TRADEDOUBLER – 2006 ANNUAL REPORT
TradeDoubler is a provider of solutions for internet marketing and sales and is an e-commerce B2B and B2C sales channel in Europe.
Our goal is to generate measurable sales results for our customers.
Leading companies in a variety of sectors have chosen TradeDoubler as their partner for performance-based marketing and sales.
Our business model is based on customers receiving payments for publishing advertisements on their websites. The payments are based on predefined actions performed by internet users in response to the advertisements, such as making an online purchase. The act- ions also include clicks or leads (user registrations).
TradeDoubler was founded in 1999 and has 351 employees in 18 European markets. The head office is in Stockholm and the company has 15 European subsidiaries. In terms of geographic presence and number of publishers, TradeDoubler is one of Europe’s leading per- formance-based marketing companies.
TradeDoubler AB Barnhusgatan 12 SE-111 23 Stockholm
Sweden
info@tradedoubler.com Tel +46 (0)8 40 50 800 Fax +46 (0)8 40 50 844 www.tradedoubler.com
Solberg • Printing: NRS Tryckeri • Photography: Ola Kjelbye, Christoffer Edling
Table of contents
Statement by the CEO 2 Statement by the Chairman 3 Vision, business concept, assets 4
Market 6
Business model 10
Customer structure 12
Geographic presence 14
Products 16
Technology platform 18
Employees 20
The TradeDoubler share 22 Report of the directors 25 Consolidated income statement 28 Consolidated balance sheet 29 Statement of Changes in Equity 30 Statement of Cash Flows 31 Notes to the consolidated
financial statements 32
Auditors’ report 49
Five-year summary 50
Corporate governance 52
Board of Directors 55
Executive management 56
TradeDoubler is a provider of solutions for internet marketing and sales and is an e-commerce B2B and B2C sales channel in Europe.
Our goal is to generate measurable sales results for our custom- ers. Leading companies in a variety of sectors have chosen Trade- Doubler as their partner for performance-based marketing and sales.
Our business model is based on customers receiving payments for publishing advertisements on their websites. The payments are based on predefined actions performed by internet users in response to the advertisements, such as making an online purchase. The ac- tions also include clicks or leads (user registrations).
TradeDoubler was founded in 1999 and has 351 employees in 18 European markets. The head office is in Stockholm and the company has 15 European subsidiaries. In terms of geographic presence and number of publishers, TradeDoubler is one of Europe’s leading per- formance-based marketing companies.
TradeDoubler is listed on the Stockholm Stock Exchange and the share is traded on the OMX Stockholm Mid Cap.
TradeDoubler in brief
Financial calendar Future reporting dates
Interim report for Q1 2007 25 April 2007 Interim report for Q2 2007 26 July 2007 Interim report for Q3 2007 26 October 2007
Annual General Meeting The AGM will be held in Stockholm
• an extensive pan-European network of advertisers and publishers
• extensive knowledge in online advertising
• a proprietary technology platform that supports the business model
TradeDoubler´s
most important strategic assets are
3
Significant events in 2006
Financial
• Revenue rose 61 per cent to SEK 1,744.1 million (1,085.0)
• Gross profit rose 53 per cent to SEK 480.3 million (314.5)
• Operating profit (EBIT) was SEK 190.1 million (44.0)
• Profit after tax totalled SEK 140.4 million (38.9)
• Reported earnings per share were SEK 4.93 (1.38) after dilution
Operational
• All geographic markets continued to show strong growth during the year
• In 2006, 93 per cent of Group sales were outside Sweden
• The number of advertisers rose from 1,045 to 1,276 in 2006 and the number of publishers increased from 100,384 to 118,098
• TradeDoubler started subsidiaries in Portugal and Russia
• td Talk was launched in the latter part of the year, and uses pay-per-call technology to integrate online advertising with telephone selling
IFRS
SEK thousands 2002 2003 2004 2005 2006
Revenue 137,466 259,607 597,744 1,085,047 1,744,080
Gross profit 59,619 94,383 188,531 314,480 480,297
EBITDA –6,243 13,310 58,167 48,118 196,474
Operating profit (EBIT) –8,982 10,690 55,501 43,951 190,066
Net profit –8,58 7,450 62,308 38,852 40,386
Assets
Total non-current assets 4,361 4,436 21,243 18,365 27,339
Total current assets 66,878 121,198 281,361 515,441 887,365
Balance sheet total 7,239 25,634 302,604 533,806 94,704
Total equity 20,207 28,048 93,488 188,562 348,965
Equity ratio (%) 28 22 31 35 38
Return on equity (%) –46 31 103 28 52
Earnings per share (SEK) –0.36 0.31 2.55 1.57 5.13
Average no. of employees 64 80 130 222 308
TradeDoubler 2006 Annual Report
Significant events in 2006
radeDoubler had an eventful first full year as a listed company, characterised by continued strong growth and excellent profit development.
Revenue grew by 61 per cent to SEK 1,744 million and gross prof- it by 53 per cent to SEK 480 million (314.5). Earnings per share in- creased to SEK 4.93 compared to SEK 1.38 in 2005. We are pleased with both our operative and financial development during the year.
The reason for our success in continuously creating customer value as well as strong profit quarter after quarter lies in our business mod- el, and in the strong, broad-based skills in the organisation.
One of TradeDoubler’s great strengths is that our business model is based on creating measurable value for customers – and this in- sight is what has helped TradeDoubler become an European leading supplier of digital marketing solutions.
By the end of the year we had 1,276 active advertisers and 118,098 active publishers, which represents a major opportunity to grow our revenue by expanding our business with existing customers.
Our customer base also provides stability and spreads risk as we have many contacts with a large number of customers and are not dependent on the development of individual customers. It also ap- pears that advertising is gradually becoming less seasonal, which helps stabilise our revenue during the year.
Another of our great strengths is our employees and it is their hard work meeting customer requirements on a day-to-day basis that is driving our development. Maintaining customer focus is a ma- jor challenge in a company growing as rapidly as TradeDoubler – 100 new employees joined the company in 2005 and as many again in 2006. Most recruitments have been to local sales and support func- tions in TradeDoubler’s 18 markets. We are also expanding our prod- uct range, largely by providing customers with increasingly sophisti- cated tools to help them more closely control and monitor their online advertising investments so they can further improve the pro- ductivity of their investments.
With a steadily growing market, a corporate culture based on the belief that nothing is impossible, a presence in a growing number of European markets, and a broad network of advertisers and publish- ers, TradeDoubler’s exciting journey has only just begun.
