Arizona Firm Agrees to Buy AdZone Interactive

Scottsdale, Ariz.-based Executive Help Services has signed a letter of intent to acquire online ad tracker AdZone Interactive, in a deal valued at about $10 million.

Pending shareholder approval, Executive Help would issue nine million shares of its common stock and 9,000 preferred shares in return for the Long Island-based firm, which also has offices in Manhattan.

The merged company would be called “AdZone Research.”

Executive Help also said that it would cancel a million shares of its stock and provide $250,000 to Long Island-based AdZone’s portion of the merged company, in addition to additional funds of an unspecified amount that it plans to provide.

AdZone’s chief executive, Charles Cardona, and president John Cardona would continue in their current positions if the merger goes through. Cardona said he expected the merger to close within the next 90 days.

Cardona said that following the acquisition, AdZone Research would look into acquiring unspecified other companies “in our area that would help supplement our existing products.”

Similarly to companies like Competitive Media Reporting’s CMRi unit, AdZone’s system monitors Web sites’ advertising to determine revenues and spending. Like competitors, the firm compiles advertising activity, estimated expenditures, creative, brand, category and other information, and produces reports as competitive intelligence.

But AdZone typically reports figures much higher than its competitors. For instance, the company recently reported that it found industry-wide ad revenue for the month of December came to be about $1.785 billion. New York-based CMRi, on the other hand, reported last week that it calculated online ad revenues to be about $2.9 billion — for all of 2000.

One reason for AdZone’s higher figures could stem from its methodology: the company’s NetGate system bases estimates straight off the rate cards of the 2,000 publishers it monitors. CMRi, on the other hand, computes spending using a proprietary algorithm, based on 300 Web publishers’ advertising, spokespeople told Internet Advertising Report last week.

Since advertising costs often differs substantially from what’s printed on rate cards — due to discounting or barter agreements — CMRi said its sampling/statistical method provides an accurate picture of Web ad spending.

But Cardona countered, saying that AdZone’s methodology was more correct — and more fair — than competitors’.

“We’re the only company out there that audits the Web,” he said. “Our competitors either measure a fraction of the sites that we do or use a sampling technology that has gross inaccuracies.”

“Our focus is to report the estimated ad expenditures, and the only fair way to compare Brand ‘A’ and Brand ‘B’ is to use a rate card methodology,” Cardona continued. “If we don’t then we’re guessing — there’s no way to determine whether a discount is given to one company or another. It’s the only way of finding out the value of advertising. We have to estimate on the most statistically sound model that we could design.”