DoubleClick turns away from ad profiles
The online advertising company phases out its Net ad profiling service as part of its shift from media services, proving consumer tracking doesn't always pay.
The New York-based company jettisoned its "intelligent" targeting service effective Dec. 31, a company representative confirmed Tuesday. Launched in 2000, the product allowed marketers to target ads based on a database of some 100 million profiles. The technology tracked people online anonymously and then served ads based on personal tastes.
The company simply decided not to continue the product in 2002, according to the representative.
But profiling largely failed to pan out the way DoubleClick hoped. Once heralded as the key to online advertising's success, such tracking behavior quickly caused privacy headaches for the company. In 2000, it came under fire from federal regulators and privacy advocates for its practice of compiling dossiers on consumers. Sources said DoubleClick has long struggled to find customers for its profiling products because of ongoing privacy concerns in the industry.
Then, with the dot-com collapse, the company had trouble selling higher-priced ads on its network because they often came with minimal benefits, analysts say.
"The lift you get from that kind of profiling just isn't enough to pay all that extra data storage and process costs," said Jim Nail, an advertising analyst at Forrester Research.
In the last 16 months, DoubleClick has worked to deflect its dependence on the sickly advertising market. It has built up its research, data and technology divisions while slowly dismantling its media division.
In November, the head of DoubleClick's media division, Barry Salzman, resigned. The company also sold its European media division and said it was considering options for the U.S. media arm. Sealing the company's bent toward technology, David Rosenblatt, the company's former technology chief, became president in late December.
The intelligent targeting product was originally launched under Abacus Online, a product of DoubleClick's $1.7 billion merger with data-collection agency Abacus Direct. But the company quietly dissolved the division in late 2000. Another division operated under Abacus Online called PredictiveMail, a combined e-mail and direct-mail marketing service, was folded into Abacus.
The company's previous plans to launch an anonymous profile service that matched online and offline data was also scotched.
Nail said DoubleClick sold the targeted ads for a premium of $10 to $12 per thousand impressions; random rotation on the DoubleClick network typically cost $3 per thousand. Although the company promised targeted-ad results of 200 percent to 300 percent higher than typical conversions--or the number of times a customer acted on an advertisement--the costs were still too high for many marketers.
"Even if you get a 300 percent lift, it isn't worth the added cost. It doesn't pay off," Nail said.