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Q&A: Chuck Berger, CEO of AdForce

AdForce Inc. (Nasdaq: ADFC) wants you --- to use its online ad server without worry that its sales force is swiping ad revenue. According to the company, this no-compete strategy will give Doubleclick (Nasdaq: DCLK) a run for its ad revenue.

Shares of the Cupertino, Calif. company began trading on May 7 and met with a warm reception on Wall Street, jumping 100 percent in its debut. The stock opened at $23 after the 4.5 million-share offering priced at $15 a share the night earlier.

ZDII spent some time with AdForce's chief executive Chuck Berger recently.

ZDII: What do you do?

CB: We are a centralized ad management and delivery service that provides information to clients about the ads.

  • ZDII: With whom do you compete?

    CB: We are comparable to DoubleClick's DART, without the ad rep business. That's all we have, we don't have a rep business.

  • ZDII: Who is your largest customer?

    24/7 (Nasdaq: TFSM) is one of our largest customers, one of our top four. AdSmart, GeoCities (Nasdaq: GCTY) , Netscape (Nasdaq: NYSE: AOL)are the others in the top four - the four make up about 75 percent of annual revenue.

  • ZDII: It was reported that 24/7 is working on developing its own server technology to rival your own, which would make one of your biggest customer a competitor, where does that stand?

    CB: We just signed a 5-year deal with them, so that takes care of that concern on a fairly permanent basis. We are working with them to use the information we develop to help them better.

  • ZDII: How does the "no-compete" policy aid AdForce versus Doubleclick?

    CB: First of all, realize what we do, for large sites, such as MapQuest, we set up the platform where the ads may be placed. They trust us to do the delivery and to provide them with customer information.

  • ZDII: Do you also sell advertising across segment, such as finance, as DoubleClick does?

    CB: We don't sell ads, but our technology allows 24/7 and AdSmart to sell space. Think of us as Nasdaq. We're not Merrill Lynch trying to get you excited about a stock so you'll buy and sell stocks, but we do handle the transaction once people decide to get into the market. We're like Inktomi is to search engines

  • ZDII: Whom do you target as customers?

  • Because we provide technology for AdSmart and 24/7, we act as an OEM for the middle-sized companies, which they target. We are going after the larger sites, such as GeoCities, for example.

  • ZDII: Do you plan to break out services based on information collected as a separate revenue stream?

    CB: We have future products, which we can talk about in about 20 days, which will do more with the numbers. We're working with Experian Corp., one of the largest database marketers.

  • ZDII: How big is the online advertising market?

    Forrester and Jupiter follow the industry the closest. They calculated the online advertising market at $1.9 billion during calendar 1998. They forecast the market to be in the neighborhood of $4.4 billion by 2002.

  • ZDII: How do you add sites to your server?

    CB: Any site that wants to join, may join. When they want to deliver an ad, they give us a URL. In a few hours they can put together a campaign, and a track the campaign immediately, even if it's a large site.

  • ZDII: Do you get any revenue by referring customers to 24/7 or AdSmart to place the ads?

    CB: No referral. We get a customer, that's enough.

  • ZDII: How does AdForce make money?

    CB: Every time we deliver an ad, on a CPM (cost per 1,000 impressions) basis, we just grow right along with them. It's completely scalable.

  • ZDII: What's the biggest threat to your company?

    CB: Our biggest threat is DoubleClick, I would hope that they would they would say the same of us. They're our only competitor for ad serving, as far as we're concerned.

  • ZDII: For what will the money raised in the IPO be used?

    CB: To fund our growth, we do have equipment needs. There are no plans today, but if we did plan acquisitions we would have that in reserve.