DoubleClick’s Ryan Forecasts Steady Ad Growth

NEW YORK DoubleClick CEO Kevin Ryan predicted steady, solid growth in online advertising, driven in part by rich media and paid search, at the CSFB Media and Telecom Week conference at The Plaza this morning.

“We’re not seeing explosive growth like we did in 1999,” said Ryan. “We’re seeing increased, balanced, sustainable, good growth.”

Indeed, third-quarter online advertising revenue reached an estimated $1.7 billion, up 5 percent from the second quarter and 20 percent from the year-ago period, according to figures released Tuesday from the Interactive Advertising Bureau and PricewaterhouseCoopers [IQ Daily Briefing, Dec. 9].

However, cautioned Ryan, the biggest misconception is that ad sales correlate to ad-management revenue. “When ad sales go up 20 percent, ad management will go up less,” said Ryan, explaining that pricing is increasing, but not necessarily volume.

DoubleClick’s ad management products realized revenue of $31 million in Q3, versus $35.4 million in the year-ago quarter. Advertisers using the company’s products include The Wall Street Journal, eBay, Terra Lycos, Grey Global Group, AOL and Ford, among others.

Ryan said he expects ad-management revenue to rise as marketers of low-consideration wares, such as fast-food and packaged goods, start to include the Web in their marketing mix. “Ultimately, advertisers will follow the eyeballs,” said Ryan.

While DoubleClick does not have a paid-search offering, the online-ad-technolgy company teamed with Macromedia in July to introduce a new rich-media advertising product, called DART Motif. In the third quarter, more than two-dozen clients used the product, including OgilvyInteractive in London and Viacom’s CBS and MTV Networks.

The New York-based company’s e-mail division—historically a money loser—is starting to see an upswing, said Ryan. DoubleClick’s e-mail management and delivery platform and related strategic services reported revenue of $9.6 million for the third quarter, down slightly against $9.7 million in the year-ago period.

Acknowledging the spam dilemma, Ryan said that he’s not optimistic that the CAN-SPAM Act (S. 877), which awaits the president’s signature, will stem the problem. Spam filters, instead, will do a better job combating unwanted e-mail, he said.

That’s where DoubleClick comes in as legitimate marketers turn to the company to address delivery issues caused by e-mail blocking devices. “Consumers do like getting e-mail [they request] from vendors,” he argued, citing 10 million people who registered to receive e-mail updates from Nokia.

Internet advertising—once the main concentration for DoubleClick—now represents less than 52 percent of its revenue, as its technology and database business grows. DoubleClick data revenue rose nearly 17 percent to an all-time high of $31.3 million in Q3, versus $26.8 million in Q3 2002.