AOL Buys Into Online Marketing

Online marketing suddenly looks like a red-hot industry. One day after online advertising company DoubleClick (Nasdaq: DCLK) announced a $1 billion deal to purchase market research firm Abacus Direct, America Online (NYSE: AOL) grabbed a bigger piece of the online marketing pie.

On Tuesday, AOL announced that it had acquired complete ownership of privately held Digital Marketing Services (DMS), which specializes in online incentive marketing programs and online custom market research. AOL had previously owned a majority stake of the company.

DMS Offers Rewards, Research Services

DMS is the exclusive provider of AOL’s incentive program, AOL Rewards. The company was founded in 1995 by AOL and the M/A/R/C Group. In addition to AOL Rewards, DMS developed Opinion Place, a leading online research service. Opinion Place allows marketers to conduct customized research through online surveys answered by AOL subscribers. Last year, DMS conducted more than 1.5 million online interviews for companies. Now, as a wholly owned subsidiary of AOL, DMS will develop rewards and market research programs for AOL’s various brands, including Compuserve, Digital City and ICQ. DMS founder Dennis Gonier will remain president of the company and will also become senior vice president in AOL’s Interactive Properties Group. “By moving the AOL-DMS relationship to the next level through this acquisition, we will strengthen our position as the leading provider of online marketing programs and online research services,” said Ted Leonsis, president of AOL Interactive Properties. “The AOL-DMS combination will provide a powerful alignment of resources and customized offerings for the audience and partners of each of our brands.” Busy Day For AOL America Online also expanded its e-commerce presence on Tuesday with a marketing deal with online pet food and supply retailer Petopia.com, which has become an AOL anchor tenant. In addition, AOL announced that it has acquired a 10 percent stake in China.com, which publishes bilingual Web sites in Hong Kong, Taiwan and China. AOL’s potential expansion into new e-commerce categories and other countries underscores the importance of its online marketing. As AOL continues to grow, DMS will likely be doing market research for a growing number of companies in a growing number of industries worldwide. Stock Impact The investment in China.com prompted Wit Capital to reiterate its buy rating on AOL. Shares of America Online gained 3-5/8 to 94-1/8 on Tuesday. Of course, the stock fell 9-3/8 on Monday, and AOL is still more than 40 percent off its all-time high.

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