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FM Raises Another $4.5M; Are They Having Difficulty Filling Inventory?
Reports from PEHub and Mashable indicate a new $4.5 million Series B round of funding for Federated Media. Congrats! Federated Media provides advertising for some of the world's largest blogs including: TechCrunch (TC is in "open warfare" and looking for a replacement), Read/WriteWeb, GigaOm, Mashable, ArsTechnica, TechDirt and about 100 other blogs. We have written several times about Federated Media and their "envelope-pushing" ad campaigns.
But I am left wondering, why do they need so much money and are they having difficulty filling their inventory?
First the "why" question. I have to assume that an ad network makes money (not profit perhaps) from day 1. Each ad view brings in some amount of revenue for FM. And since they are the provider of ads for many large blogs with mega CPMs, wouldn't they be bringing in oodles of cash? Perhaps this new investment round is to create other FM video shows like the Morgan Webb tech news show. And naturally towards hiring more sales execs and/or more ad-serving technology. Anyone else have ideas about where they would use this type of cash influx?
Secondly, Is FM having a difficult time selling ads/filling inventory on the top tech blogs? Over the past couple of weeks, as I browse their network of sites, I see a good number of bottom of the barrel ads running on their sites. It seems like they might not be able to fill the inventory that these sites need. Here are some examples over the past 10 days:
Some kind of download utility – TechCrunch
Supernova from GigaOm – this conference was 3 months ago?
Free iPhone with 1000 offers – Various
Two "we help you break the law speeding" ads – TechDirt and TechCrunch
On the plus side, there are the WebbAlert (shown right)/FM network banners running on many FM sites. These ads makes sense and I like the idea a lot. When you can't fill ads with paying ads, show house publisher ads. I wish all ad networks offered this type of publisher barter. Remove all of the ads listed above and only show the FM network ads. This is a great way for readers of x blog to learn about y blog and vice-versa. These banners also look 1000x better for a site's image than a "punch the donkey, win an iPod" ad. I would recommend they either explain what "SMB" means or change it to something else that people will understand.
got to make up for it somehow.
there were other campaigns running that were similar in nature that continued to run after he killed the People Ready stuff (and after the post you cite).
All the conversational marketing campaigns seemed to have been killed by the end of July or so. It could be that they are rethinking it, or perhaps Batelle changed his mind and now has declared conversational marketing a bad idea which he refused to do in the very post you cite.
I was looking for follow-up to the follow-up : )
Interestingly FM is holding a summit (aka $900 conference) on conversational marketing 9/11 & 9/12 less than half a mile from me. I just saw the ad on the Ad Age website.
http://federatedmedia.net/events/index
Lots of good speakers lined up, but Battelle isn’t listed as one of them. If he was, I might splurge for the $900 just to ask this question in public:
“Since your whole business is entirely built on the premise of conversational marketing why do your current campaigns all seem highly traditional? Has “conversational marketing” devolved into meaning placing ads on blogs?”
I inquired about attending the event about 2-3 weeks ago, never heard back.
Robert typed: “I’m disappointed that Battelle had no public comment on that”
Actually he did: http://www.federatedmedia.net/blog/archives/2007/06/a_follow_up.php
“I have to assume that an ad network makes money (not profit perhaps) from day 1.”
i.e. they lose money from day 1, based on an expensive sales force and the long sales cycle that seems to be required to land advertisers that will pay the desired CPM.
Of course raising money doesn’t necessarily indicate that FM is hurting; most businesses consume cash while growing. But I agree that lots of good inventory goes unsold, which must be very disappointing for the bloggers (and FM itself). I wish them luck; it’s an interesting model.
it’s pretty clear that the present business model is either not enough to sustain current operations or, probably more likely, not enough to grow the business as fast as they want to. Otherwise why do the round at all?
FM seems to have stopped all of the ad campaigns where its main bloggers were quoted saying nice things about the company advertising and not just the “People Ready” campaign.
I’m disappointed that Battelle had no public comment on that and have no idea whether they are still enamored with the idea (I think it’s definitely an idea worth playing with, and I imagine it paid FM very well)and retooling it, or punting altogether.
Ad networks seem to be all the rage and $4.5MM is much less than the $200MM Glam is trying to raise.
It would be interesting to find out what is the total advertising market $ being thrown at the TC 100K and get an idea of whether it’s approaching saturation or still has much room for growth.
WebbAlert plays to the TC 100K, but is not a mass consumer brand and never will be. Are there enough dollars available to throw at the TC 100K to generate more and more stuff like that?