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America Online, Inc. To Acquire Advertising.comAcquisition will provide opportunities for advertisers (June 24, 2004)
America Online, Inc., the world's leading interactive services company, on June 24 announced that it has signed a definitive agreement to acquire Advertising.com, Inc., a leading provider of results-based interactive marketing services, in a $435 million all-cash transaction.
Combining America Online's advertising inventory with the Advertising.com network will provide advertisers with an unprecedented opportunity to reach more than 140 million Internet users and will enable AOL to offer advertisers an expanded suite of customized solutions, including branding, paid placement, and multimedia delivered on a CPM or performance basis.
Advertising.com works with more than 800 advertisers to optimize the performance of their online marketing campaigns. Advertising.com's proprietary ad delivery and optimization tools enable advertisers to increase and measure their return on investment. Advertising.com also works with over 1,500 online publishers by providing a large and consistent customer base for their available advertising inventory and by licensing its ad serving technologies.
Jonathan Miller, Chairman and CEO, America Online, Inc., said, "Online advertising is showing very strong growth across the industry, and the acquisition of Advertising.com underscores AOL's determination to strengthen its competitive position. Advertising.com has built a profitable, scalable and highly attractive business. This acquisition is a strategic move that will bolster AOL's advertising business, building on the strides made in the past year."
Ted Leonsis, Vice Chairman America Online, Inc., and President, AOL Core Service, said, "Advertising.com will extend our advertising footprint on the Web, giving us unparalleled reach, and allow us to serve our advertisers better with more efficient campaigns. This is an exceedingly talented group of people, who, in a very short time, have created a very sophisticated and successful model for allocating and optimizing advertising online and selling it through a pay-for-performance model. Advertising.com brings a new dimension to our advertising offerings, enabling us to more fully participate in the growth in performance-based advertising."
Largest Third-Party Advertising Network
Advertising.com operates the industry's largest third-party advertising network, reaching more than 110 million unique visitors monthly and over 70% of all U.S. Web visitors, according to comScore Media Metrix in May 2004.
Advertising.com acquires ad inventory from Web sites, search engines and e-mail publishers and uses its proprietary AdLearn technology to optimally segment and allocate the inventory, based on its advertisers' objectives - such as lead generation, customer acquisition or product purchase.
Advertising.com is growing rapidly and is profitable. Revenues increased almost 80% in 2003 to reach $132 million, and 2003 income from operations was $12.1 million.
Advertising.com's optimization tools allow advertisers to plan, place, track and adjust ad campaigns in real time. Its AdLearn technology, which maximizes advertising revenues across the network, learns from the results of previous campaigns and gets smarter with each advertisement placed. As Advertising.com runs more ad campaigns, the technology becomes more adept at matching the ads with the right inventory on the network, at the right times, to reach the advertiser's specific objectives for the campaign. Similarly, as the size of the advertising network grows, Advertising.com's ability to reach the segments that will meet its advertisers' objectives increases.
The acquisition complements AOL's Search business and CPM-based relationships by strengthening its position in the fast-growing pay-for-performance area of online advertising. Across the industry, performance-based media accounted for a greater share of advertising than CPM-based deals for the first time ever in Q4 2003.
Advertising.com Chief Executive Officer Scott Ferber said, "We're looking forward to the opportunity to build on what we've accomplished - taking our company from startup to industry leader in six years - as part of America Online. We're excited about growing the size of our advertising network, continuing to provide advertisers with creative solutions that meet their needs, and helping AOL increase the value of their inventory."
Acquisition Builds on AOL's Advertising Momentum
In the past year, AOL has rebuilt its advertising business, growing ad revenue from $204 million in Q4 2003 to $214 million in Q1 2004 and achieving two consecutive quarters of sequential advertising growth for the first time since the year 2000.
Michael J. Kelly, President, AOL Media Networks, said, "The acquisition of Advertising.com will enable us to better serve our customers. We will offer advertisers a full suite of customized solutions that will allow them to reach consumers in new, creative and targeted ways. We now have all of the pieces in place - premium inventory, a strong and growing search business, and the ability to deliver customized pay for performance programs. I'm very excited about the campaigns we'll be able to put together for advertisers."
Advertising.com will remain in Baltimore and will be managed as a separate company reporting to Mr. Kelly. The company has more than 300 employees and operates principally in the United States, with operations in the United Kingdom, France, Germany, Norway, Sweden and Denmark.
The transaction is expected to close in late summer of 2004, subject to various conditions including customary regulatory approvals.
About America Online, Inc.
America Online, Inc. is a wholly owned subsidiary of Time Warner Inc. (NYSE: TWX). Based in Dulles, Virginia, America Online is the world's leader in interactive services, Web brands, Internet technologies and e-commerce services. For more information visit www.aol.com.
Advertising.com, Inc. is a leading provider of results-based interactive marketing services to advertisers and publishers. It operates a large network consisting of advertising inventory purchased from Web, search engine and email publishers. Through this network, and its proprietary technologies, Advertising.com helps advertisers develop and execute marketing programs that generate measurable results.
Related Keywords:America Online, Advertising.com, Jonathan Miller, AOL, Ted Leonsis, AdLearn, Scott Ferber, Michael J. Kelly,