Microsoft, CMGI and Cisco Systems are just a few of the industry players
we've interviewed. Check out the StockTalk archives.
Does eBay have the best online community? Its VP of Marketing thinks so.
CDnow's CEO tunes in to the company's music destination.
Is Abercrombie & Fitch a high-quality American classic? Get its Investor
Relations Director's perspective.
TMF Interview With DoubleClick
Chairman & CEO Kevin O'Connor
July 22, 1999
With Yi-Hsin Chang (TMF Puck)
New York-based DoubleClick (Nasdaq: DCLK) provides comprehensive global Internet advertising solutions for marketers and Web publishers. The company just announced plans to acquire advertising software company NetGravity (Nasdaq: NETG) in a deal valued at $530 million. The deal is expected to close early in the fourth quarter of this year.
TMF: You just announced this merger with NetGravity. What would you say are the biggest advantages to both sides of this deal?
O'Connor: Both companies' goal is to become number one in the market, and we take different approaches to the market. Now we can offer a full suite of solutions to publishers or advertisers that want to do end-management. NetGravity was the leader in the enterprise software area; we were the leader in the outsource service bureau area, and now we can provide both sets of solutions to our clients.
TMF: And how is this coming together as far as management and your headquarters are concerned?
O'Connor: Well, we're a pretty spread-out company already. A lot of folks are already in regional sales offices, so we'll bring those offices together. The company headquarters will remain in New York, but there's going to be no layoffs and lots of opportunities. I don't really perceive any major integration issues.
TMF: You will be CEO of the company, and the company will be called DoubleClick?
"We brought together the two number ones, and we remain number one."
TMF: Was the name a struggle at all? Did you consider following the [email protected] model, that is, keeping both names?
O'Connor: I don't think that was ever an issue. We're still going to keep the NetGravity name as a great brand name for technology products. That will be one of our business units. We're broken up into business units: media sales, technology, and then data. So no, that was not an issue.
TMF: How did you identify NetGravity as the partner that you wanted?
O'Connor: We've been talking for two years, and NetGravity is a leader in this market, and when we talked to our sales force, the DART sales force, we would say, "Who do you fear the most? Who do you lose most deals to?" It was unanimous. It was NetGravity. And on the NetGravity side, they asked the same questions, and it was unanimous on their side -- it was DART. So it was nice. We brought together the two number ones, and we remain number one.
TMF: As you've been talking to some of your customers, what's been the reaction to the deal?
O'Connor: It's been favorable. People would love to see more standardization in the industry. They think that's one thing that's really holding [the industry] back. It's not that there's a right way or wrong way; there are just different ways, and the differences caused problems. So when you unite the various ways into one standard way, it takes away a lot of wasted arguments.
TMF: Now both of you guys pre-released revenues along with the deal. Can you talk a little bit about that?
"We both had tremendous quarters. NetGravity grew 22%, and DoubleClick grew about 41%."
O'Connor: Sure. We both had tremendous quarters. NetGravity grew 22%, and DoubleClick grew about 41%, so we both had really, really tremendous quarters. Since the merger was going to happen right around the times of earnings releases, we wanted to show the market there was no hidden agenda here. We were bringing together two very, very fast-growing, strong companies, and we just wanted to give a little sneak preview on how the quarter was going.
TMF: And actually the revenues for NetGravity is a much smaller number than yours.
O'Connor: Yes, it's a different business. We have media sales and technology, and they're strictly technology.
TMF: Do you see this changing your focus as a company?
O'Connor: No, it doesn't really change our focus at all. The strategy has always been to be the leader in the Internet advertising infrastructure, and we've always felt that there's three key components for the leadership: ad serving/ad management -- that's NetGravity and DART. The second part of the strategy is media sales, and that's DoubleClick Network. And the third is data.
TMF: And how about your activities overseas both for DoubleClick and NetGravity?
O'Connor: That worked especially well because NetGravity is very, very strong in Asia and Latin America -- two places where we're weaker -- and DoubleClick is very, very strong in Europe. We're both very strong in the United States, so it was a great complement. It puts us in a number one position in pretty much every major country.
TMF: Is there much overlap as far as for cost savings for the combined company?
"I think you're going to see [the Internet consolidation] trend continue for the next 20 years."
O'Connor: There'll be some. We're both going to the same trade shows, both buying advertising, both maintaining two sets of offices. So there will be those types of cost savings. We both have built out data centers. We're always looking for more capacity. We're constantly growing, so those costs will be all absorbed. There will definitely be some cost savings.
TMF: Now this week alone there have been several mergers announced among Internet companies. Do you see that as a continuing trend?
O'Connor: Well, if there's one trend you can always bet on that's as markets get bigger and bigger and bigger, there's more activity on the M&A [mergers and acquisitions] front. So I think you're going to see that trend continue for the next 20 years. I think it's important to remember there's probably like 100 new Internet companies every day, so clearly the market can't absorb that unless we constantly have new deals, new partnerships going on.
TMF: Is there anything else you'd like to add?
O'Connor: No, I think that should do it.
TMF: OK. Great, thank you so much.
O'Connor: No problem. Thanks.
Would you work for a bunch of Fools?