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CMGI boosts arsenal with AdForce

Internet investment company CMGI will acquire AdForce, a Web ad-service company, for $500 million in stock.

Internet investment company CMGI said it will acquire AdForce, a Web ad-service company, for $500 million in stock.

With the acquisition, CMGI will gain AdForce's technology for serving ads and profiling users, as well as its list of customers and partners. AdForce joins CMGI's existing collection of Web ad services, including Engage, which provides ad targeting technology to Web sites, and Adsmart, which provides Web ad technology to online advertisers.

"We are really building scaleable ad serving and ad measurement tools to build a fully integrated ad machine in the family [of CMGI sites]," said Bill White, executive vice president of marketing and corporate communications for CMGI.

AdForce shareholders will receive 0.262 CMGI shares for each AdForce share, White said.

AdForce becomes the latest major acquisition for CMGI since the summer. In August, CMGI closed a deal to acquire Web portal AltaVista from Compaq Computer for $2.3 billion.

CMGI made headlines earlier this year when its chief executive, David Wetherell, resigned from Lycos's board of directors in protest of the Web firm's planned merger with media mogul Barry Diller's USA Networks. CMGI was one of the first investors in Lycos and owns 18 percent of the company.

CMGI runs a venture capital arm called @Ventures--with offices in Menlo Park, California, and Andover, Massachusetts--which has close to 40 companies in its investment portfolio. The firm's high-profile investments include Lycos and Web home page community GeoCities, which Yahoo acquired for $2.87 billion in May.

All bets on AltaVista With AdForce, CMGI adds another weapon to its Web arsenal.

The company plans to use AltaVista as its primary vehicle to drive Web traffic to its list

CMGI affiliates
Aureate Media
Critical Path
Raging Bull
Silknet Software
Softway Systems
Speech Machines
Universal Learning
Virtual Ink
Visto Corporation
Source: CMGI
of @Ventures affiliates and to its own collection of wholly owned subsidiaries. AltaVista is undergoing a face-lift in anticipation of its relaunch later this fall.

"We're trying to relaunch the brand and reestablish leadership in search," Ross Levinsohn, general manager of AltaVista, said in a previous interview.

The changes will be drastic, according to sources familiar with the relaunch. AltaVista will redesign its user interface, launch a multimillion-dollar advertising campaign targeting a more Web-savvy audience, and possibly rebrand the portal, the sources said.

For now, CMGI, its subsidiaries, and its affiliates are determining how to take advantage of AltaVista's reach, which ranks in the top ten most-visited Web sites, according to online audience measurement firm Media Metrix. The idea is to funnel much of AltaVista's traffic into CMGI's affiliates to boost their businesses, and in turn increase CMGI's return on investments.

But having an established Web service such as AltaVista happily cooperate with the list of smaller companies in CMGI's portfolio has proven difficult so far, according to an executive with a CMGI-funded company.

"AltaVista is not showing any special preference [to the affiliate companies], which if they're really there to improve the value of CMGI, they should be," the executive said.

The acquisition of AdForce is expected to close later this year.