Valueclick Display Advertising Revs Showed Q1 Strength With Vertical Network Strategy

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Valueclick Display Advertising Revenue in Q1 2009Nay-sayers: ready to admit that online display advertising is not dead - it's just getting started?

In its latest Q1 earnings report, Valueclick sheds light on the growing opportunity in display as display ad revenues increased from the prior year according to PaidContent after VLCK's earnings conference call:

"Display beat expectations, gaining 2 percent to $34 million. While not earth-shattering, it's another sign that display might have hit bottom and may rise slowly. During the call, (Valueclick CEO) Vadnais noted that lead gen marketing, which makes up the other half of its media segment was down 20 percent, as spending migrated to display."

We agree with PaidContent. It's not huge dollars, but it's still signficant given that display is traditionally seen as more of a branding, awareness-driving, vehicle than other modes of online advertising. Ironically, Valueclick attributes the uptick to direct response marketers finding value in Valueclick vertical networks and targeting technology.

From the earnings call transcript available on Seeking Alpha, Tom Vadnais said:

We are planning to launch three new verticals this year, so that would put us at four vertical networks in our display space by year-end. Now that could change, we could – if we are successful and working fast enough, we could perhaps have more, but I would say we will have at least four by the end of the year. On the pricing issue, we don’t really disclose details on the pricing, but the way the scale works is that the normal CPM rates for display advertising without targeting and without vertical networks and so on, that tends to be the lowest price that we offer. But what advertisers are finding is using our technology. While is the price is higher, they are using targeting technology, the conversions are much higher, so the ROI for the investor or for the advertiser works out very well. So it’s a scale of without targeting, with targeting there is a higher price and then our vertical networks are higher price yet because you are dealing now with very targeted audience that we know is interested in the vertical that we are serving those ads for. So that’s kind of how the scale works, but we don’t disclose the specific numbers.

Later in the call, John Pitstick, Valueclick CFO identifies verticals of strength.

We had some good strength towards the end of the quarter, particular in the finance vertical and that includes tax, campaigns running display channel for tax companies. The other one that call out will be the health vertical, both of those ends of the quarters pretty strong. Other than that I think most other verticals were fairly status quo with what we have seen in the entire quarters.

And finally, CEO Vadnais talks about exchanges:

...first on the exchange situation, we have consistently said that the exchanges are a small piece of the display ad network world and we have been customers of exchanges for a long, long time. We don’t buy a lot of inventory there, but we buy some. We don’t believe exchanges are going to have a huge place in the market because it tends to be a place where you buy liquidation type inventory, you buy it without much service or technology and we are dealing with different types of inventory in most of our work, but we are customer of exchanges and I think they will be around, but we don’t see them as being a huge part of the business.

Hmm... that will change.

The full Q1 report from Valueclick is available here.

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2 Responses to “Valueclick Display Advertising Revs Showed Q1 Strength With Vertical Network Strategy”


  1. anon says:

    web buyer 1995: buy ten separate sites

    web buyer 2000: too many sites out there... let me go to a centralized ad network to make my life easier

    web buyer 2010: too many networks out there... let me just go to centralized exchange of networks to make my life easier

    web buyer 2015: buyers cut out middleman and dump networks all together and buy inventory directly for sale on an exchange which handles delivery to boot

    2020: Stanford undergrad develops P2P ad serving via the cloud, where publisher page load triggers chain reaction of requests to hundreds of thousands of national and local advertisers servers running said P2P ad app

    Jan 2nd, 2020... tv ad sales rep shows up and takes buyer to nice lunch at local steak joint, and still takes home a buy 100x the size of anything generated on said P2P ad serving system

    :-p

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