ValueClick (VCLK) is a typical stock offering a great opportunity for growth. ValueClick is one of the online marketing industry leaders–with a fresh line of products and services. The company ranks as the 4th largest ad network in the U.S., just behind the Google (GOOG) Ad Network.
What amazes me about ValueClick is that it has been able to compete with Google and build a very competitive online ad network where publishers and advertisers trade ad space, based on affinity and common interest. The name of this fabulous ad network is Commission Junction.
Commission Junction is one of the largest affiliate networks in North America and operates worldwide. This is an incredible achievement for a small company competing against two tech giants who are fighting for a share of the same market: Google [134.04 billion], and Microsoft (MSFT) [225.75 Billion]. The market capitalization of ValueClick is just 1.38 billion. ValueClick’s revenue is generated primarily from the United States, with just 19.6% (excluding interregional eliminations) generated from operations outside the country, including Europe, China and Japan in 2009.
ValueClick could be a great asset for any player interested in competing with Google for a share of the display advertising business. My guess is that ValueClick will become a potential target acquisition for a company like Microsoft or Fox (NWS). Even though Microsoft failed with a similar acquisition (aQuantive) in May 2007, it may try again at any point. Microsoft Ad network is still very weak and undiversified; it is still not willing to give up the fight against Google, so a move like this would make perfect sense.
When Microsoft tried to buy aQuantive, the company was in negotiations with ValueClick for a merger, but the deal fell apart when Microsoft pushed through its offer. Microsoft finally acquired aQuantive for 6B but never did anything with it. This is considered the biggest failure of Microsoft in recent years, and probably in history.
As the online marketing industry matures, big media and technology companies will have to look to companies like ValueClick. The shifting of advertising money from traditional media to online is a reality, and is growing every year. U.S. users spend 12 hours per week online, which represents about 32 percent of their media time. However, online advertising makes up only 13.6 percent of advertising spent in the U.S. Recently, Alterian ran a poll that illustrates the industry’s increasing awareness of the fact that traditional media channels just don’t deliver the results they used to. 40% of respondents anticipate a shift of over a fifth of their budget toward digital channels, with 21% of respondents predicting more than a third of their budget will shift.Forrester Research adds to this sentiment, stating, “Empowered consumers today expect a customized, interactive brand experience that goes way beyond a 30-second television spot or two-dimensional print ad.” Forrester expects interactive marketing/advertising channels to grow to nearly $55 billion and represent approximately 21% of all marketing budgets by 2014.I doubt ValueClick will continue being an independent company over the next 5 to 10 years. It could be a great asset for a big media or advertising company, as this is exactly what happened to Doubleclick when it was acquired by Google in 2007.
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