Personal shopping engine StyleFeeder has joined the Glam Media Network and partnered with Shopping.com for comparison pricing.

The deal is a big win for Glam’s advertising network, with StyleFeeder bringing an additional 1.5 million page views (comScore) to Glam but more importantly over 1 million Facebook users (StyleFeeder claims to be the biggest shopping application on Facebook).

The deal with Shopping.com sees StyleFeeder adding comparison pricing to its personalized shopping engine, providing more of a one stop shop for users.

See our previous coverage here.

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Federated Media (FM) has rumored to have raised $50 million from Oak Hill Capital Partners on a $200 million valuation, according to VentureBeat. Total funding for Federated Media to-date would be $57.4 million.

So what would Federated Media do with $50 million: Invest in sites. From a March interview:

Battelle: Well, I can’t say specifically what we might do with any money that we might raise, should we do a fund-raising round. But I think there are an awful lot of opportunities in this emerging field and it’s just good to have access to capital to execute any reasonable ideas that we might have. It’s a very quickly changing market and it needs financing. I mean individual sites need financing and we want to be a good partner for all of our sites.

Here’s what Michael said at the time:

Here’s what I think he really means: They’ll either buy sites outright, or guarantee revenue, or guarantee revenue in exchange for equity. A publisher wouldn’t consider Federated Media an attractive investor versus venture capitalists simply because it would mean tying their revenue to them over the long term.

VentureBeat talks about expanding the business and Facebook apps, but does FM really need more money to build out its core business? There’s every chance FM will be going down the Glam path in owning or part owning some sites and acting as the ad broker for others.

disclosure: FM sells ads for TechCrunch

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Yahoo has launched Shine, a new content portal aimed at women aged 25 to 54.

At its core, Shine is a large blog with magazine style layout. Content is broken up into various subcategories with the front page highlighting the newest content from across the site. Topic areas include parenting, sex and love, healthy living, food, career and money, entertainment, fashion, beauty, home life, and astrology.

The Wall Street Journal quotes Amy Iorio, vice president for Yahoo Lifestyles saying internal research shows women are looking for a site to aggregate various content and communications tools:

“These women were sort of caretakers for everybody in their lives,” she said. “They didn’t feel like there was a place that was looking at the whole them — as a parent, as a spouse, as a daughter. They were looking for one place that gave them everything.”

With Shine, Yahoo will find itself competing with offerings from Glam Media, Sugar and iVillage. Screenshots as follows.

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Advertising network Glam is putting an end to at least some of its guaranteed payments to publishers, just a month after raising an $85 million round of financing.

Scott Swanson, Glam’s GM and Vice President, told publishers in an email (full text below) that “house ads” that were served for unsold inventory were being discontinued as of March 25, except to fulfill “minimum commitments that Glam has contractually agreed to.”

The email says the change was made to give publishers “more choice when it comes to how you use your unsold inventory.” But according to one large publisher partner to Glam, this is actually nothing more than a way for Glam to dramatically cut payments to partners. He said “While they’re spinning this as positive news, it sucks for publishers. Publishers were previously guaranteed $3 - $5 CPMs for house ads. By no longer running any house ads, that revenue dies. And, given Glam’s fill rates retwork wide are only 30%, that’s 70% of traffic (for most publishers) that’s no longer earning revenue from Glam…It’ll basically cause a 30 - 80% drop in revenue for publishers”

Glam’s business model is to guarantee minimum flat payments to publishers. A medium sized blog will receive, say, a guaranteed payment of $10,000 monthly. Glam then sells ads into those blogs, and placed house ads with a high CPM for any unsold inventory. If the blog’s page views grew, those additional payments over the guarantee could really add up. Some publishers, with 3 or more ad units on a page, could guarantee a $15 or higher RPM (revenue per thousand page views). That’s an awesome advertising income for blogs, particularly blogs targeting women generally (highly specific niche blogs can command higher rates, but usually only at scale).

So why is Glam doing this? Three reasons, probably.

