Adauction to change name, receive CMGI investment
The online broker for selling and buying advertising space is expected to announce next week that it is changing its name and redesigning its Web site, CNET News.com has learned.
The company also will announce investments from Internet venture company CMGI and several other firms as part of a second round of financing, sources said.
Executives at Adauction and CMGI declined to comment. The amount of funding was not disclosed.
The moves indicate that Adauction, which started as an online auction house where media companies sold surplus ad space, is changing its business strategy, said Forrester Research analyst Jim Nail. It is shifting focus to its Web exchange for media buyers and sellers.
CMGI owns a majority stake in Net marketing company Engage Technologies and through it controls online ad agencies Adspace and Flycast Communications. Nail said CMGI could be investing in Adauction as it searches for a venue through which to sell its large inventory of ad space.
"Adauction has the buyers, and buyers attract sellers," Nail said. "That's what CMGI is. Instead of just auctioning off inventory it doesn't need at discounted rates, CMGI could list all of its inventory in the exchange at full rate.
"Then Adauction becomes a powerful central directory for buyers to see what's available in the market," Nail added.
A central marketplace for ad space offering one-stop shopping would attract major media outlets and advertisers. In addition, it likely would offer lower costs for ad companies, Nail said.
Online advertising will generate about $5 billion this year, while traditional newspapers will see about $50 billion and television $55 billion, according to Forrester Research.
"The process of buying online advertising is very painful," Nail said. "There's a lot of phoning and faxing, and anyone (who) can figure out how to streamline that process is going to be a big winner."
Jupiter Communications analyst Marissa Gluck said that Adauction has done a good job of attracting sellers and buyers to its exchange and of selling advertising offline as well.
Adauction struck a deal two weeks ago with Engage Technologies, which will manage the company's inventory of ad space in exchange for Adauction listing its inventory. It was one of the first Net firms to sell offline ad inventories for mediums such as billboards and radio spots.
But Gluck said that Adauction will have to contend with new competitors in the market, including DoubleClick, Flycast Communications and 24/7 Media.