IQ News: CMGI’s Consolidation Targeted to Marketers

CMGI, which has bought its way into the limelight with a series of interactive acquisitions, has consolidated three of its majority-owned Internet companies to form what many industry watchers see as a potential rival to DoubleClick.
The consolidation was announced last week when Engage–which is now 87 percent owned by CMGI–took over the management of Flycast Communications, San Francisco, and Adsmart, New York. The combined company will be called Engage.
During the next three to six months, Engage will launch a branding campaign, and Flycast and Adsmart will cease to exist as separate entities. David Wetherell, chairman and ceo of CMGI, Andover, Mass., will continue to serve as chairman of the board for Engage, which is also based in Andover.
The companies say the move was made to create a highly integrated Internet marketing company that would represent the next generation in online marketing. “We didn’t make the transaction to ride on the taillights of DoubleClick,” said Betsy Zikakis, vp of marketing for Engage.
Last fall, CMGI noticed that online marketing was no longer driven by sites and networks. “We wanted to create a company whose primary client would be the marketer rather than the site,” Zikakis said. “The primary clients for DoubleClick and the other networks are the sites.”
Engage began looking at possible combinations of other CMGI companies to create an Internet company that provides broader solutions for online marketers.
Engage plans to integrate the sales forces of all its existing business units, including I/Pro, which it acquired last April, and AdKnowledge, acquired in September. It will also combine the media buying groups of Engage, Flycast and Adsmart. An enabling technologies group will be established to support the business units and sell its own technology products. Finally, Engage plans to take a piece of Flycast and a piece of Adsmart to form a business-to-business network and e-mail group.
Paul Schaut will remain the president and ceo of Engage. George Garrick, chairman and ceo of Flycast, and John Federman, president and ceo of Adsmart, will join Schaut–in not-yet-determined job titles–to oversee the strategic operations for Engage. “The company is built around the Engage knowledge databases,” said Zikakis. “We did not want to create just another ad network, which would have happened if Engage had ended up under Flycast or Adsmart.”
Engage is issuing 32 million shares of common stock to CMGI. The acquisition is expected to close in May.