A lot of people are talking about Glam Media and whether or not
- it is larger than iVillage,
- it’s an ad network or a publisher.
Frankly, it does not matter. All that matters is that from the metrics that count, Glam is growing quickly and it’s now looking at leveraging its momentum to raise a whopping $200M on a valuation of $600M. Just some food for thought: iVillage sold to NBC for $600M, this year will make $120M… Glam is making about $35M in revenues and losing $4M in EBITDA. It’s projecting a “hockey-stick-on-steroid” growth trajectory for sales next year… of course, word is they’re about to sign a $1B ad deal with Google… though that seems off since Google paid $900M for all of News Corp.’s Fox Interactive Media…
Anyway, CEO Samir Arora reminds me of Simon Assaad, the sharp, slick and sales-oriented CEO of Heavy.com, another site that has raised some objections but seems to be trecking along nonetheless.
Naturally, for purposes of valuations and comparing apples with apples, yes, it matters whether or not Glam is a media property or an ad network… but frankly, the lines do blur over time.
For example, Gorilla Nation Media started as an ad rep, then added network duties, and then owned some sites, even selling Quizilla to Viacom. Glam reminds me of a young, female oriented Gorilla Nation.
Read the naysayers and supporters…
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August 14th, 2007 at 1:27 am
This sounds like the process IGN went through years ago.
Step 1)
Get a whole bunch of affiliate sites. Tie them into exclusive ad contracts. Use the affiliate sites as a source of traffic to promote the core site. Occasionally push some traffic to the affiliate sites to keep them happy.
Benefit to affiliate sites: more ad revenue than they can probably generate themselves. Occasionally get bits of traffic from the core site.
Benefit to Glam / IGN: free promotion from a whole bunch of affiliate sites.
Claim aggregate traffic from all affiliate sites as being their own, so they can say “wow look how big we’ve grown in such a short amount of time”.
Step 2)
Use resources to consistently produce better content than the affiliate sites, thus retaining more traffic. Make sure all high paying CPM ads go to the core company owned sites. Keep paying affiliate sites enough to keep them happy and to prevent them going to another network.
Step 3)
Once you’ve built up enough traffic, start letting affiliate sites go. Or in IGN’s case, if the ad market dips and you find yourself locked into unfavorable contracts, simply stop honoring the 3-5 year contracts by ceasing to make payments to the affiliates. By this stage the affiliates have quit their full time jobs to focus on their sites, believing they have a secure contract and are getting paid to do what they love. For this reason I suggest affiliates always have a Plan B.
Step 4)
Affiliate sites close down or go bust. Network traffic isn’t really impacted by much, because by now most people go to Glam.com / IGN.com as that’s the url they’re used to seeing plastered all over the affiliate sites. IGN / Glam site keep all high paying ad inventory on their now much bigger core sites.
Step 5)
Sell out or do an IPO. Founders become rich. Affiliates that helped them get there, get nothing.
Having been through the whole IGN experience myself I can see this happening again. Mind you, if I owned Glam, I would probably do exactly what they’re doing now. You can see why
While affiliate sites might say they are getting ‘good traffic’ from Glam, it’s probably nowhere near as much as the traffic they are sending back to Glam, or at least is equal to the value of the brand recognition Glam gets from sticking the Glam logo all over affiliate sites. Also, yes things are all nice and rosy now, while CPMs are high and affiliates are getting good support because the company can afford to pay for an affiliate manager to talk to the affiliates. But what happens when CPMs dip, the affiliate manager loses her job as the company tries to cut costs, sites stop getting paid? I’m not saying this is going to happen, but what if it did?