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CMG buys ad server Accipiter

Internet holding company CMG Information Services purchases Accipiter, a provider of ad banner server software in a stock deal.

LOS ANGELES--Internet holding company CMG Information Services (CMGI) has purchased Accipiter, a provider of ad banner server software, for $35 million in stock.

Accipiter will become a wholly owned subsidiary of CMG and will be merged with another CMG property called Engage, a provider of software that creates anonymous profiles of Internet users based on what they look at on Web sites. Engage markets software that helps Web site operators create profiles, as well as a service that delivers similar profiles aimed at helping Web operators target editorial content.

"This is a big win for CMG and our efforts to create a synergy of companies on the Internet," said Paul Schaut, CEO of Engage. "The goal is to provide an end-to-end solution [for Net marketing ] to accelerate our customers getting the benefit of the best interactive marketing solution on the market."

CMG's Internet group also has an ad sales and service offering called AdSmart, which represents about 60 Web sites. Schaut said CMG has not decided yet how to position AdSmart among its Internet advertising offerings.

Today's acquisition puts new pressure on Accipiter rival NetGravity, which has been the leading vendor of Internet ad-serving software. NetGravity, which has discussed partnering with Engage, will put an ad-serving service called AdCenter into beta testing next month, adding to its product business.

Rick Jackson, NetGravity's vice president of marketing, said Accipiter's sale was no surprise but the buyer was.

"There's no way Accipiter could have been making any money," he added, noting that his firm isn't in the black yet either. He sees Engage's interest in using Accipiter's existing customers as a distribution base for Engage's profiling technology.

Both sides said the acquisition will strain any future relations between NetGravity and Engage.

The Internet ad services market has been rapidly consolidating since DoubleClick (DCLK), which has both a large ad sales network and technology that it markets separately to serve ads, filed for an initial public offering on December 16. DoubleClick went public on February 20.

The consolidation is driven in part by the success of the DoubleClick IPO, which has other firms salivating over the possibilities of going public themselves. In addition, other Internet ad firms seek to offer a more complete range of services as players like DoubleClick combine both the sales and technology sides of their businesses.

"Every one of the competitors is talking to everyone else," Schaut said. "The questions are 'Do you want to do that on your own, or do you want to team up and do it under an umbrella with others?'"

NetGravity's Jackson agreed: "There's so much competition that there's not enough money to support somebody. The Internet market cannot support 12 competitors in the ad management business, so all those companies are looking to diversify their business."

In January, Softbank Holdings sold its 65 percent share of major ad sales firm Softbank Interactive Marketing to Zulu-tek, which uses ad banner technology from its subsidiary, EchoMedia. Softbank launched an Internet ad network in September.

In November, Net ad services firms Focalink and ClickOver merged to form a new company, called Adknowledge, just two weeks after Web ad auditor Internet Profiles (I/Pro) bought out its biggest competitor, NetCount.

In December, Petry Interactive (formerly Katz Millennium Marketing) and Interactive Imaginations announced plans to combine forces into a new advertising network company, 24/7 Media.

In addition, Internet ad auctioneer Adbot went out of business in December after its founder was accused of propping up the money-losing operation with investor funds from another venture. Adauction, launched last month, stepped in to take its place.