1Q profits one-up scrutinous storm

Even amidst a near-doubling of 1Q profit, ValueClick faces somber speculation that its lead generation business is under FTC watch for improper practices, reports Media Post.

First quarter revenue for 2007 was $156.9 million, a 34 percent increase from the same period in 2006.

With the recent Google/DoubleClick and Yahoo/Right Media deals, in addition to the Microsoft bid for 24/7, online advertising is seeing increasingly competitive waves. With those waves come closer scrutiny.

Analyst Jordan Rohan of RBC Capital Markets calls ValueClick's growth "unsustainable," citing the company's low-brow lead generation tactics. These include use of the word "free" when multiple purchases are required. ValueClick also implements lengthy surveys to harvest email addresses for resale without sufficient disclosure.

Rohan's report includes three lead-generation sites he believes uses "overly-aggressive marketing practices" under existing Interactive Advertising Bureau and Direct Marketing Association guidelines. These are www.eatfreeandbemerry.com, www.freelawntractor.com and www.pinkphone4free.com.

In a bulletin posted this week, Stanford Group noted lack of evidence in Rohan's ValueClick assertions but still believes "the practices being investigated could negatively impact ValueClick's lead generation business."

ValueClick denies awareness of imminent legislation for "aggressive" lead generation tactics. Shares of the company fell 3 percent, or 88 cents, in extended trading.