Engage leaves local market in the lurch

Publishers and advertising agencies are reassessing their web strategies after ad server maker Engage's decision to close its Australian and Asian offices.

Engage's New Zealand customers must now call Raleigh, North Carolina, for support.

And the pullout could affect deals yet to be finalised.

While it would seem to leave the ad server market to bureau service Double Click, the local industry is still upset over the way Double Click bought Australian rival Sabela in May and closed it, giving customers a month to switch.

"The letter they sent to Sabela's customers was not diplomatic - they came in with the view they held the upper hand," said Nigel Butler, commercial affairs manager for TVNZ site nzoom.co.nz.

At the time, nzoom was just starting to migrate to Sabela from an earlier product, Spin Box, which it ran from its own servers.

Mr Butler said that faced with what it felt were unreasonable demands, and aware of concerns about Double Click's service levels and latency - the time it takes for ads to be served from the bureau to a site - nzoom showed Double Click the door and went back to Spin Box.

"We are in negotiations with Engage now, so this decision will play a significant factor in us concluding a contract," he said.

He said the bureau model did not suit publishers, and nzoom had a "moral objection" to paying Double Click to run house ads.

"With a bureau, eventually you pay based on how successful you are. With the internet, traffic grows a lot faster than revenue, so the more successful you are, the more you pay while waiting for revenue to catch up. That's why we want something in-house."

He said it could be possible to develop an in-house server, linking in to the Vignette content server.

"One thing we are exploring with Engage is putting the source code into escrow with a trusted third party, so if Engage ceases to exist we can access the code and maintain the system ourselves."

Mr Burton said a major problem facing the New Zealand industry was the low level of internet advertising here - about 0.5 per cent of total advertising spending, totalling about $7 million.

In Australia, about 1.5 per cent of the advertising budget goes online; in the United States, the figure is closer to 3 per cent.

"Once New Zealand gets to the level of the US or even Australia, most large players will be breaking even or making money," he said.

INL's online arm, stuff.co.nz, this week started its move from Double Click to Engage's AdBureau.

Stuff internet sales manager Fiona Reid said she had spent two frantic days on the phone with Engage getting assurances that sufficient resources and support would continue.

"Our concerns have to a large extent been met, but it's wait and see, and we will be running both systems for at least for the next two weeks."

Ms Reid said Stuff felt Double Click's pricing was too steep, its reporting was suspect and differed hugely from internal tracking, and Engage was offering superior features.

"The reasons we have gone to Engage are the same today as they were three months ago.

"The contract is in place and if our expectations aren't fulfilled we will look at alternatives, but must give them our best shot."

The New Zealand Herald site has run Engage in-house since March, and manager Mark Ottaway said it would continue to use it.

"We have found the software outstanding for flexibility, and we have come out of the installation period, where reasonable support was needed," Mr Ottaway said.

"Engage is planning to handle support out of the United States, and since so much is done these days by phone and e-mail, it should not have too great an effect."

Engage's departure could be an opportunity for the newspaper publishing software company Atex.

"We already have a distribution agreement for Engage for Asia-Pacific, and I'm talking to them to see what opportunities we can pick up and whether we should put support in place," said New Zealand manager Graeme Doak.

Polly Foot, the online strategist for the Media Online division of Colenso BBDO, said advertising agencies had different needs to publishers.

"The advertising side is more campaign based, whereas if you are a publisher you need to have something showing all the time," Ms Foot said.

She said most agencies went with Double Click.

"When Sabela was closed we went with Double Click because they provided us with the best information and it was hard to get information out of Engage."

As well as closing offices in Sydney, Singapore and Hong Kong, Engage cut 100 jobs and told the remaining 125 staff in its media division that their jobs would go if no buyer could be found.

Chief executive Tony Nuzzo said the company would concentrate on developing its Content Server and other software products.