ValueClick Reports Display Revenue Boost in Q2

At a time when display advertising revenues are plummeting, ValueClick announced yesterday its display revenues have actually risen since the first quarter. However, during its Q2 2009 earnings call yesterday, the ad network company said overall economic weakness did have a negative effect on its business, driving profits down since Q2 2008. ValueClick also indicated its relationship with Google is a key component of its business.

“Our U.S. display business had a record quarter in terms of revenue and number of both new and total advertisers,” said ValueClick CEO Tom Vadnais. Display revenues rose 3 percent quarter-over-quarter to $32.4 million. According to Vadnais, the company benefited from falling prices for inventory bought through other networks, while behavioral targeting brought up its own prices. Vadnais also said the company saw an increase in eCPM rates during the quarter. Display in Europe was weaker due to the economic recession.

Last year, the company reported its display advertising worldwide rose 10 percent year-over-year, but display budgets began dropping toward the latter half of Q2 2008.

ValueClick is taking a vertical approach to its business, both in development of vertical display ad networks and content sites. Its pharma-centric AdRx ad network had “another good quarter,” according to the firm, which has plans to launch three new vertical display ad networks. The company also said it would develop vertical content sites in its comparison shopping and search segment to drive traffic and monetize search traffic. “A vertical site search traffic initiative is a direction we’ll take with ValueClick’s overall lead generation capabilities over time,” said Vadnais.

Vadnais also noted that the firm’s Google partnership will be a key part of ValueClick’s business going forward. “We are working in tighter collaboration with Google. This reengagement is a testament to our focus on running this business with traffic quality and value-added product offerings as priorities.” Google distributes AdSense ads through ValueClick’s network.

The firm’s lead generation and affiliate marketing units dragged down overall quarterly earnings. Lead gen revenues were $26.3 million, down 18 percent since the previous quarter. Perhaps affirming its focus on vertical-centric offerings, the firm attributed that decrease to increased demand for vertical lead generation specialists.

“Lead generation customers are getting more specific about wanting highly targeted type leads, smaller volumes of leads,” said Vadnais.

The company’s Commission Junction affiliate marketing revenues fell 7 percent, due to decreased retail and financial services spending. Yet, ValueClick saw strength in travel and stabilization in home and garden and apparel segments.

Despite disappointment in its lead gen unit’s performance, Vadnais said he believes the business is still viable. “I think it’s a very synergistic product to sell along with display,” he said. Still, he didn’t rule out selling the business if the right offer were made.

Overall, ValueClick’s Q2 2009 profit came in at $14.9 million, down from $16.5 million in Q2 2008.