The Next Dot-Com IPO

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Though the wildly successful stock market debut of Google (Nasdaq: GOOG) earlier this year got investors excited about the promise of the online advertising sector, don't expect to be similarly blown away by Wall Street's reaction to Fastclick.

The popular advertising company filed to go public yesterday, but it would be shortsighted to assume that the graphical ad network specialist will thrive the way that the contextual text ad masters like Google and Yahoo! (Nasdaq: YHOO) Overture have taken off lately.

Fastclick is a closer match to ValueClick (Nasdaq: VCLK) and the ghost of DoubleClick's (Nasdaq: DCLK) media business in pitching its cumbersome ads to content publishers who find themselves gravitating toward the more logical Google Adsense alternative to fill available site space. The fact that they all share the same last name is simply a bonus.

That doesn't mean that the graphical space is dead. ValueClick has seen its stock more than triple over the past three years while DoubleClick has inched higher in recent months.

Fastclick is also growing nicely. Revenues through the first nine months of the year have more than doubled to $39 million from $18 million a year earlier. The bottom line hasn't followed suit, with year-to-date earnings dipping from $3.9 million to $3.3 million, yet the reason for the dip in profitability is that Fastclick's income is fully taxed now. Pretax profits paint a more accurate picture, climbing 27% higher so far this year.

So it's clear that Fastclick has managed to stay relevant. It is serving 5 billion ad impressions a month and it has lined up some meaty investors, including Disney (NYSE: DIS), through its Steamboat Ventures (venture capital) arm.

We will be able to flesh out a fairer picture once the offering's pricing is crystallized, though it seems likely that it won't come cheap if you go by earnings and sales multiples. In other words, this isn't necessarily a slam-dunk dot-com IPO. Then again, they said the same thing about Google and look how well that turned out.

Are rich media ads ready to give text ads a run for their money? Will the pop-up ever find vindication? All this and more -- in the Webmaster's Corner discussion board. Only on Fool.com.

Longtime Fool contributor Rick Aristotle Munarriz prefers text ads over the eye candy, but that doesn't mean that he won't give Fastclick a fair shot once it does go public. He owns shares in Disney. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.