Stockholm, April 2007
Martin Henricson
President and CEO until February 2007 believe that with the knowledge and experience we have across
the entire organisation, including the management team, we are heading towards an exciting future. We have an unsurpassed pres- ence in the pan-European market and many of our products and services are market leaders in the 18 countries where we operate. I hope that in time we can increase our geographic spread and our range of products and services to meet the demands of our advertis- ers and publishers.
Stockholm, April 2007
Will Cooper
CEO since March 2007
I T
2006 Annual Report
Statement by the CEO
Statement by the CEO
3
radeDoubler is facing a bright future, with a number of factors in its favour – internal strengths as well as those related to market development. In January 2007, AOL made an offer for TradeDoubler.
The Board deemed the offer to be favourable and decided therefore to recommend it to shareholders for consideration. When it became clear the offer had not been accepted by sufficient shareholders, it was withdrawn by AOL. We are now putting this process behind us, and can once again look ahead and go on with the work of develop- ing TradeDoubler.
We have established a unique position in Europe with a broad network of advertisers and publishers. We have a strong business model whose success is based on our revenue largely being gener- ated as commission on sales. This means our customers know our systems generate value for them: value that they are prepared to pay for. We also have a unique technical platform that supports our busi- ness model. Its scalability makes it possible for us to expand quickly and efficiently into new countries.
In addition, there is an underlying strength in the development of the market. Despite the powerful growth of the internet, it is still underutilised as a marketing medium. Most advertisers have still to adapt their marketing budgets to reflect the place where people really gather information and make their purchasing decisions – on the internet. Increasingly, however, many companies are realising they can increase the effectiveness of their marketing and sales – and thus their revenue – through greater use of the internet as a channel.
TradeDoubler’s position and offer are at the centre of this develop- ment.
We will continue to exploit available growth opportunities, on a product as well as a geographic basis, to increase our revenue and profitability and thus deliver value to shareholders. Our expansion in Europe has been done gradually and we still have white spots on the map. There are other countries like Austria, Hungary, the Czech Re- public, Slovakia, Slovenia and others which have the necessary broadband penetration to make market entry interesting. We have also now come to the point where we are evaluating opportunities to expand outside Europe. Asia, US and South America are possible options, with new businesses being started in the wake of our cus- tomers’ international expansion or through the acquisition of estab- lished companies.
We believe that our presence in a growing number of markets in combination with an expanding product range, reliable technology and most importantly, the broad knowledge inherent in the com- pany, equips us well to take advantage of the opportunities that will emerge in the next years in this rapidly growing industry.
Stockholm, April 2007
Kjell Duveblad Chairman of the Board
T
TradeDoubler 2006 Annual Report
Statement by the Chairman
Statement by the Chairman
2006 Annual Report
Vision, business concept, assets
Vision, business concept, assets
Vision
Mission
Assets
To redefine the marketing landscape.
We create results by improving your digital marketing through our expertise, networks and technology.
TradeDoubler’s three most important strategic assets are:
• pan-European network
• knowledge
• technology platform
5
TradeDoubler 2006 Annual Report
Vision, business concept, assets
Vision, business concept, assets
TradeDoubler has the following strategy for reaching its long- term goals and for generating profitable and measurable sales results for customers:
• Increase revenue from existing advertisers
• Expand and strengthen our publisher network
• Upgrade our products and add new system functionality
• Actively seek new advertisers
• Develop new products and services
• Extend our international presence
The basis of our business
Developing current advertisers, products and markets
TradeDoubler aims to expand its business and establish close coop- eration with existing advertisers by offering a broad range of prod- ucts and services. We work constantly to develop and enhance our existing technology platform by upgrading existing functions and adding new ones. This ensures that our products remain competitive at all times. TradeDoubler strives to give advertisers access to in- creased advertising space via our continuously growing publisher network.
Growth through new customers, products and markets
Our aim is to expand our advertiser base across all sectors, generally
as well as in selected markets. The td Talk product launched in late
2006 is ideally suited to marketing and selling more complex servic-
es, such as financial services and areas such as B2B which have a
longer customer selling cycle. In the campaign area, TradeDoubler
has continued developing its ad network so that it can operate ef-
fectively in sectors such as fast-moving consumer goods (FMCG) and
Automotive. Advertisers in these segments traditionally require more
than just direct response. Introducing and developing these prod-
ucts gives us the opportunity to increase sales to existing customers
and sectors, as well as providing greater opportunities to reach com-
pletely new customers and segments.
2006 Annual Report
The market, drivers and competition
Market
Internet access and broadband penetration are strong drivers be- hind the growth of online advertising. In Europe, household access to the internet and broadband adoption continues to increase, re- sulting in people spending more time online. This trend has been apparent for a number of years and is expected to continue in 2007, leading to increased internet advertising and e-commerce.
The EU market for internet advertising is less saturated than the North American market and with more than 450 million inhabitants, the EU has a greater population base than the USA and thus consid- erable growth potential. In contrast to the highly consolidated US market, the EU market is extremely fragmented with major regional differences in terms of infrastructure for internet and broadband as well as for investment in internet advertising.
According to PointTopic (September 2006), Western Europe has a higher broadband penetration from a global perspective with 27 per cent broadband subscribers compared to 24 per cent in North America. The Netherlands, Denmark, Switzerland, Finland, Norway, Sweden and Belgium all have higher broadband penetration than the US.
Growth in internet advertising
The internet has become an effective tool for advertisers to reach their target markets. eMarketer estimates that internet advertising in Western Europe will be USD 7.5 billion in 2007, compared to USD 6.0 billion in 2006. As much of the internet advertising mediated by TradeDoubler leads to e-commerce, the growth and acceptance of e-commerce is clearly important.
Growth in e-commerce
According to Forrester Research, the number of Europeans who shop on the internet is expected to grow from 100 million to 174 million over the next five years. During the same period, annual average con- sumption per e-commerce buyer will increase from EUR 1,000 to EUR 1,500. European e-commerce is expected to increase to EUR 263 mil- lion by 2011, with travel, clothes, food and electronics representing an annual increase of more than EUR 10 million.
Total European e-commerce in the consumer chain has increased significantly over the past five years and is reported by Forrester to be EUR 102.3 billion in 2006. The average annual growth rate in Europe is expected to be 21 per cent between 2006 and 2011.
Leisure travel is expected to continue to account for the major- share of revenue but will eventually start to lose share to some ex- tent. Clothing is expected to increase from EUR 10 million in 2006 to EUR 31 million by 2011. Forrester predicts the mail-order industry will be a winner in the internet market due to its extensive knowledge in customer relationship building.
