At Home said on Friday it agreed to acquire privately held Narrative Communications for about US$89 million in stock, a move that could give At Home more expertise in producing compelling banner ads for online sites.
At Home plans to use Narrative's Enliven software to build a standard for interactive advertising, including high-speed Internet access though cable-TV networks and regular modems, said Charles Moldow, vice president of sales and marketing for At Home's At Media division. A single standard for creating ad content would make it easier and cheaper for advertising agencies to create ads, Moldow said.
With Web advertising growing more interactive and complicated, companies are looking for a solution to keep production costs down. Advertisers have been frustrated by the need to create different versions of the same ads to accommodate different access speeds.
In addition, several issues complicate the production process, including incompatible software platforms and advertising reporting tools that require different configurations.
Narrative's software products, primarily its Enliven product, build and track multimedia Web ads. Advertisers can produce ads that play video clips, gather data from customers, and generate electronic commerce. Companies like Proctor & Gamble and Amazon.com are some of Narrative's customers.
"Enliven is bigger than just the proliferation of rich media," said Drew Ianni, online advertising analyst with Jupiter Communications. "On the back-end it does network management, reporting, and ad-serving. With that, At Home hopes to have the creative and ad management standard for the digital set-top box."
But the reality of a unified advertising market for both narrowband and broadband Internet access may be years away, said Ianni. He said that he believes At Home's primary interests lie in using the Narrative acquisition to build a standard for broadband advertising through cable modems and set-top boxes.
"It’s incredibly expensive for an agency to produce ads for all the different standards," said Richard Hoy, vice president of marketing for Tenagra, a company that builds Web advertisements. "Standardizing could make for some incredible cost savings."
Under terms of the agreement, At Home (ATHM) will acquire all outstanding shares of Narrative in exchange for between 1.34 million and 1.55 million shares of At Home common stock, according to Narrative officials. Based on the closing value of At Home’s stock on Thursday, the companies expect the deal to be worth about $89 million. The transaction is expected to close in late December 1998 or early January 1999.
Narrative will continue to provide its existing customers with its advertising software products, and will not restrict use to the At Home network, Narrative officials said. At Home does not want to expand its role as a producer of advertising content, said Moldow.
