Engage to Buy MediaBridge for $268 Million

SAN FRANCISCO (06/13/2000) - With so many ways to advertise these days - outdoor, print, TV, cable, Web, e-mail - some retailers are longing for one-stop shops, and Engage has taken a step toward becoming just that.

Online advertising firm Engage, which competes with DoubleClick (DCLK) and 24/7 Media (TFSM) for online ad dollars, announced on Monday that it plans to acquire MediaBridge Technologies for 14.5 million shares of Engage stock, or about $268 million. MediaBridge, which helps advertisers translate traditional advertising campaigns into interactive online ads, would operate as a subsidiary of Engage, based in Andover, Mass.

"Online advertising spending keeps rising, and we see a lot of that money coming from companies who are not online yet," says Betsy Zikakis, VP of marketing. "We looked at MediaBridge because they have the software that will let us help these companies get online."

Many agencies devote special resources to online campaigns, leaving other media promotions to specialists in their respective fields. But Acton, Mass.-based MediaBridge's business is built on the idea of allowing advertisers and agencies to consolidate ad campaigns and keep a brand's advertising consistent across various media channels.

MediaBridge clients are retailers, media companies and ad agencies, among them Office Depot (ODP) , J.P. Morgan, DDB Needham, the Wall Street Journal, the Los Angeles Times and Rare Medium. Traditional media, retail and catalog customers use its software to access, store, manage and reuse "digital assets," or creative material from various campaigns. The company wants clients to implement marketing plans that the agency can then put into traditional campaigns as well as produce on the Web and blast out over e-mail.

Last week, Engage announced the launch of Engage Media, a move that combines CMGI (CMGI) 's Adsmart, Flycast and AudienceNet divisions into one entity to give clients a single contact person to buy media through. Monday's acquisition could strengthen Engage's appeal among companies that are eager to advertise online but are still struggling to convert their offline ad collateral into Web ad material.

However, the cost of the technology could prevent some clients from signing up for its services. MediaBridge consults with various technology companies, but it charges a pretty penny for doing so - often in the range of $250,000 to $1 million; Zikakis said Engage wouldn't be making any pricing changes until the MediaBridge deal closes.

Dot-coms, many of which are already sinking into the red thanks to exorbitant advertising campaigns, might be turned off by the expense of cross-media marketing, but some companies are already exploring ways to solve this problem.

IXL, for example, is developing an initiative called COPE (create once, publish everywhere) to address advertisers' need to leverage digital content across different media.

MediaBridge has 185 employees and had revenues of $17.8 million in 1999. On Monday, shares of Engage fell $1.56, or 8.45 percent, to close at $16.94.

Zikakis said the deal is expected to close in September.

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