Three years ago, Forrester estimated that Germany’s e-commerce would surpass Great Britain’s by 2008. The British e-commerce mar- ket is however holding its lead despite Germany having more e- commerce consumers. Forrester estimates that British e-commerce consumption will outstrip the US. British e-commerce consumption is expected to increase from EUR 43 million in 2006 to EUR 76 million in 2011, or 29 per cent of total European e-commerce consumption.
Germany is expected to be the second largest with an increase from EUR 22.9 million in 2006 to EUR 62.3 million in 2011, and France to be the third largest.
The internet advertising market is characterised by technical change,
development of industry standards, constant introduction of new
products and services, and changing customer behaviour. Internet
marketing has shifted focus in recent years from being primarily a
tool for brand building to being a way of generating sales.
TradeDoubler made it possible for Nina to find the car of her dreams at her local dealer.
It just clicked!
That’s so me!
The coolest car on the web was calling out to me. Now the world’s all ours. At the weekend I’ll pick up my sister and we’ll hit the road to Copenhagen.
7
Advantages of internet advertising
Internet advertising has a number of benefits compared to tradition- al media which are contributing to the growth of internet advertising in Western Europe.
Internet advertising enables advertisers to measure consumer response more directly and precisely than advertising in traditional media. This enables advertisers to quickly adapt their advertising and improve their results. Typical consumer information that advertisers can track is how they found the website, what information they read, their response to a specific advertisement, which purchases and ac- tions were made, and where they went after visiting the website. The internet enables advertisers to cost-effectively design and adapt their advertisements to specific user interests or to certain geograph- ic areas or target groups. It also helps shorten the selling cycle from introduction to product purchase; a consumer can often buy a prod- uct or service simply by clicking the ad then completing the pur- chase in a few steps.
Web visitors’ activity determines revenue
Advertising that generates activity, with compensation based on performance, has helped increase internet advertising in Western Europe. Internet advertising payments have previously been based on the CPM model (cost-per-thousand-impressions); a payment model based on the number of times the advertisement is shown (see page 10). CPM will remain important, not least in less mature markets and for advertisers whose primary objective is to build awareness for and strengthen their brands.
Western European advertisers are however increasingly choosing to pay for advertisements on performance: for actions such as the
web visitor making a purchase. Two such pricing models are cost- per-action (CPA) and cost-per-click (CPC), with CPA becoming in- creasingly popular (see page 10). When these models are used, the advertiser pays only when the advertisement leads to the agreed ac- tivity, such as a purchase. TradeDoubler focuses on creating profita- ble and measurable sales results for its customers. It mainly uses the CPA pricing model with the CPC model as needed.
New types of web-based marketing
Search engine and e-mail marketing are becoming increasingly pop- ular, adding to the growth of internet advertising.
Marketers can use search engine marketing to identify customers that are actively looking for products and services on internet. Using e-mail marketing, advertisers can send targeted offers to a list of re- cipients by e-mail.
Competition
As the demand for technology and services for internet marketing and e-commerce increases in Europe, so too does the competition.
Barriers to entry in the local market are relatively low, but a broader European base creates higher barriers to entry for new operators as it takes time to build up a structure that can effectively handle the unique conditions in each local market.
New players will enter TradeDoubler’s markets and existing com- petitors will invest more resources in developing their products and services. Our main competition is other companies that offer online solutions within our field of business, but the company also com- petes with large internet companies and traditional media compa- nies for a share of advertisers’ total marketing budgets.
2006 Annual Report
The market, drivers and competition
Market
TradeDoubler products make it possible for online marketplaces to market in Europe, in 18 countries at the same time.
It just clicked!
Steve in Auckland had just the thing I was looking for – Marvin Gaye’s great soul classic What’s Going On. And even better – the album is in mint condition and even came in a special cover!
9
2006 Annual Report
Business model
Business model
Revenue model
Around 90 per cent of TradeDoubler’s revenue is transaction income from advertisers. Publishers receive payments for displaying adver- tisements on their websites. The payments are based on predefined actions performed by internet users in response to the advertise- ments and reflect different performance-based pricing models. The bulk of TradeDoubler’s transaction revenue is used to pay publishers, with TradeDoubler retaining the outstanding balance. Payments may take the form of a percentage share of advertising sales or a fixed fee for specific activities such as leads or clicks.
Revenue also includes fixed set-up, network and td Toolbox access fees. Consultancy income accounts for a relatively small portion of TradeDoubler’s total revenue.
Performance-based pricing models
The principal pricing model that we offer advertisers is cost-per- action (CPA). CPA involves advertisers paying a fee based either on the sales or the number of leads (mainly registrations) that their ad- vertisements generate.
Another pricing model is cost-per-click (CPC), whereby advertisers pay a fee based on the number of clicks or unique visitors that their advertisements generate. These two models can be combined in various ways to suit the requirements of individual advertisers and publishers.
Only in isolated cases does TradeDoubler use the cost-per- thousand impressions (CPM) model, whereby advertisers pay a fee based on the number of times their advertisement is viewed.
Expansion model
TradeDoubler considers local presence to be critical for healthy busi- ness development.
Technology platform
New geographic locations are set up using an existing technology platform that is ready to use after the language is adapted to make it more user-friendly.
Customers
New geographic locations are often established when an existing TradeDoubler customer starts up in a new country.
TradeDoubler’s goal is to generate measurable sales results for our customers through performance-based marketing and sales.
The business model links publishers and advertisers together via a
network for which TradeDoubler technology provides a common
transaction platform.
TradeDoubler 2006 Annual Report
Business model
Advertisers TradeDoubler
Publisher
Visitors
Advertise-
ment Advertise-
ment Advertise-
ment Advertise- ment Fixed costs
Variable costs
Visitor’s clicks lead to the advertiser
Payments for publishing
Advertisers sign up to gain access to the
TradeDoubler network of publishers for on- line advertising in return for a fee. The prod- ucts and services offered by publishers are presented on the TradeDoubler website.
The TradeDoubler system tracks and logs
the activities performed by internet user in response to an advertisement. TradeDoubler uses the data to bill the advertiser.
Publishers host their chosen advertisement
or advertisements on their websites. The payment a publisher receives for hosting an advertisement is variable and reflects the types of activity performed by the viewer. In other words, it is performance-based. The most frequently used pricing models are cost-per-action and cost-per-click.
When a visitor clicks on an advertisement
displayed on the publisher’s website it may
generate a lead, a sale or some other activity
qualifying for payment, depending on the
pricing model used.
2006 Annual Report
Customer structure
Customer structure
Advertisers
TradeDoubler’s advertising customers are active in e-commerce sec- tors including consumer electronics, telecoms, financial services, shopping, gaming and entertainment, auctions, price comparison, and travel and tourism. Customers range from companies with strong brands and high sales volumes to smaller companies with a more niche-oriented sales strategy. The internet is a strategic chan- nel for these companies and a key part of their marketing mix.
