Another online marketeer feels the pinch

NEWS The online advertising industry suffered another severe knock-back today as marketing company Engage announced it was pulling out of the media business. The company is the most recent victim of the online advertising world, which has seen revenues dry-up. But the company's decision to put its media services up for sale - a division which includes a profiling service and a research unit - and concentrate on the technology is a serious set-back for the online market as a whole. Engage is one of the few online marketing companies to recognise the importance of measuring more than just click-throughs. Its technology enables companies to quantify the effectiveness of advertising on the behaviour of consumers by asking users questions about their experiences and brand awareness. The company is one of the leaders in its field in the UK. One of its closest competitors is interactive marketing company 24/7, another company that recently suffered at the hands of a flagging advertising industry. Its parent company withdrew funding for its European operation last week, which reported second quarter net loss of 35 cents a share. Rebecca Ulph, analyst at Forrester Research, explained that Engage understands the importance of quantifying more than just click rates - something that has the potential to boost the credibility of online advertising. "It's a shame for the market as they're pretty good at what they do. The technology has the ability to demonstrate how useful advertising is," she said. Ulph added that disposing of the business was a good move for the company in the short-term. The question is, who would be interested in buying this kind of media division during such lean times? "Possibly one of the very large international traditional advertising agencies who are prepared to take a risk for at least the next year," said Ulph. However, Ulph believes that these types of companies tend not to understand the importance of what Engage does.