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Engage exits Web advertising

The company, a former highflier in Net ad services, sells back its online advertising division to former employees after a rocky ride in the industry.

Engage on Wednesday sold back its online advertising division to former employees, exiting its once-core business after a rocky ride in the Internet market.

The Andover, Mass.-based company sold its Web advertising technology to Accipiter Solutions, a newly reformed company that originally was founded in 1996 and acquired by Engage in 1998. Financial terms of the deal were not disclosed. However, Accipiter is 90 percent employee-owned, and Engage holds the remaining stake.

"After consideration of Engage's long-term strategy, we decided to exit operations of our Internet advertising business," Engage President John Barone said in a statement.

The deal "allows the company to focus our efforts on becoming a leading provider of AMP (advertising, marketing and promotion) solutions," he said.

Engage, a former highflier in Internet advertising services and once backed by Net incubator CMGI, has slowly inched out of Web advertising, its seminal business, as the market has soured.

In September, struggling Internet company CMGI divested its stock and debt in Engage only a month after Engage's stock was delisted by the Nasdaq. The stock now trades over the counter.

Last fall, Engage stepped away from selling advertising inventory for Web publishers because of weakness in ad rates, dwindling marketing spending, and innumerable dot-com closures. The company subsequently asked its publishing customers to accept little more than half of what they were owed in back payments for its service, a move that illustrated just how deeply its problems cut.

At the same time, Engage sold some online advertising assets to rival Bluestreak and announced it would refocus efforts on software products for multichannel marketing. Like many Internet-based companies, Engage has also had several rounds of layoffs.

The company is now solely focused on selling services to help retailers, publishers and ad agencies manage their digital media assets. Its work-flow automation software helps companies create and deliver marketing and advertising material at a faster clip. Clients include Newsday, Valpak and Dow Jones.

Accipiter, with about 20 employees, sells technology that handles the delivery and reporting of Web ads. Its feature products include Accipiter AdManager V6 and Accipiter AdBureau V6, an ad management business technology. Accipiter's long-time clients include Microsoft, and Looksmart. Brian Handly, former chief of technology at Engage, will lead as CEO of Accipiter.