DoubleClick to Abandon Web Analytics
In a sign of consolidation within the Web-analytics space, online advertising services pioneer DoubleClick will retire its SiteAdvance Web analytics product at the start of 2005, and focus instead on its core operations. The company has announced an agreement with former rival Omniture to migrate current users of SiteAdvance to Omniture's analytics product, SiteCatalyst. DoubleClick says the migrations will be voluntary at first, but that SiteAdvance will be discontinued entirely at an unspecified later date.
The two companies also announced that SiteCatalyst will now integrate with DoubleClick's popular DARTmail and DART for Advertisers online-advertising servers to measure the effectiveness of marketing efforts, and that DoubleClick would begin reselling Omniture's analytics offerings.
In an interview with CRM
magazine, DoubleClick President David Rosenblatt said that by stepping back from the analytics space, the company hopes to redirect its energies in more productive arenas. "The main driver in this is our desire that we be number one in each of our various markets. As we looked at analytics we compared our own road map with the existing feature set of the Omniture product, and decided the best way to reach the number one position was through a partnership with Omniture.
"We felt that they had the strongest product in the marketplace right now," Rosenblatt said, adding that DoubleClick was also swayed in part by Omniture's commitment to and investment in research and development. "Migration to the Omniture product will start in the first quarter of 2005."
By then, DoubleClick will likely be happy to have 2004 in its rear-view mirror. A pioneer on the online advertising scene, DoubleClick was known to rise and fall in lockstep with the tech boom and bust at the turn of the century, but despite this year's overall rebound in the online advertising space, DoubleClick hasn't enjoyed the bounce seen by its peers.
At the end of October DoubleClick surprised industry analysts by announcing that it had engaged Lazard Freres & Co. "to explore strategic options for the business." The options DoubleClick mentioned at the time included "a sale of part or all of its businesses, recapitalization, extraordinary dividend, share repurchase, or a spin-off." (Before speculators jumped at that news, the company's market value had plummeted by more than half from an April high.) Analysts speculated that DoubleClick would be sold off--not as a whole, but in pieces.
Rosenblatt stressed that the decision to exit analytics has nothing to do with the Lazard engagement. "They're completely independent," he said, referring to the two announcements. "The discussion about [exiting analytics] started six months ago, five months before we hired Lazard." He did acknowledge that "both were motivated by the same underlying process: our goal as a company to be focusing on businesses where we have a competitive advantage. We decided we could better do that by partnering rather than by building."
Many analysts agree that the company made a sound strategic call in exiting the analytics space. Forrester Research estimates that SiteAdvance added only $4 million to DoubleClick's top-line revenue--barely 1 percent of the company total--and was never profitable. Bob Chatham, principal analyst at Forrester Research, wrote in a research note after the DoubleClick/Omniture announcement that "the move is a coup for Omniture...[and] will further fuel Omniture's already torrid growth." But Chatham suggested that several challenges remain for SiteAdvance users hoping to make good on the "seamless" migration that DoubleClick and Omniture are promising, primarily with regard to retaining comparable data sets.
"DoubleClick is obviously going through an organizational 'deep look,'" says Eric Peterson, site operations and technology analyst at Jupiter Research. "DoubleClick did the right thing in acknowledging that theirs wasn't a particularly strong offering." Peterson says that "by partnering with a market leader," DoubleClick is hoping to offer integrated services to its installed customer base, particularly those that rely on its popular DARTmail technology. He remains cautiously optimistic about the companies' chances, estimates that DoubleClick has roughly 55 or 60 SiteAdvance clients, and posits that "Omniture is probably going to get between 65 percent and 70 percent of those customers."
Peterson suggests that the success of the DoubleClick/Omniture arrangement hinges on "tight integration between DARTmail and the analytics practice...[and] the big promise of having fewer applications to do more of the work." The partnership will flourish, he says, "only if they execute on that promise."
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