DoubleClick is overhauling its media business and sloughing off 10 percent of its employees in the process. The Internet marketer said the moves will increase efficiency and customer service.
The majority of job cuts will affect the company's global business, and will leave it with 1,850 employees as of the end of the second quarter, DoubleClick said.
DoubleClick (Nasdaq: DCLK) provides targeted advertising serving to Web sites using its proprietary technology. Its software collects and analyzes audience behavior and predicts which ads will be most effective, measures ad effectiveness, and provides data for Web publishers and advertisers. DoubleClick also makes money by licensing its technology to third-party publishers and ad agencies.
Outside of the United States, DoubleClick's media structure will stay the same; it will continue to offer networks of local content in each country.
But in the United States, DoubleClick will divide its media business into two networks, one for branded sites, and the other for audience reach and targeting.
The new "DoubleClick Brand Network" will contain sites that are recognized media brands that have a significant amount of traffic and marketable inventory. The "DoubleClick Audience Network" will offer sites grouped by content with an emphasis on reach and targeting.
The changes are a result of current market conditions, the company said, and are designed to make more efficient use of its media sales force. Behind the scenes, a unified sales force will sell both of its network offerings, creating efficiencies and improving client services as senior sales teams focus on key sites and advertisers.
The company also said that its media business is expected to be less than 20 percent of gross profit in 2001, a move that will help lessen its reliance on advertising revenue.
The ad environment has been hurting most Internet companies lately as dot-com clients have died off. DoubleClick has managed to distance itself from the more severe troubles that have snagged Yahoo (Nasdaq: YHOO), but warned in its fourth-quarter report that earnings would be lower for 2001.
Wit SoundView analyst Lisa Haas today also lowered her expectations for the online media sector again, but said that DoubleClick was faring better than many other companies exposed to the slump.
"Given the prolonged and more exaggerated weakness in the online advertising industry," the analyst reduced her forecasts for the industry's spending by another 10 percent to 15 percent. Haas now projects online advertising revenue of $7.2 billion, down from her prior estimate of $8.4 billion.
While things are expected to get worse for Yahoo--Haas predicted its share of the ad market will likely decline from approximately 14 percent to just over 11 percent in 2001--DoubleClick, along with AOL Time Warner (NYSE: AOL) is one of the few, more diversified companies that can expect to gain share, Haas wrote.