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July/August 2006 Issue: Page 120

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Changes at CJ may signal a bigger shift in behavior at ValueClick.

ValueClick may have made Business Week's list of 100 "hot growth companies" to watch as number 55, but the Westlake, California, company seems to be having more than a few problems with its Commission Junction business.

People at CJ are leaving in droves. Many of these departures are high-profile executives. The body count is rising faster than a summer blockbuster movie. The latest one to bid adieu to CJ was COO Jeff Pullen, who started as CJ president and CEO and stayed on when the company was bought by ValueClick in 2003.

Todd Crawford, vice president of sales; Elizabeth Cholawsky, senior vice president of marketing and product development; and Celine Takatsuno, director of strategic relationships, along with a host of others have all left over the last 9 months or so.

Some of the reported changes at the Santa Barbara-based CJ include not paying account reps overtime pay for putting in the 50 to 60 hours a week necessary to service their assigned clients.

CJ is also placing individuals on 30-day performance plans and then setting impossibly high standards that workers can't live up to. That way people end up quitting and the company doesn't have to shell out for workers' last two weeks' pay or unemployment.

Insiders at CJ say that cash flow is also a big problem. ValueClick claims to have $260 million to $270 million in the bank, but reportedly all of that is earmarked for more acquisitions rather than operations.

Many are saying that the huge organizational shift and change in managerial focus is all being orchestrated by puppet master Tom Vadnais, who was named as CJ's president and basically takes over for Pullen. Vadnais, notorious for cutting costs by slashing workers, is currently the general manager of Commission Junction and Mediaplex, and a member of the ValueClick board of directors. Vadnais joined ValueClick in 2001 through its acquisition of Mediaplex, where he was president and CEO.

If all that wasn't enough, many are up in arms about CJ's Link Management Initiative (LMI), which forces affiliates to change links from HTML to JavaScript. Many are speculating that it's all part of a huge ValueClick play to become a behavioral targeting powerhouse.

But some were not amused. eBay pulled out of CJ's Link Management Initiative saying that it had been working on a new HTML tracking methodology of it's own. Executives at eBay claim it will be deployed prior to the holiday season.

Don't forget that eBay sells advertising and now has a strategic partnership with Yahoo, a market leader in behavioral targeting advertising.

Other key CJ accounts such as LowerMyBills.com and Zappos.com are reportedly also not thrilled with CJ and may be looking to go elsewhere.

But even amidst all the upheaval there are companies that want to be in the CJ fold. Take HP Shopping for example. Performics previously ran that program but recently, HP has abandoned its folks in the Windy City for those in Santa Barbara.

Not to be left out in the cold, the crew at LinkShare is saying "Arigato" as talk of Rakuten's NASDAQ IPO circulates. That could be good news for LinkShare President Steven Denton & Co., unless of course, Jeff Pullen resurfaces as the new CEO of LinkShare, which is one of the wild rumors making its way around the Net.

If you thought keeping up with CJ and LinkShare was hard, try keeping up with Google. It's not about the latest and greatest search technology – it's really all about the snacks and the perks. Don't underestimate the power of free towels in the company showers, on-site laundry service and dinners to go from Wolfgang Puck. It's all finally resonated with Microsoft's CEO Steve Ballmer.

Ever the company man, Ballmer, who refuses to buy iPods for his kids and reportedly insists they not use Google, is spearheading Microsoft's effort to boost employee morale as it battles for talent with Google and other recent start-ups. Sounds like 1998 all over again.

Speaking of time warp, or maybe just warped … no column of mine would be complete without a nod to my pal Patrick Byrne. The Overstock Chairman and CEO was at it again last month when he declared himself "delighted" to see his company get a government subpoena. "I may be the first CEO in history to celebrate receiving an SEC subpoena. Some of the requests suggest the whispering of the blackguards, but I remain unconcerned about their hokum," Byrne said in a press release issued by OverStock. Not only that, but the headline on that press release read: "Overstock.com Celebrates Receipt of SEC Subpoena."

I'm not sure why Byrne would be celebrating a subpoena that requested, among other things, all documents relating to the company's accounting policies, targets, projections, estimates, recent restatement, new technology systems and their implementation, and communications with and regarding analysts. Party on Patrick.

Meanwhile, contact me if you've got any hot industry gossip or juicy information. I want the skinny and if I use your tip in the next column, I'll send you a Revenue T-shirt. Email me at TheSpider@RevenueToday.com or call the hotline directly at 415-732-7456.

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