they have knowledge and resources you don't. They have the ability to open doors, get favorable terms, and increase the value of your brand in ways that a lone entity simply can't. They also have the same power in reverse. They can suck you dry. Take away your spirit, put pressures on you to change your business, even play a role in removing you from your own business. Ultimately, it's a little of both. They are there to add value and take value from you. The trick is making sure it's in that order.

· "Next" - Meeting with investors feels like a different version of MTV's dating show, Next. You will have your time with them. If you make it through the full date, you get funding. But, they can and will lose interest and sometimes for reasons that won't make sense to you or the viewing audience. Like Next, they have other options waiting, but they are also wondering whether the ones that follow you aren't as good. Luckily, they can choose more than one date, but it's a helpful analogy as you remember that they are always in search of the next thing.


Tips:

· Be Confident - Investors invest. They need you to execute. You have created something that got their attention in the first place. They might have a better grasp of how to build a billion dollar business and can lead mind numbingly complex conversations about solving the business ecosystem, but they don't know your business. Ultimately, they have money they need to place, and as often as not, they judge the business by the person. If they can believe in you, that's a huge factor in their decision. When you talk, if you don't agree with their assumptions, don't roll over. Challenge. Push back. Do it based on reason and experience and not simply because they have some doubt.

· Think Like Them - Management books always talk about being able to think like your boss for being a better employee. Understand their objectives and how you can accomplish them. The same holds true for investors. They want growth, and they want an exit. They want longevity even if they will flip your company. They need something that will sell well to others. An over-priced conference series like Elite Retreat is interesting, but an investor won't want to sink money in it or buy it out. It can grow to a multi-million dollar business and make a handful of people quite wealthy, but in its current format it has a ceiling. It's not like Right Media, where if you apply it to Yahoo, you don't see 1+1 = 2 but 1+1 = 3. Now, if Elite Retreat didn't accept money but took a stake in the companies, then it might be more interesting, or if it tried to see more companies than fewer with the aim of putting pieces together to form a larger company, then it has the type of growth and potential outside investors want to see.

· Listen Selectively - Much of what they say will sound like criticism, and you could easily take it personally. Think of it like a movie or reality show. The dialogue used in movies would break up most relationships if used in real life. But it has dramatic flare. Investors often operate in a bubble and talk about you and your business as though you aren't there. Like a movie, listen for the main points, the insight you can use, but don't let the negative get your down. They often don't know they are doing it. You and your business are just business. There is nothing personal in this. In the end, pretend it's not really you that is being discussed, much like a movie is not about you but for you.


Now fully armed, if you would like an introduction or more information, email us.

M&A in the Digital Ad Sector is Smoking Hot; Here's Your Handy Future-Take-Out List

from Internet Outsider by Jason Jones (May 17th, 2007)

Jason Jones: The digital advertising industry consolidation continues. Interestingly, most of the acquisitions have been cash deals. Why aren't the big guys using their pricey stocks? Maybe the acquirees have negotiating leverage. (Or maybe the acquirors are hallucinating that their stocks are undervalued).

A list of recent M&A in the sector is below. But first, here are the single folks still waiting to be scooped up:

Acquantive, Valueclick, Burst Media, and AdPepper, the latter two of which trade on London's AIM. How much might the U.S. ones go for? AQNT is worth $44 if you use the TFSM take-out multiple (23x), $60 if you use the DCLK multiple (33x), and $75 if you use the Right Media multiple (10x EV/Revs). VCLK is worth $44 if you use the TFSM multiple, $66 if you use DCLK, $70 if you use Right Media. And then of course there are all the private beauties: Blue Lithium, Tacoda, Efficient Frontier, Did-It, etc. Go to it, bankers!

Recent Digital Advertising M&A

Google for Doubleclick: $3.1b cash (32x '07 EBITDA - my estimate) - ad serving, SEM, affiliate network

Publicis for Digitas (DTAS): $1.3b cash (16x '07 EBITDA) - digital ad agency

Yahoo for 80% Right Media: $680m cash & stock - implied value = $850m (10x revs - rumored value) - ad media exchange

WPP for 24/7 Real Media (TFSM): $649m cash (23x '07 EBITDA) - media network, ad serving, SEM

Aquantive for Accipiter: $30m - publisher side ad server

Aquantive for Duke Digital Marketing: $8m + earnout - European digital ad agency

AOL for AdTech: terms undisclosed - European ad server

Aegis for Trigger Communications: terms undisclosed - digital ad agency

Fox Interactive Media for Strategic Data Corp: terms undisclosed - publisher side ad server and site optimization

Doubleclick for Falk eSolutions: terms undisclosed - European ad server

Aquantive for DNA (UK), e-Crusade (Hong Kong/Shanghai), Amnesia (Australia), Neue Digitale (Germany)