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Yesterday it was announced that affiliate network Digital Window has purchased buy.at from AOL, in a deal that may signal the start of a wave of consolidation in the affiliate space.

I caught up with Digital Window CEO Kevin Brown to discuss the deal in more detail.

Why purchase buy.at? Why does this make sense for your business?

Buy.at has been a fierce competitor of Digital Window for many years which is one of the reasons the business caught our eye when it went to market. We have a tremendous amount of respect for what Buy.at achieved and stands for and we feel we share a lot of core values. It has an innovative technical team, talented account managers and an impressive portfolio of complementary clients. 

The deal will allow us to leverage the rich expertise in both businesses to deliver exciting and ground-breaking solutions for the market at a much more rapid pace. Together with Zanox, our European partners, and now our Buy.at colleagues in the US, we can offer clients a global solution with industry leading technology and quality client service in all core markets. 

Who instigated the deal - Digital Window or AOL - and why?

AOL’s core strategy has changed since their acquisition of Buy.at and it was therefore something they could not commit to focusing on in the long term. They went to market to find a company with a strong track record in the affiliate industry to drive Buy.at forward. 

This coincided with Digital Window seeking acquisition opportunities to expand. We have a strong appetite to succeed and the infrastructure already in place to consolidate our position as the UK market leader.

How much did you spend on buy.at and is this an all-cash deal?

It was an all cash deal for 100% acquisition of Buy.at for an undisclosed amount. 

Did you pay less for buy.at than when AOL bought the company?

Unfortunately all details concerning the price remain undisclosed.

Will the deal extend your services, or tools, or is it mainly about scaling up (acquiring new merchants and affiliates)?

The deal certainly has the potential to enhance the existing solutions of both networks. To give just a few examples, our brand protection tools Snoopy and Agent99 have the capacity to be immediately rolled out across the Buy.at platform providing clients with additional security; ShopWindow and ShopCentral will benefit from a much larger product base in particular ShopWindow Mobile which will now contain all UK mobile networks in addition to all prominent resellers; Buy.at’s charity web shops proposition can expand to include many of Affiliate Window’s exclusive partners. 

These benefits sit alongside the more obvious advantages of a much broader affiliate and merchant base. We are anticipating the additional development resource available in Buy.at’s Newcastle office will allow us to bring new tools to the market at an accelerated pace. We are excited at the prospect of combining the Digital Window and Buy.at Product Teams as both contain some of the most innovative talents in our industry. 

How will the deal affect buy.at's client base?

We anticipate there to be very little disruption if any. The technology stays the same as do their usual contacts so we don’t see any need for merchants or affiliates to have any concern. The switch for the London based Buy.at staff from AOL’s offices to Digital Window’s new offices is already complete and Newcastle is running business as normal. 

After this initial settling in period we see Buy.at’s partners being able to share in some of the DW tools and methodology and vice versa. The key is taking the best on offer from both networks and making this available to all of ‘our’ partners. 

Will all of buy.at's staff be retained as part of the business, or will there be redundancies? 

Several members of the Buy.at staff opted to take the Voluntary Separation agreement which was on offer from AOL prior to any acquisition. This will continue as planned although some have highlighted that they would be keen to stay on and be part of the new DW/Buy.at opportunity. There are no plans for redundancies at present. We will of course be assessing the needs and requirements for the Buy.at business over the coming months to ensure we have all the necessary resources in place so this may involve some restructuring.

Will you be consolidating the buy.at and Affiliate Window offering, and combining the services, or maintaining two separate brands?

Initially we will maintain the two separate brands but for practical reasons this doesn’t make sense long term. Luckily, the Buy.at culture and organisational structure is similar to DW so merging would be an easier process but we are keen to do this naturally, we see no reason to rush it. 

Buy.at has a great track record as a network and it’s fair to say that under AOL it may have lost its way. We have already seen a remarkable transformation as the staff realise that this isn’t so much a change in ownership but an opportunity to take ownership and continue building on the foundations of being involved with the UK’s largest performance based marketing network. 

Is consolidation a sign of difficult market conditions in affiliateland?

No, I think it's actually quite the opposite. Consolidation signifies considerable interest in the affiliate model and the importance placed on the UK market, not to mention that consolidation requires a significant amount of investment and this kind of M&A activity can only occur if the market contains players that are profitable.

What current trends are you seeing in the affiliate market?

It's still very much the usual suspects, increased consumer awareness of the likes of vouchers and cashback, plus merchant interest in areas like multi-attribution and behavioural targeting. There is also a shift towards a need for greater control and I believe industry bodies like the IAB’s, Affiliate MarketingCouncil will become even more pivotal in coalescing opinion and facilitating rational guidelines.

Internationalisation is also a growing trend for those brands who aspire to market cross borders, but having the reach is only one part of the equation. Service providers need to ensure that their service offering is of a suitable standard in every region whilst merchants need to appreciate that rolling out a UK site into a new territory can suffer if it does not acknowledge subtle but important regional requirements and differences.

Chris Lake

Published 2 March, 2010 by Chris Lake

Chris Lake is CEO at EmpiricalProof, and former Director of Content at Econsultancy. Follow him on Twitter, Google+ or connect via Linkedin.

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Comments (2)

Jonathan Beeston

Jonathan Beeston, Director, New Product Innovation, EMEA at Media & Advertising Solutions, Adobe

Sounds like it was a steal at $17 million; AOL paid $125 million.

over 6 years ago

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almost 4 years ago

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