Ad serving tactics upset NZ players

By ADAM GIFFORD

New Zealand website publishers and advertising agencies are upset at the way online advertising giant DoubleClick has effectively shut its Australian rival Sabela.

DoubleClick bought Sabela's technology and client list from owner 24/7 Media Technology Solutions on Friday.

Sabela, which electronically pasted banner advertisements to websites, was a popular choice among New Zealand users. Now they have 25 days to shift to DoubleClick or find some other way to serve up ads.

Sabela founders Gour Lentell and David Turner sold to 24/7 in January last year for $US67.5 million ($160 million), mainly in shares, after the venture capital they needed to expand dried up in the face of a patent infringement suit from DoubleClick.

When 24/7's share price dived, the pair started talking buyback.

"We were at the 11th hour and 59th minute with negotiations, ready to buy Sabela back and keep it running with significant financial support to become a major competitor of DoubleClick," Mr Lentell said.

Instead, DoubleClick swooped in what Mr Lentell said was "a take-out strategy that leaves DoubleClick with a near-monopoly in the Australian market."

John Stewart, managing director of Auckland online advertising specialist Interaction, said consolidation in the marketplace was inevitable.

"There are players out there who want to be dominant and one way is by gobbling up the competition," he said.

In the short term there would be some inconvenience, "but once the dust is settled it may have little impact."

Polly Foot, the online strategist for the Media Online division of Colenso BBDO, said Sabela had worked hard to support the New Zealand industry.

"They provided functionality we found particularly useful, such as post-click tracking," which could be used to calculate the cost per sale of online campaigns.

"They also had a flexible attitude. Because they were Australian, they were prepared to put time and effort into solving problems."

She said a big concern was latency - the time it takes to serve up an ad.

Wilson and Horton Interactive manager Mark Ottaway said slow response time from the Australian servers was why the New Zealand Herald's websites ended their contract with DoubleClick last week.

They now uses an in-house ad server with software from another United States company, Engage.

"We weren't happy with the support or the product. The nearest support is in Australia, but we were often bounced to Hong Kong or the US, and we found that a problem," Mr Ottaway said.

"The site is much faster now with the servers downstairs."

DoubleClick Tech Solutions regional director Ralf Hirt was in Auckland yesterday talking to Sabela customers.

He said DoubleClick had bought only the intellectual rights to the Sabela technology and access to the client base.

"We did not buy the company. We have offered clients a transition to our service within a specific period of time to ensure they can continue serving ads, because 24/7 will shut down the Sabela service."