As people spend an increasing amount of their time and money on the internet, so interest has grown among advertisers in harness- ing the internet as a cost-effective medium to market products and services. Advertisers are under increasing pressure to make their ad- vertising more effective and to show measurable results, and this is possible with performance-based marketing via the internet.
The number of TradeDoubler advertisers has grown rapidly, rising from 300 at the end of 2001 to 1,276 by the end of 2006. We are not dependent on any one advertiser or industry sector. In 2006, our ten largest advertisers accounted for 22 per cent (24) of gross profit and our single largest advertiser accounted for 5 per cent (9). Our average gross profit per advertiser was SEK 34,500 during the year.
TradeDoubler usually enters into standard contracts with adver- tisers. These agreements can usually be terminated with three months’ notice by either party. TradeDoubler also has contractual agreements with media agencies working for advertisers, though these account for a relatively small share of our business.
Publishers
TradeDoubler’s publishers fall within several categories, with some spanning more than one category. The network comprises publish- ers that conduct keyword marketing, websites with wide-ranging content and heavy traffic volume, and websites with lower traffic vol- ume, aimed at more specific user groups.
The number of active publishers has grown rapidly, rising from 37,000 active publishers at the end of 2001 to 118,098 at the end of 2006. Active publishers are defined as those that have generated at least one transaction (a sale, lead or click) over the last month.
TradeDoubler’s ten largest active publishers accounted for 10 per cent (9) of gross profit last year, with the largest single publisher con- tributing 2 per cent (1) during the period.
Publishers usually join the TradeDoubler network by registering online, which is free of charge. TradeDoubler then signs a standard contract with the publisher that can be terminated by the latter with no notice and on any grounds. TradeDoubler can terminate the con- tract on special grounds, for instance publication of inappropriate content. TradeDoubler has ethical and quality guidelines that mean we do not work with advertisers and publishers who use websites with dubious content or who engage in illegal activities.
TradeDoubler’s network of advertisers and publishers is one of the
largest in Europe and consists of more than 1,200 advertisers and
in excess of 120,000 active publishers in 18 European countries.
TradeDoubler make it possible for travel agencys to market its trips throughout the Nordic countries.
It just clicked!
Finally we found what we’d only ever dreamt about – a few days at Angelina’s pensione in Florence.
And the view over Ponte Vecchio was perfectly romantic.
3
2006 Annual Report
Geographic presence
Geographic presence
In 2006, 93 per cent of Group sales were outside Sweden.
International customers, that is those who use the TradeDoubler network in more than one geographic market, are extremely impor- tant to the company.
Growth across all markets
All geographic markets continued to show strong growth during the year. Revenues in the UK were up 46 per cent compared to the previ- ous year. TradeDoubler is the market leader in the UK, which is Europe’s largest e-commerce and online advertising market.
In France, revenue rose 85 per cent, largely due to robust growth in TradeDoubler’s campaign business. Germany, which previously had a lower growth rate than other countries, had very successful sales during the year. Revenue rose 76 per cent compared to the pre- vious year. In the rest of Europe (excluding the Nordic countries), growth was 88 per cent.
The Nordic market grew 46 per cent compared to 2005. Accord- ing to internal TradeDoubler data, the company is the market leader in affiliate marketing in all the countries where it is present, except Germany.
Evaluating new markets
It is believed the market will continue to develop favourably in 2007, with growth in internet advertising and e-commerce. Consumers are expected to spend an increasing proportion of their time online and internet advertising is forecast to become more effective.
TradeDoubler continues to assess future business start-ups in ad- ditional countries and it is highly probable that we will commence operations in one or two new countries in 2007. Our scalable tech- nology platform facilitates effective expansion into new geographic markets. It allows active transfer of knowledge accumulated in coun- tries with developed online advertising markets to operations in less mature markets. TradeDoubler enters new markets in partnership with large advertisers and only when the market in question is deemed sufficiently mature based on a number of criteria, including internet and broadband penetration and secure e-commerce pay- ment structures.
TradeDoubler has customers in 18 European countries, serv-
ing them via wholly owned subsidiaries with local employees
in 15 of these markets. Our market position is unique in terms
of geographic reach and adaptation to local requirements in
the countries in which we operate. We have a wide European
revenue base and see growth potential in all markets.
5
TradeDoubler’s pan-European network
TradeDoubler 2006 Annual Report
Geographic presence
2006 Annual Report
Product areas
TradeDoubler products
Affiliate marketing is a form of performance-based online marketing. The TradeDou- bler affiliate marketing product focuses on generating sales and offers a number of advantages to advertisers and publishers, notably clearly measurable sales results.
A network of advertising sites is created in td Push, customised to individual cam- paign requirements. td Push Campaign Managers regularly optimise campaigns and generate results through the best-performing advertising sites to achieve the agreed conversion targets and campaign results.
td Talk uses advanced tracking to trace online visitors from an initial click on the customers advertisement through to a completed telephone dialogue. All information is registered (including phone number, time and date) and made available in specific reports.
td Reach is an ad network which enables advertisers to plug into a network of hghly-frequented publisher sites. Their advertisements are rotated across the network reaching a wide target audience. The advertiser only pays the publisher for each click generated.
td Toolbox is a tracking and ad serving interface for managing online marketing activities. Advertisers and publishers can track, analyse and optimise the performance of all online marketing activity (advertisers) or advertising carried on their website (publishers).
Consultancy is part of TradeDoubler’s product and service portfolio. Here we focus on optimising and integrating customers’ online advertising strategies. Our consultants have in-depth expertise in performance-based internet marketing and help adverti- sers improve their returns on internet advertising expenditure.
Consultancy
services
7
Advertisers Publishers
Advertisers gain access to Europe’s largest affiliate network through TradeDoubler.
As we always have local representation in countries where we operate, advertisers have immediate access to TradeDoubler’s overall expertise to help optimise sales results in long-term affiliate programmes.
The TradeDoubler network creates opportunities to share unique knowledge about market conditions on a local and European level, which helps add value for advertisers.
Joining the TradeDoubler network gives publishers access to ads from the more than 1,200 advertisers in the TradeDoubler network. This effectively makes the publisher a virtual re- seller for many of the most successful brands in Europe.
By placing advertisements on their websites, publishers direct traffic to the advertiser’s website. The traffic is then converted to measurable sales results that create revenue for the publisher. There are a number of motivating factors for publishers: they can follow, evaluate and earn money on traffic to their websites while establishing partnerships with leading brands that contribute to raising the profile of their website.
