24/7 Media: Creating a New Media Giant via Mergers and Acquisitions


24/7 Media CEO David Moore created an interactive media giant through mergers and acquisitions and continues to grow the company with strategic transactions in the online advertising arena.


Internet advertising is a hot ticket today, but in 1995 the network model wasn't even a concept and selling online ad space likened to peddling vacuum cleaners door-to-door. Of course, none of this intimidated David Moore, president and CEO of 24/7 Media. Moore sold cable airtime to advertisers back in 1980 and invited the challenge of marketing another emerging advertising vehicle.


Moore has been involved in a handful of media startups. After spending time in sales at Turner Broadcasting, he joined Viacom to help launch the Cable Health Network, a channel that would eventually merge with Hearst/ABC's Daytime to become Lifetime. During his 10 years with the leading cable network for women, Moore developed and ran two physician-oriented cable television services. By 1993, he was Net-bound with an online service for doctors that was acquired by Reuters in 1994. And one year later, Moore and partner Mark Burchill founded Petry Interactive, a spin-off of Petry Media Corp., a leading television ad rep company.


And that's where the real story begins.


Cutting His Teeth on the Web

Moore's responsibilities at Petry Media included evaluating new business models that would leverage the company's core competencies. So Moore looked at barter-syndication, he looked at replicating domestic activities on an international scale, and he looked at the Internet. "I just saw a tremendous opportunity on the Web -- it was growing very rapidly, the infrastructure was already in place, and I felt this was a medium that was going to take off in a very short period of time," explains Moore.


Moore and Burchill were passionate about the possibilities of the Net and convinced Petry Media to allocate start-up funds for an interactive division. By the end of 1995, Petry Interactive was established, and the duo officially began representing advertisers online. But their staff of eight was bigger than their client list in the early days.


"We weren't even spending full time selling ads on the Internet," admits Moore. But he was convinced the next industry wave was interactive marketing, and he soon realized this emerging medium was crying out for a new-sprung model of advertising. "I would say after only a few months of selling to Web sites on an individual basis, I was convinced that the network model was the way to go," recalls Moore.


DoubleClick introduced the network model in mid-1996. The standard network model is a collection of highly trafficked and premium-branded venues, as well as smaller niche Web sites -- a combination that allows advertisers to target viewers based on profiling criteria. Petry Interactive was right on DoubleClick's heels, introducing their own network in 1997 through a deal with AdForce, an online ad-management service. Moore says the network grew very rapidly, and it was clear that there was a huge opportunity for runaway success by early players in the Internet advertising arena. All he needed was the financial backup that would help Petry Interactive gain that all-important market share.


The Mergers That Made 24/7 Media

Unfortunately, the parent company wasn't in a position to put more capital behind the Internet venture. Moore and Burchill, however, refused to watch a golden opportunity pass them by and decided to pursue a management buyout of Petry Interactive. "We bought the division from Petry, and I hit the streets to find money to fund us going forward," explains Moore. "In that effort, I ran into a couple of other similar companies that were looking for money, as well, and I ended up merging the three of them together."


Those similar companies were Katz Millennium Marketing and Interactive Imaginations, two fast-growth interactive ad agencies that, when merged with Petry Interactive, formed an immediate industry giant dubbed 24/7 Media. The marriage was christened with $10 million in VC funding that Moore secured from Travelers, Prospect Street and Big Flower Holdings.


Moore's reasoning behind the mergers was based on a time-tested truth: There's strength in numbers. "When you look at the Internet, big is better, and scale is important," says Moore. "The merger gave us the scale in several critical areas that really catapulted us overnight to the number-two position." Indeed. 24/7 Media immediately enjoyed a sales force, a portfolio of Web sites and an audience mass that was nearly three times the size of each individual company alone.


Since the merger in late 1997, 24/7 Media has been on a mission to provide solutions to advertisers and Web publishers alike. For the advertiser, 24/7 Media is a one-stop shop, offering the ability to purchase a campaign across literally thousands of Web sites. Advertisers save time by getting one report and one invoice. For the Web publisher, 24/7 Media offers an opportunity to outsource their ad sales to an experienced global agency. Publishers generate revenues for their sites based on traffic counts.


With this straightforward business model, 24/7 Media is today one of the largest Internet media companies, reaching more than half of all online users in the United States, for a total of more than 34 million people. In fact, the company is the third largest reach vehicle on the Internet, trailing only Microsoft and America Online.


A Veteran Team

Moore attributes much of the company's success to an executive management team with more than 100 years of combined media sales experience and expertise. The merger, however, was challenging from a human resource perspective because responsibilities had to be strategically reassigned and delegated among a staff of seasoned veterans. Moore says it was difficult to put the right people in the right positions in a manner that would drive the company to success.


"It was important that we got everybody to leave their ego at the door and look at what it was going to take to grow the business," explains Moore. "We had to realize who was best qualified to do what, and we had to move some people around."


Moore says, for the most part, everybody went along with the plan -- and those who didn't left the company. The general cultural differences typical of most mergers and acquisitions took several months to work out, but Moore says it was all worth it to assemble a crew of top-notch executives to help him take the company to the next level. Moore is lavish in his praise of his savvy executive staff:


"There's a management credo I heard many years ago, which I always believed, that says you should surround yourself with intelligent people who contribute directly to your success," says Moore. "I definitely would not be running a successful media company if I didn't have an all-star group of senior managers who were making this company the great place it is today."


