24/7 Media Inc

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24/7 MEDIA INC.

24/7 Media Inc. is an advertising agency specializing in the Internet and interactive media. Headquartered in New York City, the company operates globally and offers a wide range of advertising, direct marketing, promotions and sponsorships, and technology services and solutions. Starting in 2000, the firm organized its business into three functional areas: 24/7 Network, 24/7 Mail, and 24/7 Technology Solutions.

The 24/7 Network is a global advertising network represented in 24 countries. It includes high-profile, high-traffic Web sites that 24/7 Media represents to advertisers, including more than 400 Web sites in the United States, 80 in Canada, more than 250 in Europe, and more than 30 in Latin America. Through an agreement with Chinadotcom Corp., 24/7 Media portrays more than 500 major Web sites in Asia. The 24/7 Network is organized into topical channels covering such areas as automotive, business/financial, career, college, entertainment, music, news/information, search engines, sports, and more.

The company's second principal line of business is e-mail marketing. 24/7 Mail provides a range of opt-in, e-mail, direct-marketing services. The company's database of more than 20 million e-mail addresses enables direct marketers to target their campaigns to consumers who have chosen to receive commercial messages via e-mail. Campaigns can be targeted using more than 260 pre-selected categories of user demographics and psychographics. Such valuable information can provide businesses with concrete factual data on consumer specifics, as well as insight into Web users' values and beliefs. In addition, 24/7 Mail aggregates and manages opt-in e-mail lists for more than 200 third-party Web sites. Consumers who choose to receive e-mail or other information through one of these Web sites are added to the company's database. 24/7 Mail also acts as a list broker and rents lists to supplement its managed lists. It can assist direct marketers by running campaigns and delivering HTML (hypertext markup language) banner ads and text links in e-mail editorial newsletters. 24/7 Mail can handle all aspects of a direct marketing e-mail campaign, including order fulfillment and the reporting and tracking of results.

Technology solutions offered by 24/7 Media include ad-serving systems offered under 24/7 Connect for Networks and 24/7 Connect for Advertisers and Publishers. These services were launched in the first quarter of 2000, and during the year 24/7 Media converted its entire 24/7 Network to the new technology. The distinguishing feature of 24/7 Connect was its ability to select an appropriate advertisement for a Web page at the same time that content was being delivered to that Web page from a third party. The selection of the appropriate ad was based on pre-selected targeting criteria. The company also offers e-mail technology solutions.

BEGAN OPERATIONS IN 1998

24/7 Media was formed in New York City by a merger of three companies involved in online advertising: Petry Interactive, Interactive Imaginations, and Katz Millennium Marketing. The formation of 24/7 Media was announced in December 1997, and the merger was completed in April 1998. David Moore, who was CEO of Petry Interactive, became 24/7 Media's CEO in February 1998. In its first year 24/7 Media raised $45.5 million through an initial public offering (IPO) in August 1998, with shares offered at $14 each. The company planned to grow through acquisitions and to challenge online advertising industry leader DoubleClick.

At its inception, 24/7 Media represented about 200 medium and large-sized Web sites with a staff of 30 sales representatives. By the end of 1998 the company was operating three ad networks and representing thousands of mostly small and medium-sized Web sites as well as 100 to 200 major Web sites. During the year it acquired the CliqNow network of 75 financial, college, and travel-related sites from K2 Design for $4 million in cash and stock. In another acquisition, 24/7 Media purchased Intelligent Interactions, which developed an ad-serving product called Adfinity, for $7.7 million in stock.

ENTERED E-MAIL MARKETING IN 1999

24/7 Media gained entry into e-mail marketing in March 1999 with the acquisition of Sift Inc. for $22 million. Sift was based in Sunnyvale, California, and had about 20 employees. It had an opt-in e-mail database of 3 million addresses and customers that included Cisco Systems, Dell Computer, and RealNetworks. The acquisition was consistent with 24/7 Media's avowed policy of not sending out unsolicited e-mail, since all of the addresses in Sift's database were for consumers who were interested in receiving commercial e-mail. Later in the year, 24/7 Media acquired a second e-mail marketing firm, ConsumerNet of Red Bank, New Jersey, for $52 million.

In order to provide a national sales force to focus on the convergence of television and the Internet in local markets, 24/7 Media entered into a three-year agreement with NBC Interactive Neighborhood during 1999. Under the agreement 24/7 Media established a sales force to sell ads on the Web sites of local NBC affiliates. The deal enabled NBC to offer combined Web and television advertising packages to local advertisers. The program began with six large NBC-owned affiliates in New York, Los Angeles, Chicago, Washington, Dallas, and San Diego, and eventually was expected to involve more than 100 NBC stations.

