A leading provider of Internet advertising solutions and online marketing services, ValueClick Inc. (VCLK) entered into a partnership agreement with the leading digital media management solution provider LucidMedia.
Under the terms of the agreement, ValueClick will add LucidMedia’s contextualization technology to its own online advertising platforms. This follows a significant test period in which ValueClick integrated, deployed and tested LucidMedia’s patented ClickSense contextual targeting technology.
With a rapid rise in Internet usage, marketers are increasingly using the Web as an advertising platform. Online advertising has become much more result oriented where reaching out to the target audience remains the primary goal of the advertisers.
Evolving a new technology that helps in achieving this goal is of utmost importance to these advertisers. Demand Side Platform is a software that facilitates transparent automated buying across multiple sources using unified targeting; data, optimization and reporting through a Web based interface that allows the buyer complete control. LucidMedia integrates DSP with RTB, allowing buyers to make real-time decisions on an impression-by-impression basis.
By integrating these two powerful technologies, LucidMedia can deliver 25 billion monthly impressions. ValueClick believes that the ClickSense technology will help its clients to reach the right audience at the right time and get a competitive edge.
We believe this partnership is significant for ValueClick as it will enable the company to penetrate further in the online advertising market. Increasing market share based on quality service and higher customer base is expected to boost top-line growth over the long term.
ValueClick remains a premier provider of independent ad serving technology and is well positioned with its display advertisement network, which ranks first in the U.S. The network reaches an estimated 75.0% of U.S. online consumers each month.
The total size of the U.S. online advertisement market is $22.7 billion, of which ValueClick’s addressable market is $9.3 billion. According to research firm eMarketer, ValueClick’s banner and rich media display, lead generation and email categories are expected to grow at a CAGR of 11.4% from 2009 to 2014.
ValueClick reported revenues of $95.7 million, down 7.2% year over year for the first quarter 2010. First quarter earnings per share from continuing operations were16 cents. For the second quarter, ValueClick expects revenues in the $95 – $98 million range.
We continue to maintain a Neutral rating on a long-term basis (6-12 months) due to a sluggish revenue growth, weak macro environment, customer concentration and increasing competition from Digital River Inc. (DRIV) and Google Inc. (GOOG).
However, strong growth affiliate business, international expansion and aggressive share repurchase will boost profitability going forward.
Currently, ValueClick has a Zacks Rank of #3, which implies a short-term Hold rating.
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