ValueClick Exits Lead-Gen? by Chris Trayhorn, Publisher of mThink Blue Book, February 3, 2010 ValueClick this week announced the divestiture of their lead-gen business unit, Web Clients. The stated reason is that ValueClick wants to stay focused on their online marketing services and technology businesses. That’s fair enough, but a look at the history of ValueClick and Web Clients raises questions in the minds of the curious. Consider this: In 2004 Web Clients’ revenues were $59 million. ValueClick bought the company in 2005 for $141 million. Reports say that the undisclosed buyer will now, just four and a half years later, be paying $45 million. That’s a net loss of almost $100 million. But look closer and one also sees from an SEC filing that the $45 million is being paid in the form of, “a five-year note bearing interest, with payments amortized over a 10-year period, and a balloon payment at the end of the fifth year.” Additionally the filing notes that the note is secured on the assets of the purchasing company. In plain English, this appears to mean that ValueClick has essentially given Web Clients to somebody and said, “pay us back if you make some money out of cashflow.” Which is an interesting thing to do with a business that was worth $141 million four years ago. ValueClick, it seems, just wanted to get out of the lead-gen business. As a company they’re in great shape: they’ve got $180 million in cash and no debt. And their display and affiliate businesses are doing well. But clearly they don’t see lead-gen as a good place to be over the next year or two. Why that’s the case is the question. Kicking a $141 million business to the kerb indicates something more than a slight downturn. Was it the increased competition in the market, or heightened FTC oversight or simply the economic recession that led to a simple conclusion that there’s no longer good, legitimate money to made? Or something else? We would welcome the chance to interview a ValueClick spokesperson to answer these questions (call us!). Enquiring minds want to know. Filed under: Revenue Tagged under: Ad networks, affiliate marketing, affiliate networks, Co-reg, CPA networks, Industry Trends About the Author Chris Trayhorn, Publisher of mThink Blue Book Chris Trayhorn is the Chairman of the Performance Marketing Industry Blue Ribbon Panel and the CEO of mThink.com, a leading online and content marketing agency. He has founded four successful marketing companies in London and San Francisco in the last 15 years, and is currently the founder and publisher of Revenue+Performance magazine, the magazine of the performance marketing industry since 2002.