TradeDoubler’s pay-per-call network for advertisers links potential customers from high quality websites to a landing page that is designed to suit the customer’s needs. The land- ing page contains information about the customer’s product and a unique phone number that is transferred to the customer’s call centre. As the caller is already well-informed about the product when they call, it is easier to convert the call into a sale or registration over the phone. td Talk is particularly suitable for products or services that are complex or have a high order value, such as financial services and travel.
TradeDoubler’s td Talk pay-per-call network provides increased revenue for publishers on the web. It makes it easy for leading advertisers to promote more complex and high-value products. The publisher is paid for all traffic generated, whether it results in a phone call, click or online sale.
td Talk connects online traffic directly to an advertiser’s call centre, which then helps in complex purchasing decisions and sales conversion. The publisher can increase his income and further develop profitable partnerships with high-value advertisers.
TradeDoubler offers a range of services to advertisers in conjunction with advertising cam- paigns. We design a customer-specific network of websites for targeted advertising cam- paigns, based on the advertiser’s goals and budget. td Push enables advertisers to trace leads and sales in their target groups. Advertisers and budgets are allocated on a real-time basis during the campaign to the publisher sites that generate the best results. Local Trad- eDoubler offices in Europe also provide advertisers with the opportunity to reach addi- tional markets with their campaigns.
td Push enables publishers to find a large number of campaigns and advertisements from recognised brands in a single location. The TradeDoubler publisher team helps them ac- cess the best agreements and can adapt the payment structure to their business model. In addition, they can simply and effectively handle all types of online advertising formats on their website or through unsold advertising space and create additional income through newsletters and e-mails.
Assisted by interactive advertisements, including rich media, advertisers can use td Reach to launch new products, find new customers or increase online awareness of their brands.
Local TradeDoubler offices in Europe also provide advertisers with the opportunity to reach additional markets with their campaigns.
td Reach gives publishers access to interactive advertising campaigns from leading brands at competitive prices and in a number of business areas. Publishers can quickly and effec- tively fill their advertising space as well as maximise their revenue per impression or click.
The TradeDoubler publisher team, with its broad knowledge of online advertising, helps ensure that campaign revenue is maximised.
td Toolbox is designed to enable advertisers that conduct their online sales and marketing activities through multiple online channels and partners to track, manage and evaluate all their online advertising, sales and marketing activities, including affiliate marketing, adver- tiser campaigns and keyword and email marketing.
td Toolbox enables publishers to measure the effectiveness of advertisements on their websites and the traffic generated by their websites for advertisers by tracking users’ ac- tions. This functionality allows publishers to optimise their internet advertising space by selecting those advertisements that have resulted in the most sales, leads and clicks.
TradeDoubler 2006 Annual report
Product areas
Using TradeDoubler’s consultancy services, advertisers can accelerate their online sales and lead generation. TradeDoubler consultants have many years expertise in performance- based marketing and in-depth knowledge of key industries. Advertisers can choose to use services on either a local or a pan-European basis.
TradeDoubler consultants work to build strategic partnerships between advertisers and publishers. In this way, Publishers receive strategic and operative advice from Trade- Doubler on how they can optimise their channels to increase earnings capacity.
Scalable technology platform
The platform is fully-scalable, which is an important factor in Trade- Doubler’s rapid expansion into new geographic markets and the ability to effectively handle steadily increasing transaction volumes.
It is easily adaptable to local variables such as language, currency and legislation and to local payment and billing procedures. The platform currently supports 13 languages and transactions in eight currencies.
Highly secure
We have designed the platform to guarantee a high level of data se- curity and to enable the prevention and detection of fraud. The com- pany has solid procedures in place to detect and prevent fraud and has a team of staff specifically assigned to this area.
TradeDoubler follows the guidelines of the Platform for Privacy Preferences Project (P3P), an industry initiative to develop standards for protecting the personal information of internet users. The com- pany has guidelines for the management of such data which reflect the legislative requirements of the countries where we have subsidiaries.
Upgrades
The TradeDoubler platform is designed to facilitate the addition or replacement of functions, upgrades and improvements to meet cur- rent or future trends in online marketing. The platform was upgraded in 2006 to be able to manage contextual online marketing, which is a function whereby the advertising system interprets which adver- tisement is best suited to a particular advertising slot by automati- cally searching the contents of a page and matching them to the advertisements in the system. The platform has also been developed to handle pay-per-call functionality.
We use cookies in combination with tracking tags to collect data from web browsers for our statistics database.
Reliability
The TradeDoubler network runs on a robust and highly reliable server system. Security and development processes are regularly reviewed by external experts.
TradeDoubler uses the same technology platform for its entire product across all 18 markets. This has been a prerequisite for our rapid international expansion. The platform was originally designed to support performance-based marketing and it offers advertisers and publishers a variety of functions via a Web interface.
2006 Annual Report
Technology platform
Technology platform
TradeDoubler made it possible for Hank to put up ads from TradeDoubler on his hobby site.
It just clicked!
I love my hobby, and it seems like I’m not the only one.
My fishing site became a popular meeting place and suddenly adver- tisers started to bite. It looks like soon
I can make a living from my hobby.
9
2006 Annual Report
Employees
Employees
Corporate culture and core values
TradeDoubler is based in 18 European markets. We have skilled local employees in all our markets, which is a prerequisite to being able to support and further develop business in each market.
TradeDoubler has an entrepreneurial spirit throughout and a proactive approach to business decision-making. The latest review of skill levels showed that some 90 per cent of TradeDoubler employees have college or university education, and it is their expertise and commitment that makes TradeDoubler’s continued success possi- ble.
Management development
As TradeDoubler is a young and rapidly-growing company, it is key to our future development that we identify and develop leaders at an early stage, and run effective introduction programmes for our staff.
TradeDoubler is starting a talent programme in 2007 that aims to identify and educate talented young professionals in the organisa- tion for development as future management.
All leaders undergo a three-stage management education based on the corporate culture, values and management style that is pro- moted in the company.
TradeDoubler’s leadership values:
• Open minded
• Inspiring
• Appreciative
Individual TradeDoubler leaders are reviewed annually in an em- ployee survey that specifically focuses on leadership in relation to our leadership values.
Employee introduction
TradeDoubler continually recruits employees to support our strong growth in all geographic markets.
All new employees undergo local job training as well as a training session at head office during the first months of their employment.
The programme provides the new employee with an introduction to their job as well as to TradeDoubler’s culture and values. Inviting new employees to head office is seen as a way of creating a strong base for the company’s culture and products, as well as helping new em- ployees to take up their role as quickly and efficiently as possible.
Large increase in employees
At year-end, the Group had 351 (256) employees. The majority of the newcomers in 2006 joined Group subsidiaries to strengthen sales and support functions. Approximately 85 per cent of TradeDoubler staff are involved in sales, with the others working in technology, product development and administration.