First, they need to get costs down. Last year the company lost $3.7 million on $21 million in revenue. They’ve promised investors that 2008 would bring in $150 million in revenue with $40 million in profit. The only way to get there is bring in a lot more publishers, sell a lot more ads, and keep a larger share for themselves.

Second, Glam really needed to keep all those bloggers happy last year while they were raising capital. There’s no better way to do that than to send them big checks every month. Now that Glam has raised the big round, they don’t need the small bloggers at all, and they certainly aren’t going to be losing money on them.

Third, Glam is actively acquiring many of the blogs that they currently sell ads for, and they want them cheap. By cutting their revenue dramatically and quickly, many of those blogs will immediately be in a very tight cash position. They may be forced to sell. And with revenues down, Glam can pick them up for a song.

What does all this mean? It means if you are a Glam publisher, you’ve served your purpose and the good times are over. Move along, please. They have a company to build. And if you’re counting on those guaranteed payments after the termination date on your contract, well, you’re as dumb as Glam hopes you are.

I’ve emailed Glam for a comment, but haven’t heard back from them yet. The company has raised a total of $114 million.

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Two thing jumped out at me when I read a CNET interview with John Battelle of Federated Media this morning - his direct criticism of competitor Glam Media as a “flavor of the month,” and his suggestion that he may take equity stakes in his publishers.

Full disclosure - Federated Media is our ad selling partner. Sometimes we love them. Sometimes, not so much.

Glam Media: A Flavor Of The Month

The first thing that stuck out was his criticism of competitor Glam. CNET’s Stefanie Olsen asked Battelle “Vertical ad networks like Glam Media are really popular right now. Investors love them. Why do you think that is?” His response: “Because people don’t understand them and they hope things that they don’t understand will pan out.” He added “I just think they are the kind of flavor of the month, but you have to get down to where do you add value to the marketer and where do you add value to the publisher.” In a world filled with over-media-trained executives, its refreshing to see someone go after a competitor with such a direct statement.

My next question would have been to ask him how Federated Media is different from Glam. Federated Media sells advertising for tech sites; Glam sells ads for women-focused sites (although their biggest partner is MyYearbook). Other than the focus of the ad sales effort, the differences are not obvious to the casual observer.

The truth is the networks have significant strategic differences. Glam owns a few properties of its own, which helped in the early days as anchor properties. Federated Media does not own any major publishing sites.

Glam also guarantees revenues to partners. MyYearbook is rumored to receive a guaranteed CPM on page views, and many of the blogs get guaranteed monthly payments of $10,000 or more. Those guarantees resulted in a loss for Glam of $3.7 million last year on $21 million in revenue. But it also accelerated growth and allowed them to raise a massive round of financing.Federated Media, by contrast, doesn’t guarantee revenues but is profitable. They’ve raised just $7.4 million.

But Battelle also reportedly has Glam envy. He turned down a $100 million buyout offer, reportedly because he felt Federated Media should be worth at least as much as Glam ($400+ million).

Will Federated Media Buy Or Invest In Publishers?

The weak point of Federated Media’s model is that they don’t control their own publishers. If a better deal comes along, those publishers will bail - which is what happened last year when Digg left the network for a big, three year guaranteed revenue deal from Microsoft.

One way to solve that problem without guaranteeing revenue is to own publishers, or at least a stake in them in return for a contract they can’t get out of. When Olsen asked Battelle what he intended to do with the venture capital he’s in the process of raising, he said:

Word has it you’re looking to raise money and you’ve hired Savvian to vet offers. (CNET News.com story here.) Given that you’re already profitable and don’t need the cash, what do you plan to do with the money?
Battelle: Well, I can’t say specifically what we might do with any money that we might raise, should we do a fund-raising round. But I think there are an awful lot of opportunities in this emerging field and it’s just good to have access to capital to execute any reasonable ideas that we might have. It’s a very quickly changing market and it needs financing. I mean individual sites need financing and we want to be a good partner for all of our sites.

