Commission Junction’s parent company,  ValueClick lost almost 20% of its value this week after announcing poor Q2 results. The only bright spot seemed to be their retargeting , with expectations of new revenues from the dismantling of Google Affiliate network being totally downplayed.

Wall Street analysts, Needham & Co. said:

“We are downgrading ValueClick to HOLD from a BUY due primarily to a slowdown in its key Media business. The Media revenue growth slowdown results from two factors: increasing competition from Demand Side Platform (DSP) companies and execution issues. Additionally, we are also less optimistic about the incremental revenue opportunity provided by Google’s departure from the affiliate networking market.”
Translation: we don’t expect CJ to be able to make any money out of GAN’s old clients, and our display business is being eaten up by programmatic buying on demand-side platforms. So we are now all about retargeting via Dotomi.

The earnings release didn’t contain much that was of interest but reports on the follow-up analyst’s call were more revealing:

“Analysts were a tad obsessed with Google Affiliate Network revenue. Giuliani, the CEO, let out a clue to the potential of these affiliate advertisers by saying they didn’t get the service level at Google that they do at ValueClick’s own Commission Junction. Hence, the pricing potential of the $30 million Google Affiliate Network business that ValueClick inherited is weak. It may be time to start thinking GAN revenue is inconsequential for the overall growth of ValueClick.”

ValueClick – and CJ – are still big companies of course, but a 20% drop in market capitalization happens for a reason. It’s hard to see how retargeting on its own can drive the sort of growth that will keep Wall St happy. Watch this space.

More here.