The average number of employees was 308 (222). The number of male employees was 197 (142) and the number of female employees was 111 (80).
Employee data
2005 2006
No. of employees at year-end 256 351
Average no. of employees 222 308
Female (%) 35 36
A key success factor in TradeDoubler’s successful development
has been our employees. Ongoing recruitment, along with
development and retention of skilled employees, is essential for
continued success.
TradeDoubler 2006 Annual Report
Key words
Key words
2
TradeDoubler’s core values
The brand should be associated with and represent
TradeDoubler’s business stands on these
cornerstones
TradeDoubler’s leadership values Leadership style in the organisation
• Knowledge
• Action
• Results
• Cost-effectiveness
• Focus
• Profit
• Return on investment
• Open Minded
• Inspiring
• Appreciative
2006 Annual Report
The share
The TradeDoubler share
Share capital on 31 December 2006 totalled SEK 11,181,934.80, dist- ributed between 27,954,837 shares each with a par value of SEK 0.40.
All shares have equal rights to share in the assets and profit of the Group. At the AGM, each person with voting entitlements may vote for the full number of owned and represented shares with no limita- tion to the number of votes. The number of shareholders as of 31 March 2006 was 2,509.
Share price trend and revenue
The share was introduced at SEK 110 when listed on 8 November 2005.
The share has closed on all trading days from introduction to 30 March 2007 with average daily turnover of SEK 38 million.
Dividend
The proposal of the Board of Directors is that a dividend be paid of SEK 5 per share.
Warrant programme
Two warrant programmes (2004/2007 and 2006/2010) are currently running with conversion permitted during 2007–2008 and 2009–
2010 respectively. The outstanding 914,441 warrants carry entitle- ments to 1,386,396 shares.
Capital market information
As a listed company, TradeDoubler is obliged to follow the listing agreement of the Stockholm Stock Exchange, which regulates market information requirements, as well as the rules of the Swedish Industry and Commerce Stock Exchange Committee. Interested parties can subscribe to press releases via the TradeDoubler website as well as receive financial and other general information about the Group.
TradeDoubler’s shares have been listed on the O list of the Stockholm Stock Exchange since 8 November 2005.
TradeDoubler The TradeDoubler share
9,000 6,000 220
180 160 140
120 200
Turnover, thousands of shares (incl. late registration) SIX General Index
Distribution of ownership by size
No. of No. of Holding/
shareholders shares Votes (%)
1–500 2,053 329,893 1.18
501–1,000 269 221,865 0.79
1,001–5,000 233 539,928 1.93
5,001–10,000 44 323,169 1.15
10,001–15,000 24 307,901 1.10
15,001–20,000 19 348,436 1.24
20,001– 103 25,944,095 92.61
Total 30 March 2007 2,745 28,05,287 00.00
Distribution of ownership – Individuals
No. of Share- Holding/
shareholders holders (%) Holding Votes (%)
Individuals 1,958 71.33 1,121,117 4.00
of which based in Sweden 1,938 70.60 752,376 2.69
Legal entities 787 28.67 26,894,170 96.00
of which based in Sweden 556 20.26 16,815,480 60.02
Analysts monitoring TradeDoubler
Canaccord Adams Limited Anthony Chow
anthony.chow@canaccordadams.com
Carnegie Investment Bank AB Daniel Ek
daniel.ek@carnegie.se
Daniel Djurberg
daniel.djurberg@carnegie.se
Enskilda Securities AB Lars Sveder
lars.sveder@enskilda.se
Nicklas Fhärm
nicklas.fharm@enskilda.se
Andreas Joelsson
andreas.joelsson@enskilda.se
Goldman Sachs International Jean-Michel Bonamy
jean-michel.bonamy@gs.com
Laurie Davison
laurie.davison@gs.com
Nordea Mats Bergström
mats.bergstrom@nordea.com
Kaupthing Mikael Laséen
mikael.laseen@kaupthing.se
ABG Sundal Collier Karl Berglund
karl.berglund@abgsc.se
Swedbank Patrik Nygård
patrik.nygard@swedbank.se
23
TradeDoubler Årsredovisning 2006
Aktien
TradeDoubler 2006 Annual Report
The share
Ten largest owners – shareholdings
No. of Holding/
shares Votes (%)
Alecta pensionsförsäkring 3,648,300 13.02
Arctic Ventures I Ehf 2,669,078 9.53
AMF Pensionsförsäkrings AB 1,033,000 3.69
Enzymix Systems Ltd 1,015,150 3.62
Ram One 1,002,200 3.58
Afa Sjukförsäkrings AB (om) 966,628 3.45
Första AP-fonden 800,000 2.86
Par dbpf treaty rate France 725,170 2.59
Jpmc re m.Stanley Sweden eq depot 624,404 2.23
Ubs ag lnd ipb segregated client a 542,044 1.93
Total ten largest owners 3,025,974 46.50
Other 14,989,313 53.50
Total 30 March 2007 28,05,287 00.00
Ten largest countries of ownership
No. of No. of Holding/
shareholders shares Votes (%)
Sweden 2,494 17,567,856 62.71
Great Britain 43 5,744,602 20.51
Cypress 14 1,606,430 5.73
France 16 1,089,029 3.89
Luxembourg 21 703,612 2.51
USA 16 444,867 1.59
Norway 18 146,500 0.52
Belgium 4 143,321 0.51
Denmark 37 128,281 0.46
Germany 8 101,802 0.36
Total ten largest countries
of ownership 2,67 27,676,300 98.79
Total other countries 74 338,987 1.21
Total 30 March 2007 2,745 28,05,287 00.00
Share capital development No. of Nominal value/
shares Total par value Share
Date Transaction issued Class of shares shares SEK capital
19 August 1999 Incorporation 1,000 Ordinary shares 1,000 100 100,000.00
5 January 2000 New issue and share split 483,681 Ordinary shares 1,483,681 0.1 148,368.10
19 April New issue 635,863 B preference shares 2,119,544 0.1 211,954.40
10 July 2001 New issue 998,123 D preference shares 3,117,667 0.1 311,766.70
10 July 2001 New issue 198,397 C preference shares 3,316,064 0.1 331,606.40
10 July 2001 New issue 462,926 C preference shares 3,778,990 0.1 377,899.00
2 April 2002 New issue 1 57,167 C preference shares 3,836,157 0.1 383,615.70
2 April 2002 New issue 2 192,338 C preference shares 4,028,495 0.1 402,849.50
31 December 2004 New issue 3 4,878 Ordinary shares 4,033,373 0.1 403,337.30
31 December 2004 New issue 4 46,666 Ordinary shares 4,080,039 0.1 408,003.90
31 December 2004 New issue 4 3,332 Ordinary shares 4,083,371 0.1 408,337.10
15 September 2005 Bonus issue 5 — All 4,083,371 2.4 9,872,090.40
15 September 2005 Share split 6 — All 24,500,226 0.4 9,800,090.40
October 2005 Conversion 7 — Ordinary shares 24,500,226 0.4 9,800,090.40
October–December 2005 New issue 4 2,227,914 Ordinary shares 26,728,140 0.4 10,691,256.00
January–April 2006 New issue 8 606,861 Ordinary shares 27,335,001 0.4 10,934,000.40
October–December 2006 New issue 4 619,836 Ordinary shares 27,954,837 0.4 11,181,934.80
January 2007 New issue 4 60,450 Ordinary shares 28, 015,287 0.4 11,206,114.80
1) Directed to Livförsäkringsaktiebolaget Skandia.
