• by Wendy Davis  @wendyndavis, October 10, 2006

Brokerage house Merrill Lynch Monday debuted coverage of ad network ValueClick, giving the company a "neutral" rating in its inaugural report.

Merrill Lynch research analyst Lauren Rich Fine wrote that she sees benefits in ValueClick's large ad network of more than 13,500 Web sites, but also views the prospect of competition from Google, Yahoo and MSN as a potential drawback.

"The scale of ValueClick's network now makes it an important buy for many advertisers," stated the report. But, the report continued, Google has started selling display ads, while Yahoo and MSN also appear poised to offer display ads to their publishing partners. "Google, Yahoo and MSN's financial resources certainly are much greater than ValueClick's," Fine wrote. The report, however, stopped short of predicting that ValueClick would be crowded out of the ad network market. "The Google's, Yahoo's, and MSN's of the world might have other bigger fish to fry," stated the report.

Merrill Lynch also predicted that ValueClick stands to gain from the continued migration of ad dollars to the Web. "Dollars are coming from other traditional mediums such as newspapers, magazines and TV, but the medium is also expanding the pie," states the report. "ValueClick will benefit from this secular shift as it focuses on continuing to educate and assist advertisers about how to best use the medium and reach their target audiences."