Fastclick Ad Network Sales Boom

NEW YORK Fastclick said revenue from its Internet ad network doubled in 2004, thanks to robust demand for performance-based advertising.

The Santa Barbara, Calif., company said in a filing with the Securities and Exchange Commission that it had 2004 revenue of $58 million, up from $28.7 million in 2003. Net income in 2004 was $5.1 million, down slightly from $5.8 million, due mostly to brisk hiring and technology costs. Fastclick said beefing up its sales staff helped triple its sales and marketing expenses from 2003 to 2004. Fastclick added 53 employees in 2004 to end the year with 88.

Fastclick, which places targeted ads on Web sites, filed for an initial public offering in December 2004 that aims to raise $92 million. In September, it received $75 million in venture funding, $55 million of which was used to buy the shares controlled by the company’s executives and their families.

In the fourth quarter, Fastclick reported revenue of $19 million, up from $10.2 million in fourth-quarter 2003. Net income was $1.5 million, down from $2.1 million in the year-ago period. Fastclick’s cost of revenue, which is the amount it pays Web sites for their ad inventory, decreased as a percentage of revenue. In fourth-quarter 2003, cost of revenue was 67.1 percent of revenue, compared to 65 percent in the same period in 2004.

Fastclick said it placed 6.5 billion ads in December 2004 across more than 8,000 Web sites. According to ComScore Media Metric, Fastclick’s ad network reached 115 million Internet users last month. The Fastclick network includes niche Web sites and inventory bought from portals like Yahoo.

Fastclick has invested in building new technology. It plans to release a search engine bid-management tool, based on its ad-optimization technology, in the next month. In its SEC filing, the company said it is working on technology that is “designed to gather, store and distribute to advertisers targeted Internet user contact and other information.” That technology should be released in the second quarter, the company said.

Fastclick competes with ad networks like AOL’s, Burst Media and ValueClick. In most cases, the networks buy ad inventory on an impression basis, then resell it to advertisers with performance pricing. Fastclick’s uses optimization technology to better target its ads and generate clicks. Adware maker Claria announced this week that it planned to launch its own behaviorally targeted network in April that would buy $100 million of Web ad inventory in the following year.