2) Directed to Quantum Industrial Partners LLC, SFM Domestic Investments LLC and Arctic Ventures I ehf.
3) Issued pursuant to the exercise of employee warrants in TradeDoubler.
4) Issued pursuant to the exercise of employee warrants in TradeDoubler.
5) Reflects the increase in share capital due to a bonus issue through an increase in the par value of the share from SEK 0.10 to SEK 2.40.
Share-related key ratios
2002 2003 2004 2005 2006
Earnings per share –0.36 0.31 2.55 1.57 5.13
Earnings per share after full dilution –0.36 0.30 2.33 1.38 4.93
P/E ratio — 350 60 98 40
Share price/equity 131 88 44 22 16
Earnings per share
Profit for the year divided by average number of shares
Earnings per share
Profit for the year divided by average number of shares after full dilution
P/E ratio
Share price divided by earnings per share for the year. The share price for 2004, when the share was not listed, is assumed to be the same as at the end of 2005.
6) Reflects the decrease in par value of TradeDoubler shares and the corresponding increase in the number of shares.
7) Reflects the conversion of preference shares to ordinary shares in TradeDoubler.
8) Issued in conjunction with the exercise of employee warrants in TradeDoubler, and the exercise of warrants by Livförsäkringsaktiebolaget Skandia, Quantum Industrial Partners ldc, SFM Domestic Investments llc and Arctic Ventures I ehf.
after full dilution
2006 Annual Report
Financial statements
Financial statements
Report of the directors 25 Consolidated income statement 28 Consolidated balance sheet 29 Statement of Changes in Equity 30 Statement of Cash Flows 31 Notes to the consolidated
financial statements 32
Auditors’ report 49
Five-year summary 50
Corporate governance 52
Board of Directors 55
Executive management 56
Annual General Meeting
and glossary 57
25
TradeDoubler 2006 Annual Report
Financial statements
Report of the directors
The Board of Directors and the Chief Executive Officer of TradeDoubler AB (corporate identity number 556575- 7423) present their annual report and the consolida- ted financial statements for the financial year ended 31 December 2006.
General comments Group
TradeDoubler is a leading European provider of performance-based online marketing and sales solutions. The company offers a broad spectrum of solu- tions, ranging from technologically advanced management tools and main- tenance to efficiently administered performance-based marketing products.
These solutions are sold to businesses and organisations with an active online presence.
Founded in 1999, TradeDoubler has developed advanced tracking tech- nology which, combined with our unique knowledge and expertise in inter- net sales, enables customers to grow their online sales and to monitor the results of all their internet marketing activities. Our proprietary technology platform currently manages more than 1,276 customers (advertisers) and 118,098 active websites (publishers or affiliates). The company’s platform for internet marketing generates some 88 million unique visitors and more than EUR 146 million in sales value each month. It also generates and tracks more than 3 million leads or registrations per month. In 2006, the number of cus- tomers (advertisers) rose by 22 per cent and the number of publishers increased by 18 per cent.
TradeDoubler remains the only European performance-based marketing company with a truly pan-European network, being present in 18 countries and with local offices and thus local knowledge and experience in 15 of these.
Our primary focus is to generate sales income for our advertisers and our principal pricing models are therefore CPA (cost per action), along with CPL (cost per lead) and CPC (cost per click). We also offer a CPM (cost per thousand impressions) model. TradeDoubler is one of only a few companies that can license its own technology. Using our td Toolbox technology we have expanded our revenue streams by not only attracting advertisers but pub- lishers and media agencies too. In the last two years TradeDoubler has also developed an advertising campaign service that we will continue to market aggressively in Europe in 2007 since it enables us to expand our reach among Europe’s leading publishers and to help our advertisers to reach their tar- gets.
TradeDoubler has a strong track record in international expansion and the technology we provide is easily adaptable to local languages, regulations and payment and billing systems. Our geographic reach is also unique – as is the extent to which we are adapted to different markets. TradeDoubler sys- tems currently run in 12 languages and manage transactions in nine curren- cies in 15 countries – all with different VAT rules, payment and banking sys- tems and business cultures.
Strong revenue growth and high-quality customers and networks dem- onstrate that TradeDoubler is well on the way to fulfilling its vision: To rede- fine the marketing landscape.
Business model Affiliate programme
TradeDoubler’s primary source of revenue is affiliate marketing. Our model is based on advertisers entering mutually profitable and long-term business relations with thousands of websites (publishers). The advertisers receive quality traffic and sales by establishing partnerships with the websites and reimbursing them for generating concrete sales or leads. TradeDoubler is the only truly pan-European affiliate marketing network and is present in 18 mar- kets. Our advertiser base and website network are the largest in Europe, and generate the highest traffic volumes. Within this network, TradeDoubler’s role is an independent third party that provides technology and applications to customers. We offer customers a unique internet-based technology solu- tion, consulting services and access to a network of thousands of potential business partners and websites.
TradeDoubler earns a certain amount of income from set up fees and monthly network access fees, but the major part comes from transaction- driven fees. Transaction revenues contribute economies of scale and low marginal costs to the business model. The advertiser pays the website either a fixed amount or a commission for each transaction delivered, whether a sale, a lead or a click. TradeDoubler usually receives a percentage of the web- site’s commission, though in some cases the commission is a fixed amount per transaction.
Revenue and profit
Group revenue rose 61 per cent in 2006 to SEK 1,744.1 million (1,085.0).
Of this, transaction income accounted for SEK 1,629.8 million (989,6) and other income for SEK 114.3 million (95.5).
TradeDoubler’s gross profit totalled SEK 480.3 million (314.5), an increase of 53 per cent from the previous year. Of this, transaction income accounted for SEK 366.0 million (219.0) and other income for SEK 114.3 million (95.5).