In 1999 and 2000, 24/7 Media continued to expand internationally. In July 1999 it acquired Click-Through Interactive, a Toronto, Canada-based advertising sales network that represented more than 65 premium Canadian Web sites. In August the company expanded its European operations to 12 countries with the addition of 24/7 Suomi in Finland. Later in the year the firm's German unit, 24/7 Deutschland, opened offices in Dusseldorf and Frankfurt, in addition to its existing office in Hamburg. In February 2000, 24/7 Media acquired the Australian ad network Sabela for about $70 million. In March it launched 24/7 Mail in the United Kingdom, offering opt-in e-mail marketing services to advertisers there. European e-mail service was rolled out to France, Germany, Holland, and Scandinavia later in the year, and in mid-2000 the company opened an office in Lausanne, Switzerland. Additional expansions were taking place in Latin America and Asia.

MORE ACQUISITIONS FOLLOWED BY DOWNTURN IN ONLINE ADVERTISING, 2000-2001

Major acquisitions in 2000 included Exactis.com Inc., a Denver-based e-mail marketing and communications firm, for $490 million in stock. Exactis reportedly sent out more than 10 million e-mail marketing messages a day and had highly scalable, precise e-mail delivery and advanced data mining systems. Following the acquisition 24/7 Mail had 23 million permission-based e-mail addresses under management. Another acquisition involved iPromotions, a market leader in incentive marketing programs. The acquisition added online sweepstakes, incentive offers, premiums, contests, and viral marketing programs to 24/7 Media's offerings. In August 2000 24/7 Media acquired Website Results for $95 million in stock. Through its proprietary technology, Website Results was able to deliver traffic to client Web sites. It accomplished this by performing queries on major Internet search engines and improving a site's positions within search results.

By the third quarter of 2000, the downturn in Internet advertising was apparent. The stock prices of the three largest ad networksDoubleClick, 24/7 Media, and Engagewere all down approximately 90 percent from their 52-week highs. Although 24/7 Media had diversified into e-mail marketing, Internet banner ads still accounted for most of the firm's revenue. In November 24/7 Media laid off about 200 workers, followed by another 100 layoffs in January 2001, which brought the company's workforce to about 900. While it continued to maintain offices in Europe, Asia, and Latin America, 24/7 Media UK dropped about 25 percent of its client base to focus on top brands. The action marked a rethinking of the firm's strategy to gain the greatest reach in favor of representing only the strongest Web publishers.

News of 24/7 Media's second round of layoffs sent the company's stock price below one dollar a share. The company announced it was evaluating strategic alternatives regarding its cash position and even took the drastic step of delaying the announcement of its fourth quarter results. When the company finally released its financial results for 2000, it reported revenue of $185.2 million, an increase of 106 percent over 1999. European operations posted revenue of $35.8 million, a 501-percent increase over 1999. The firm's three principal sources of revenue were its ad network (68 percent), e-mail (16 percent), and technology (16 percent). Overall, the company had a net loss of $677.1 million for 2000. With the downturn in Internet advertising and an overall economic slowdown, 24/7 Media reduced its reenue forecast for 2001. The company remained confident that the online advertising market would recover by the end of 2001. However, by April 2001 the firm's stock had traded below one dollar a share for 19 consecutive days, and it faced de-listing from the NASDAQ.

FURTHER READING:

24/7 Media Inc. Company information. 2001. Available from www.247media.com.

Beale, Matthew. "24/7 Expands European Operations." E-Commerce Times. August 13, 1999. Available from www.ecommercetimes.com.

Brookman, Faye, et al. "The Biggest Players." Crain's New York Business. November 30, 1998.

Clark, Philip B. "Working 24/7 Entails Global Reach." B to B. July 3, 2000.

"Crunch Leaves Alley Firms Few Choices." Crain's New York Business. February 26, 2001.

Fineberg, Seth. "Dot-Com Sea Change Forces Ad Networks to Rethink Strategies." Advertising Age. September 25, 2000.

Frook, John Evan. "U.S. Firms Dominate Worldwide Ad Networks." B to B. November 20, 2000.

Maddox, Kate. "Ad Networks Adjust to Slowdown." B to B. April 2, 2001.

Virzi, Anna Maria. "24/7 Media Adds Services with Purchase of E-Mail Marketing Firm." Internet World. March 15, 1999.

SEE ALSO: Advertising, Online; DoubleClick Inc.

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