What do you mean individual sites need financing? You want to fund some of the sites you represent?
Battelle: I’m not saying that we’ll necessary do that. I’m saying that it might not be a bad idea to be ready, should that become something that those sites are looking to do. In a fast-evolving model, it pays to have a strong balance sheet.

So Federated Media says they want the option of investing in their publishers down the road. But certainly there will be strings attached. Here’s what I think he really means: They’ll either buy sites outright, or guarantee revenue, or guarantee revenue in exchange for equity. A publisher wouldn’t consider Federated Media an attractive investor versus venture capitalists simply because it would mean tying their revenue to them over the long term.

But at one point in the interview Battelle said a roll up wouldn’t work, because authors must be independent to be authentic (I’m interpreting, not quoting). So there’s some conflict in some of his statements. What are they really thinking? I have no idea. But revenue guarantees would be a nice place to start.

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CNET is reporting that tech-focused advertising network Federated Media (which sells advertising on our behalf) is looking for a new round of financing. CNET is basing this partially on our previous report that they hired investment bank Savvian to represent them after they turned down a $100 million acquisition offer, plus a new source that says the company is looking at term sheets now.

From what we hear, Federated Media is looking at both financing and new buyout offers, but wants a valuation way beyond the $100 million floated to them last year. Founder John Battelle is said to be looking for more of a Glam-like valuation, in the $400+ million range. Glam has a similar business model to Federated Media, but focuses on womens sites. Glam also guarantees significant revenue to its partners, which resulted in a loss last year of $3.7 million on $21 million in revenue. Federated Media doesn’t guarantee revenue, and is reportedly profitable (they better be, with how much of our revenue they keep).

Federated Media is reportedly generating gross revenues in excess of $2 million per month, and they keep 40% of that after the split to partners.

It’s unlikely the company will get buyout offers in the price range Battelle is looking for, so a new financing is likely. But part of me wonders why they’re doing this at all. A new financing means a bigger valuation, which means they need a much higher price down the road when they do eventually sell. And with competitors springing up all over the place, margins can take a hit.

Perhaps Federated Media intends to take the Glam approach and go in the red for the sake of growth and begin to guarantee revenues. That’s a slippery slope, but it may also get Battelle his payday.

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Through a variety of sources we’ve confirmed that Technorati is making plans for a major shift in it’s going forward strategy, and is also considering a number of corporate development transactions.

First, they’ve been pitching venture capitalists on another round of financing. That’s not surprising - their last round, $10.5 million, was in June 2006. The company has raised a total of just over $20 million, and given that they have 25 employees, it’s time for another round. But we’ve also heard that they’ve hired Montgomery & Co. to shop the company to buyers, simultaneous to their funding pitches.

What’s more interesting, though is what we’re hearing on the product front. Technorati, under new CEO Richard Jalichandra, recently changed it site to focus more on its core blogging audience.

That change foreshadows the upcoming shift - which places the Technorati site itself as an anchor in a new blog advertising network.

Advertising networks are popular right now - Glam recently raised $85 million after transitioning, seemingly overnight, from a small web property focused on women to selling advertising for a variety of similarly-focused publishers. And John Battelle’s FM Publishing, an advertising network focused on technology blogs, recently hired investment bank Savvian to help them raise money or sell after turning down a $100 million buyout offer.

Technorati will certainly be competing head to head with FM, although sources say they’ll focus on the long tail of the market as well (FM only takes larger sites). The network will be a self-serve exchange for bloggers (and other publishers) as well as advertisers. Ad units will include both display and text ads, and will allow units to be charged on both a CPM and CPC basis. This self-service model looks a lot more like Adbrite than Glam or FM.

Technorati tags, which are very often used to describe blog posts with keywords selected by the author, would also be a natural way for Technorati to target advertising more effectively.

Technorati has also considered other strategies recently, including a blog rollup. But our understanding is that they’ve gone with the ad network idea, and are currently focusing engineers on finalizing the product.