The gross margin for the period was 27.5 per cent (28.9) and the transac- tion margin totalled 22.5 per cent (22.1).
EBIT for 2006 totalled SEK 190.1 million (44.0), representing an operating margin of 10.9 per cent (4.1).
Operating profit included share-related costs attributable primarily to the warrants programme in 2004. These totalled SEK 3.0 million (23.4) and were charged to selling expenses. See Note 1, Accounting Principles.
The operating margin, adjusted for share-related costs, was 11.1 per cent (6.2) of revenue and 40.2 per cent (21.4) of gross profit.
Profit after tax totalled SEK 140.4 million (38.9), corresponding to an income tax rate of 29 per cent.
Financial position and cash flow
Cash and cash equivalents on 31 December 2006 stood at SEK 433.1 million, compared to SEK 218.3 million on 31 December 2005. The Group has no non- current loans or bank credits.
Cash flow from operating activities before changes in working capital totalled SEK 196.6 million (71.8) in 2006. The increase was attributable to a strong increase in gross profit. The change in working capital was SEK 32.5 million (–29.9) and consisted primarily of employee receivables for paid tax and social security fees relating to warrants settled during the financial year.
Group investments in non-current assets totalled SEK 7.3 million (7.2) and related chiefly to spending on computers. Group investments in subsidiaries amounted to SEK 9.9 million (0.0).
2006 Annual Report
Financial statements
Cash flow from financing activities arose from a new share issue of SEK 8.2 million (48.2) in respect of the exercise of previously granted warrants.
Cash flow for the period amounted to SEK 220.2 million (82.8).
Sales and markets
Internet and broadband penetration continues to rise in Europe. As a result, more people are spending more time online. This trend has been apparent for a number of years and is expected to continue in 2007, leading to increased internet advertising and e-commerce.
The phenomenon is confirmed by TradeDoubler’s growth, which was strong across all customer segments in 2006.
Geography
All geographic markets continued to show strong growth during the year. In the UK, revenue rose 46 per cent compared to the previous year. In France and Germany the increase was 85 per cent and 76 per cent respectively, and in the rest of Europe (excluding the Nordic countries) growth was 88 per cent.
The Nordic market grew 46 per cent compared to 2005. In 2006, 92 per cent of Group sales were outside Sweden.
In 2007, TradeDoubler’s management intends to further consolidate the company’s position in Europe, which will lead us to expand into new markets.
Business potential outside Europe will also be evaluated.
TradeDoubler’s prior experience of geographic expansion, together with our highly adaptable system platform (in terms of language, local regulations and payment procedures, etc.) makes decisions on entering new markets easier for management and reduces lead time.
Ownership structure
TradeDoubler AB has been listed on the OMX Mid Cap since 8 November 2005. The 10 largest shareholders are AVI EHF, Alecta Pensionsförsäkring, JP Morgan Bank, JP Morgan Chase Bank W9, Enzymix Systems Ltd, AFA Sjuk- försäkrings AB, AMF Pensionsförsäkrings AB, RAM One, Rosello Company Ltd and SSB CL Omnibus AC OM07.
Expectations of future events and performance Group
The company believes that the market will continue to develop favourably in 2007, with growth in internet advertising and e-commerce. Consumers are expected to spend an increasing proportion of their time online and internet advertising is forecast to become more effective, resulting in higher conver- sion rates.
Based on our growth forecasts, staff recruitment will continue and will focus on sales and support as well as on product and system development.
Development Parent Company
A number of functions were introduced in 2006 to improve management and delivery of advertisements in the TradeDoubler platform. These improve- ments relate to all our products: td Pull, td Push, td Reach, td Toolbox and td Talk. The development has added business value across the company through increased efficiency in platform development, increased ROI in set- ting up advertising sites for our advertisers and greater benefits for our pub- lishers.
Rich Media
TradeDoubler introduced functionality to simplify the use of Rich media, which is a highly effective tool for performance-based marketing on internet.
Rich media is a generic name for advertising formats that are more than just a picture, and is used primarily to create advertisements with integrated func-
Reporting
TradeDoubler introduced a separate reporting structure in May 2006 to meet the needs of our advertisers and publishers for information and evaluation.
As part of TradeDoubler’s focus on transparency and profitability, the Trade- Doubler reporting module has been further improved with graphic repre- sentations which have been very well received by all user groups.
New technology
Our purchase of Advertigo AB in April 2006 gave us access to the new Con- textual internet marketing and Pay-per-call technologies. TradeDoubler has put a lot of effort into integrating the new technology with our other prod- ucts during the year.
Contextual Internet marketing was beta tested on some 20 different websites to confirm its stability, scalability and future commercial application.
Necessary improvements were identified and implemented and the func- tionality was rolled out in early Q2, 2007.
After beta-testing Pay-per-call functionality, a number of improvements were introduced in Q4, 2006 to improve usability and td Talk has now been launched as a separate product.
Private Network
Development work on the td Toolbox product has been focussed on further developing Private Network functionality and developing the utility of the administrative interface.
Time reporting
To improve productivity, TradeDoubler has developed a time reporting sys- tem for detailed reporting of all consultant team activities. The system was developed and tested in Q4, 2006 and rolled out on 1 January 2007. The objective is to increase efficiency and make it possible for the consultant team to focus on productive tasks.
Information management
TradeDoubler has also developed a user-friendly system to manage the increasingly complex information flow across its 18 markets. The system ensures that all publication and updates of information on TradeDoubler websites is done in an efficient and secure manner. The system is fully inte- grated with TradeDoubler’s business system which provides fast and simple access to all the information required in all markets.
General
In addition, TradeDoubler has also launched minor improvements to simplify work for its publishers and advertisers as well as TradeDoubler employees.
Work has also been made easier for the TradeDoubler campaign team and for the advertisers that use our Product Feed product, which makes it possible for a publisher to market an advertiser’s entire product catalogue.
Parent Company revenue rose 52 per cent to SEK 235.4 million (155.3), reflecting increased licence fee income from subsidiaries. Profit after financial items amounted to SEK 111.1 million (18.1). Cash and cash equivalents on 31 December 2006 were SEK 159.6 million, compared to SEK 68.0 million on 31 December 2005. Investments in non-current assets totalled SEK 4.3 (4.4) million and the average number of employees was 77 (49).
Employees
At year-end, the TradeDoubler Group had 351 (256) employees, with 17 new recruits joining the company during the fourth quarter. Most of the newcom- ers joined Group subsidiaries to strengthen sales and support operations.
The average number of employees during the period was 308 (222). The number of male employees was 197 (142) and the number of female employ-
