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.
Update: Scott Swanson replies in the comments:
As GM of the Glam Publisher Network, my team’s #1 priority is to ensure the success of our publishers and to help them secure high-CPM brand advertising. Unlike most other networks we do not compromise on our rate card and as a result, our partners benefit from high CPM brand advertising. When we’re unable to deliver a paid ad, we have traditionally run a Glam house ad (i.e. a current house ad announces our upcoming Glam Network blogger awards). Publishers have requested more choice for the impressions that our house ads would normally fill. This default ad technology simply replaces the Glam house ads with a host of options. This is similar to standard network ‘default’ technology that’s been in general use for years.
I want to acknowledge that Glam is successful because of our publisher partners. As a company, our focus is on convincing the brands to engage in new ways with a media landscape made up of independent premium publishers with passionate audiences. We welcome the ongoing dialogue.
Federated FTW!
Slam BAM! Thank You Ma’am!
I am too Sexy for you
It hurts
I never figured these guys out. One day they were a “revolutionary” online women’s magazine, then they morphed into an ad network, now moonlighting as a blog network. Whats the deal? Maybe finding a real sense of purpose will instill the financial discipline that their investors are looking for.
Well said, Mike..
I think this shows a very interesting monetization model that many sites and startups grapple with or at least ponder:
-Start out Sweet
-Then once you got the user base, suck ‘em dry.
When thinking about possibly doing this, the worry is that you’ll destroy your brand and credibility, and it ultimately won’t be worth it. Let’s see what happens with Glam.
James
from
http://FaceySpacey.com – “The Startup Incubator”
That sucks for sites like mine, when i just started getting into advertising. But then again i don’t know much about it.
Glam’s CPMs have always seemed insanely high. I work with a company that would be a perfect fit to advertise on Glam’s network, but their costs were way too high. Even if we were a multi-national conglomerate just looking to advertise the brand, I don’t see how we could ever see a return on investment that would be worth it.
Somebody must be happy with their Glam ads, right?
this seems pretty shady – seeing the vocal negative backlash companies like FB have seen when making changes that effected their base, I think the Glam deserves a loud backlash of their own. hopefully the voice of the smaller blogs is heard. Would have been good for TC to talk to some of the bloggers directly effected by this policy change. While I’m not Glam’s target, this news certainly changes the way I’ll view the company. All that VC money has gone to their heads.
‘That’s an awesome advertising income for blogs, particularly blogs targeting women generally’
Blogs targeting women can have very substantial incomes from swag: why else does anyone write twenty nine posts a day about handbags. I guess this means severe booty price inflation.
MistOne – read paragraph 3 above.
how are they going to make that much revenue in 08 when they are going to be dropped by the medium blogs pretty damn quick. Could be a good moment for FM and alike to pick up some new blogs.
I am guessing that the blogs they now own are the ones that bring in 80% of the income from last year.
Can someone explain to me the benefit for a small to medium sized website to monetize their site with CPM vs. fixed monthly rate?
http://twitter....tuses/779324019
an anonymous Glam blogger comment via email:
“Many of their publishers are leaving in droves, somehow our $ significantly dropped last year, plus the ads are no longer really niche”
Off topic – Is that Shannon Nelson who works for Pierce Mattie Beauty Public Relations Advocates?
All I can say is, “Ha Ha”. Welcome to the real world! All the crappy piss-ant blogs need a reality check, and this will help within the fashion niche.
Heh patricia, please tell us how awesome this vertical is now. You got out early enough before everyone realized it was a micro-bubble, good work.
Hi This is Marco from The Purse Page. We’re a blog in the Glam network.
Just wanted to say that being in Glam is one of the best things that happened to our site.
We’ve earned more with Glam than all other advertisers on the combined.
No one asked me to say this, I just read TechCrunch sometimes and saw it, so wanted to speak up.
