2 firms joining to win more Net ads

e.magination is merging with GoldNet Marketing


February 22, 2000|By Mark Ribbing | Mark Ribbing,SUN STAFF

As anyone who has used the Internet lately can attest, advertising seems to be everywhere online. At many Web sites, the first item to show up on the monitor is a banner advertisement, the little rectangle at the top of the screen selling anything from financial advice to Caribbean cruises. Ads often show up on the sides and at the bottom of the screen, and sometimes even pop up unbidden.

Today, two Baltimore companies are joining forces to grab a larger share of the Internet-advertising business.

e.magination network llc , located in Canton, was already involved in several different aspects of online marketing, including consulting and the development of Web-site features such as archives and the "shopping carts" where users can keep track of the items bought on a given visit.

However, e.magination did relatively little banner-ad business.

That's why it's merging with downtown-based GoldNet Marketing, a company that focuses on such work. The merger is effective immediately; the combined company will operate under the e.magination name.

GoldNet's two top officials, President John Zocco, 26, and Chief Executive Officer Jason Goldsmith, 24, will together get up to 10 percent ownership of e.magination, depending on their division's financial performance over the next year and a half.

When asked if he's nervous about racking up enough sales to gain the equity share, Zocco said, "We think that this is going to be challenging in a way, but we're very excited and very confident it's going to happen."

GoldNet, which was founded in 1997 and has 10 employees, had about $3 million in sales last year, including accounts with some high-profile Web sites such as Priceline.com. e.magination, which counts the Department of Justice and Sylvan Learning Systems Inc. among its clients, has 70 workers and had 1999 sales of roughly $8 million.

e.magination Chairman Bruce R. Spector, 47, a veteran of the cable-television and radio industries, said price margins in GoldNet's industry are far lower than those in the Web-site-development industry where e.magination dwells.

Spector said this is why GoldNet could get only 10 percent of the combined company when it accounts for about one-third of projected sales.

Spector expects the newly combined companies to each double their sales from last year.

To accommodate the anticipated growth, e.magination is looking for 30,000 to 50,0000 square feet of office space in Baltimore.

Spector said more mergers or acquisitions are "absolutely" in the works for e.magination, but he was less committal about the likelihood of an initial public offering.

"There's nothing in the works," said Spector. "A lot of companies do an IPO because they need the money, but we're already profitable."

Gary H. Arlen, an interactive-media analyst based in Bethesda, said big national advertising firms are gobbling up ever-larger shares of the Internet advertising pie.

However, he added that there is still plenty of room for smaller companies like e.magination.

"As the Net keeps finding new life -- there could still be room for regional players," said Arlen.

"The market is going to continue to get larger, no question about it."

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