Will the strategy work? As we’ve argued many times, ad networks suffer from fickle customers. Glam offers partners revenue guarantees based on page views (and lost $3.7 million last year on $21 million in revenue). FM has resisted guarantees to date, but lost high profile partner Digg last year to Microsoft. Others, including us, have simply sold advertising directly while continuing to work with FM. With Technorati entering the market, publishers will have yet more choices. That’s good for everyone except the ad networks competing for their business.

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Brisbane, California based Glam Media reported an $85 million round of financing, their fourth, today. We first reported that Glam was looking to raise as much as $200 million in August 2007.

The round was $65 million in cash and $20 million in debt, on top of almost $30 million they raised in three prior rounds. Investors included Hubert Burda Media, GLG Partners, Duff Ackerman & Goodrich and Hercules Technology Growth Capital. The valuation, as expected, was in the half billion dollar range.

The company, according to their original offering document, is not yet profitable. They lost around $3.7 million on $21 million in revenue in 2007.

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Brisbane, California based Glam Media reported an $85 million round of financing, their fourth, today. We first reported that Glam was looking to raise as much as $200 million in August 2007. More rumors popped up in November 2007.

The round was $65 million in cash and $20 million in debt, on top of almost $30 million they raised in three prior rounds. Investors included Hubert Burda Media, GLG Partners, Duff Ackerman & Goodrich and Hercules Technology Growth Capital. The valuation, as expected, was in the half billion dollar range.

The company, according to their original offering document, which is embedded below, is not yet profitable. They lost around $3.7 million on $21 million in revenue in 2007. 2008 projected revenues are $150 million and $40 million in profit.

Glam operates a number of small sites geared towards women (including that appear to be pure SEO plays like free-beauty-tips.com, celebrity-hairstyles.org and others). They also sell advertisements for other sites, which make up the vast bulk of its page views. We have criticized them in the past for claiming to be the largest womens site on the Internet, and the fastest growing site in the U.S., based on traffic coming from sites they sell ads for.

As an ad network Glam may find its margins squeezed as competition increases. Still, they control a lot of page views. Comscore reports that worldwide uniques across all sites that Glam sells advertising for had nearly 47 million unique visitors and 1.1 billion page views. That’s 4x the unique visitors and 11x the page views from a year ago.

Glam Media Teaser August 2007

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Ad network Glam got a glowing review from Jeff Jarvis today. And he’s not the only person out there that likes them - word is they closed the big round of financing they’ve been trying to raise, at a $450 million valuation.

I mentioned that they were raising money in an August post. In that post I heavily criticized the company for trying to claim it was the largest womens site on the Internet, as well as the fastest growing U.S. web site. In their offering document, they said “Glam Media is a Web 2.0 distributed media company that is number one in reach for women as reported by comScore Media Metrix…Glam Media is the fastest growing web property in the United States…”

But Glam isn’t really the largest women’s site on the Internet - not by a long stretch. Rather, it’s a collection of a few sites that they own that generate some page views, plus a big ad sales team that sells ads for 600 or so other blogs and websites. In August the company claimed 19 million monthly visitors, but just 3.4% of them (654,000) actually visited Glam.com. The company will lose about $3.7 million this year on $21 million in revenue.

The company still claims to be the largest women’s site on the net, and still talks about those big unique visitor numbers. But their real position is much different - they rely completely on their partners for page views and advertising inventory.

Jarvis says Glam only had to “fire” one content partner this year. That suggests the power in the relationship sits entirely with Glam, when in fact the opposite is true. For now, many of their partners have few choices in selling ads.

But competition is clearly coming (Sugar, Inc. is going in this direction, for example). And when publishers have multiple choices for ad networks, they’ll start asking for guarantees and better margins. That will cut into Glam’s already unprofitable business model.

Not only will competition hurt Glam, but their network partners will leave them once they grow to a certain size. As soon as it costs less to simply hire a salesperson instead of paying Glam 40% of revenue, they’ll leave.

So while I think Glam is great, i don’t see them as the redefinition of new media and I do see some real problems with their business model. Whoever creates the content and the page views owns the real assets. Whoever sells their ads for them is little more than a service provider.

Glam Media

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SugarPublishing

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