Adknowledge, AlmondNet, Claria and Revenue Science may attract bidders in effort to keep up with Yahoo’s BlueLithium buy, sources say14 September 2007

In the wake of Yahoo’s purchase of California-based BlueLithium last week, industry sources and an analyst say competitors such as California-based Adknowledge, New York-based AlmondNet, California-based Claria and Washington-based Revenue Science could be next.
The roughly USD 300m BlueLithium purchase is one of several so-called behavioral advertising purchases in the last year, including the sale of Tacoda to AOL in July 2007, an industry executive in the search space said.
“I do think there’s a little bit of a feeding frenzy on display advertising right now,” he said. This could encourage BlueLithium competitors to follow suit and sell, he said.
Targeted display technology remains a fractured market, he said, noting that search-oriented advertising has largely been consolidated by players such as Google and Yahoo.
Susquehanna International Group analyst Marianne Wolk said Microsoft could be the next to move in the space. The Washington state-based giant obtained some targeting capabilities with its aQuantive acquisition, but she said it could seek more depth in its behavioral advertising technologies.
Other potential buyers include eBay, which is taking more search results in-house and may want targeting technology. Amazon and Expedia are also among e-commerce sites that are trying to figure out better ways to serve and monetize large user bases, she added. Wolk said international portals such as Sina or Sohu - both of China - and South Korea’s Naver may want to follow Yahoo's lead and bring behavioral targeting capabilities in-house.
Both Revenue Science and Adknowledge are attractive because they have good financing and momentum. Claria has built an attractive list of marquee customers, Wolk said.
Adknowledge president Brett Brewer, currently in Europe working on an acquisition, said he expects the "big three" - Yahoo, Google and AOL - are still in the market for behavioral targeting companies.
"They have all finally realized that they can't build everything and size matters," he said via e-mail.
However, a well-placed source at Google said his company may shy away from a behavioral advertising buy based on privacy regulations. These concerns may be no small matter for the company. Google is reportedly receiving scrutiny from European and Australian regulatory bodies this month over concerns regarding the effect its planned acquisition of DoubleClick will have on market competition and consumer privacy.
The Google source claimed his company's current targeting technology is as powerful as existing behavioral advertising capabilities.
Even so, ad targeting technology based on data aggregation could be the main focus of the next wave of buys for business seeking to better serve advertisers by focusing the value of online advertising buys, AlmondNet CEO Roy Shkedi said. He said his company focuses on this area, along with Revenue Science.
Shkedi noted that AlmondNet is attractive as a result, but said his company should be better positioned to entertain offers late next year. He said it is preparing to release additional products around tools to aggregate and analyze user and advertising data.
Despite the BlueLithium and Tacoda deals, Shkedi said both AlmondNet's and Revenue Science's analytics tools could still be a good fit for Yahoo or AOL.
Revenue Science declined comment.
The industry executive involved with search said consolidation and rapid movements in this space have been ongoing for months. He pointed to the rapid-fire deals of Google’s purchase of DoubleClick for USD 3.1bn in April, Yahoo’s buying Right Media for USD 680m in April, and Microsoft’s buy of aQuantive for USD 6bn in May.
While digital media business deals often sell for 8x – 10x revenues, the search executive source noted that deals such as the one for Right Media seemed to have been far higher.
“The buyers are pretty clear,” he said. Beyond the obvious technology players, he said bidders could also include advertising agencies and their holding companies – usually a more reserved group. With more ad dollars online, he said they will increasingly want a share of the money spent placing them there.
Shkedi agreed, noting that WPP and Publicis were both possible bidders in the space; indeed he said that mid-market businesses such as Experian and Acxiom may also be become active buyers.
Finally, the search executive said media organizations such as Viacom, Disney, and News Corporation could decide to get into this area too. He noted News Corporation, also digital media buyer, had not made any moves into this space to his knowledge.

by James Erik Abels in New York, Louise Bleakley in California and Mark Foxwell in London

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