Growing 24 Hours a Day

Moore says his more than 20 years in the industry has taught him that the key to creating long-term relationships with advertisers is understanding what they are looking for: reach and targetability. From the beginning, 24/7 Media has been working on the reach aspect, aggregating Web sites of all shapes and sizes, so long as they don't contain extreme content. As a result, the company enjoys a long list of marquee brands, like Reuters and GoTo.com, as well as a variety of small- to mid-sized venues, in its burgeoning network.


In addition to collecting Web sites, however, Moore continues to look for products and services that can help the company bond more closely with advertisers and agencies, as well as their network of publishers. In staying true to the strategy that spawned an Internet giant, Moore is always looking to buy companies that can help 24/7 Media get bigger quicker, and he has made several highly synergistic acquisitions during the past two years that have stimulated the growth of the company. Of special note are Sift, Inc., an e-mail-based direct-marketing firm, and TechWave (now called ShopNow.com, a leader in e-commerce solutions.


"When you look at what advertisers want -- reach and targetability -- e-mail is an important component of what we do. With the Sift deal alone, we gained 3 million opt-in e-mail addresses," explains Moore. "Our salespeople are now selling it in combination with banner campaigns."


With a 19.8 percent stake in ShopNow.com, Moore brings an experienced e-commerce enabler to his eclectic media company. "When you look at the amount of money that's scheduled to be spent in e-commerce by the year 2003 -- over $100 billion -- we just felt we had to have an e-commerce play, and this deal with ShopNow gives it to us."


Then there's 24/7 Media's entry into the global advertising arena with acquisitions in Europe and Asia. This year saw Moore claim a 60 percent stake in London-based InterAd Holdings Ltd. to form 24/7 Media Europe. And a minority interest in Hong Kong-based China.com Corp. represents 24/7 Media Asia's emergence into the international scene. While Moore sees these regions as lagging behind the United States in terms of overall growth, he is looking at the long-term picture, when these markets will begin feeling the full impact of the Internet.


Moore's growth strategies have kept most of the competition at bay. DoubleClick and 24/7 Media are the clear industry leaders. The 24/7 Media network represents about 4 billion impressions for more than 600 advertisers. Their revenues are steadily increasing, and their offices have expanded to more than 20 throughout the world.


"That type of infrastructure, that type of scale, that type of momentum, is very difficult for someone to replicate overnight," Moore insists. "At the same time, we aren't standing still." But Moore says there is plenty of room for the many second-tier firms that are attempting to compete with the giants. Indeed, 24/7 Media and DoubleClick have paved the way for others in the space.


What Makes 24/7 Media Tick?

In addition to the all-important network model, Moore says there are several other strategic programs that make 24/7 Media tick. The first of which is a landmark deal with IntelliQuest Information Group, a leading provider of data for interactive marketing. 24/7 Media Profilz offers demographic targeting services to advertisers using a database of 100 million high-tech households as a foundation. Moore says this deal puts the company on track to provide targetability better than the competition.


"Our database will allow us to identify users who are in the IntelliQuest database any time they come into our network," explains Moore. "So we can go to a company like Merrill Lynch, for instance, with adults aged 18-49 that make $100,000 a year but don't have a brokerage account, and schedule their advertising so that those will be the only folks who see it."


Launched in March, 24/7 Promotions is an online direct-marketing service designed to generate qualified customer leads while leveraging multiple branding opportunities. Moore says this program was developed in direct response to advertisers' demand for category-exclusive promotions to a pre-qualified audience. Right behind the promotions division came 24/7 Direct, a service for qualified direct marketers with transactional marketing objectives, such as user registration, account application or product sale.


Finally, the Content Zone was created for the "little guys." The Content Zone is a holding Web site for more than 2,500 smaller venues that want to join the 24/7 Media Network. Moore stresses that this market should not be ignored. "We are going to get even more aggressive in pursuing the smaller sites because the smaller sites definitely add more reach and targetability to the offers that we can make our advertisers," he explains.


The Public Life

According to Forrester Research, by 2003, Internet-based advertising will grow to more than $15 billion, and per capita spending for online ads in the United States will bypass radio and magazine ads. Faced again with an enormous potential for growth, 24/7 Media filed for an initial public offering (IPO) in June 1998. DoubleClick had earlier set the value standard, which made it easier for Moore to take his company to the public markets.


"DoubleClick was already out there, and I can argue that being public gives you access to capital that is necessary to be competitive and do acquisitions," says Moore. 24/7 Media's IPO performed exceptionally well, selling 3.5 million shares of common stock at an opening price of $14 dollars per share. By the end of its first day, 24/7 Media stock was up more than 44 percent and trading at about $20 per share. Today, the stock has more than doubled to about $43, and analysts are predicting a target stock price of between $75 and $100 per share.


Moore admits that running a public company is a challenging task. "You certainly are in a fish bowl -- there are no secrets," he explains. "But overall, in terms of our pursuit of our business, it hasn't had a dramatic effect on how we think or how we act."


Future goals of the company include establishing a presence in Latin America before the year's end. But for the most part, says Moore, 24/7 Media will continue to do the things that have made the company successful to date. That's a safe bet, considering Moore's strategies led the company to $20 million in revenues last year, a number that is expected to triple for 1999.


Company Snapshot:

Company: 24/7 Media

URL: http://www.247media.com

Founder: David Moore

Industry: Online advertising

Founded: 1997

Location: New York, N.Y.

Employees: 225

Revenue: $20 million (1998)


For additional reading on this topic, don't miss M&A Mania: Is It Right for Your Business?, Avoiding "Morning After" M&A Problems , Expand With New Market Development and What You Can Learn From Your Customers.


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