ValueClick (VCLK)

ValueClick, Inc. is a Westlake Village, California-based online marketing services company. The company sells targeted and measurable online advertising campaigns and programs for advertisers and advertising agency clients, and generates qualified customer-leads, online sales, and increased brand recognition on their behalf. ValueClick provides targeted advertising campaigns to reach online consumers as well as performance-based campaigns, where marketers pay for advertising only when it generates a lead or sale. The company's customer base consists of direct marketers, brand advertisers, and the advertising agencies that serve both these groups. ValueClick works with a network of third-party websites and other online publishing partners, which the company optimizes for specific marketing goals and to generate the audience for its advertiser's campaigns. The company reports results across four operating segments, including Media, Comparison Shopping, Affiliate Marketing, and Technology. Virtually all of the company's revenue is generated in the United States, with just 15.6% generated from operations outside the country. ValueClick brands include Commission Junction, ValueClick Media, Mediaplex, and PriceRunner.

The Media segment (59.9% of 2007 revenue, including inter-segment sales) provides a comprehensive suite of online marketing services and tailored programs, which help marketers increase awareness of their products, attract visitors, and generate leads and sales through the Internet. Included in the Media segment are Display Advertising, Lead Generation Marketing, Email Marketing, and E-commerce. The Media segment has grown both organically and through a number of acquisitions, including Hi-Speed Media in December 2003, Webclients and E-Babylon both in June 2005, and Fastclick in September 2005.

Display Advertising provides advertisers and advertising agencies access to online advertising networks. Through the acquisition of Fastclick in September 2005, VCLK is now one of the largest online display advertising network operators in the industry. ValueClick partners with third-party website publishers and applies its proprietary technology platform to deliver its advertiser customers' display ad campaigns to the appropriate pages of its publisher partners' websites and track the results. Display advertisement placements are offered on a cost-per-thousand-impression (CPM) pricing, where the client's pay is based on the number of times the target audience sees the advertisement cost-per-click (CPC) pricing, where payment is triggered when someone clicks on the advertisement and cost-per-action (CPA) pricing, where a pre-determined action triggers a charge. VCLK also sells ads on a cost-per-lead (CPL) basis. According to comScore Media Metrics, ValueClick Media is one of the largest global advertising networks and is the 7th largest buying point (including portals) for unique users in the U.K. and the 5th largest display advertising network ahead of Blue Lithium, DRIVEpm, Yahoo!, Adviva, Casale, and Unanimis. Being one of the most effective performance advertising networks, ValueClick Media reaches more than 75.0% of the U.S. and 75.9% of the U.K. Internet audience across 13,500 quality sites with 35 billion impressions. With 16,000 active online publisher relationships in the U.S. and 21,000 worldwide, VCLK's Display Advertising Network reached 134 million unique Internet users in the U.S. and 25 million unique users in the U.K in December 2007.

In Lead Generation Marketing, ValueClick manages online campaigns that generate qualified customer inquiries for an advertiser's product or service by collecting data when people request for more information on a product. Leads are generated in four ways: by opt-in email lists, where consumers agree to receive an advertiser's messages through email co-registration, where consumers registering at a website agree to receive offers display ads, where partners agree to display online ads focused on generating leads and ValueClick owned and operated websites. Its lead generation capabilities have been developed organically and through acquisitions, including the acquisitions of HiSpeed Media in December 2003 and Webclients in June 2005.

Email Marketing services allow marketers to target qualified prospective customers on a large scale with opt-in email lists from VCLK's proprietary database of approximately 97 million names and from a group of email list partners. This service allows advertisers to target audiences contained in the database with specific selection criteria.

E-commerce offers to sell a limited number of products directly to end-users through a small number of company owned e-commerce websites. The company entered this business through the acquisition of HiSpeed Media in 2003, and added to e-commerce capabilities with the acquisition of E-Babylon in June 2005.

The Affiliate Marketing segment (18.0%) enables advertisers to develop their own online sales force comprised of third-party affiliate publishers. In affiliate marketing, a publisher joins an advertiser's affiliate marketing program and agrees to distribute the advertiser's offer in exchange for commissions on leads or sales generated. The publisher places the advertisers display or text links on their website, email campaigns or search listings, and receives a commission from the advertiser when a visitor takes a specific action. Affiliate Marketing's services are offered through VCLK's wholly-owned subsidiaries Be Free, acquired in May 2002 and Commission Junction, acquired in December 2003. Affiliate Marketing's services are currently offered under the Commission Junction (CJ) brand.

CJ Marketplace, an affiliate publishing network, is dedicated to VCLK's affiliate marketing business. Advertisers upload their offers onto CJ Marketplace, making them available for placement by affiliates. Affiliates apply for joining the advertiser's program, and upon acceptance, select and place the advertiser's offers on their websites, in email campaigns, or in search listings. These links are tracked and served by Commission Junction. When a visitor clicks on one of the affiliate's links and then makes an online purchase or completes an agreed-upon action on the advertiser's website, that transaction is tracked and recorded by Commission Junction.

The Comparison Shopping and Search segment (17.5%) enables consumers to research and compare products from thousands of online and offline merchants through its Pricerunner and MeziMedia websites. The service is free for consumers, with merchants paying primarily on a CPC basis when consumers click through to their websites. Pricerunner operates comparison shopping destination websites in the United Kingdom, Sweden, the United States, Germany, France, Denmark, and Austria. MeziMedia, acquired in July 2007, operates comparison shopping destination websites in the United States, Japan and Europe, primarily under the Smarter.com, Shopica.com and Couponmountain.com brand names. In December 2006, ValueClick acquired Shopping.net, a privately-held London-based company that provides comparison shopping, search and vertical market content to European online consumers. In February 2007, PriceRunner selected Picsel Technologies, a provider of one of the world's leading mobile platforms, to deliver a free, fully comprehensive mobile price comparison service. The Comparison Shopping segment has distribution agreements with MSN U.K. & MSN France. During the second quarter of 2008, ValueClick moved its Search123 distribution business, a part of the Affiliate Marketing segment, into the Comparison Shopping business, and renamed the Comparison Shopping segment the Comparison Shopping and Search'.

Search Marketing allows marketers to find prospective customers who are actively engaged in researching and buying products and services online. This platform is offered through pay-per-click search engines, in which marketers bid for placement within search results and pay only when targeted leads are delivered to their websites. VCLK offers the self-service platform Search123 and a premium offering called Simpli. Search123, acquired in May 2003, generated revenue of approximately $21 million in 2007.

The Technology segment (5.0%) provides marketers, advertising agencies, website publishers, and other companies with the tools needed to manage business operations and marketing programs. These services are offered through VCLK's wholly owned subsidiary Mediaplex Inc. and Mediaplex Systems. Mediaplex is an application services provider (ASP) offering hosted tools that enable customers to implement and manage their own online display advertising and email campaigns. Mediaplex offers third party advertising, publisher ad management and email campaign management. Mediaplex Systems offers Agency Management, Media Management, and Content Management. VCLK provides multi-channel technology solutions with over 800 advertising customers.

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