Thanks
Marco – my understanding from our past posts is that Glam contacts their bloggers and asks for support in the comments on our posts. Did they contact you to tell you about this? Have they in the past?
More importantly, have your revenues been hit?
There’s a reason why Glam had to go outside the US to raise money.
something else that’s interesting. Glam was working at one time with Allen & Co.:
http://www.tech...is-glam-a-sham/
but we’ve heard that the relationship fell apart for some reason and Bank of America ended up representing them in the transaction. More drama as well. We’re digging for confirmation.
Allen couldn’t get them the deal they wanted so they parted ways and went with the hackish BofA (they’ll take anything these days) and go some dumb money. This is just an educated guess.
money suckers…..they are building their own ditch to go down
While I understand it would suck if I got my $$ cut, what up on all the snarky comments? It is UNSOLD impressions. Seems like a logical move to right their previous dumb move to guarantee way above what the market. I would understand the slams if they were jacking the bloggers on the guarantees but sounds like that is not the case. Or is it that we should be shocked that they built their fundraising story on some shuck and jive? I am shocked, shocked to find gambling in here!
Ha ha, you’ve been TechPunched. Does Glam compete with PopSugar?
Hi Michael
No one has contacted me to defend the Glam about this post. It’s Saturday and I think Glam offices are closed. Im just sitting home and saw the Tech Crunch article and wanted to post. Ive never talked about Glam on your blog before but was reading it and wanted to say that my experience with them is way different and very positive.
I happen to read TechCrunch because its success is inspiring to me, I didn’t come today because someone asked me to.
PursePage.com was accepted into Glam in early 2007 and that’s when things started happening for us. I saw a boost in traffic right away from being networked with other fashion bloggers. Our traffic grew and revenues did too. You can see our Alexa and Compete.com rankings that after joining Glam that’s when the ball started rolling for us.
I’m not sure what I can and can’t say about revenues legally, but I’ll just say that it’s grown every month. This holiday season we got an unusually huge boost from retailers who wanted to advertise their stores to our readers, but now that that is over the revenues are inline with how they were before the holidays. I dont know about other sites, but for us the revenues are have always been great from Glam.
So yes, the revenues are still good. Better for us today than last summer. For me they’ve been inline with my traffic, so as our traffic grows so do our Glam checks.
It is next to impossible to promise guaranteed CPMs on house ads when you sell through rate is that low.
@Tom (#22), That’s a fair point. I get snarky b/c of all the hype with which they launched. Over-promising and under-delivering (eg. changing your original “position” to something more reasonable) is a sensitive nerve for me as I fight my partner on much the same grounds.
another possible reason:
This new round of financing could have had conditions attached with regards to the current business model……these changes could be as a result of those conditions
Submit your startup for review @ Blubert – http://www.blub...tup_reviews.php
Glam is a scam. Anyone could have seen this coming, the whole thing is a shell game that works like this:
1. Roll up a bunch of web properties. Buy their loyalty by paying wildly expensive rates.
2. Get those sites to do traffic assignment so you can claim, using Comscore, that you’re massive in whatever niche you claim to be in
3. Fool a bunch of VCs and other investors into believing you’ve created something massive and revolutionary. This part is perhaps the most surprising/revolting part, as you’d think they’d be smarter then this.
4. Raise a shitload of capital at an insane valuation
5. Slash rates back to industry standards, you’ve got money to burn so why not? Maybe you can even build a “real” business but most likely you just keep acquiring sites/traffic so you can sell out to a desperate, clueless traditional publisher.
As GM of the Glam Publisher Network, my team’s #1 priority is to ensure the success of our publishers and to help them secure high-CPM brand advertising. Unlike most other networks we do not compromise on our rate card and as a result, our partners benefit from high CPM brand advertising. When we’re unable to deliver a paid ad, we have traditionally run a Glam house ad (i.e. a current house ad announces our upcoming Glam Network blogger awards). Publishers have requested more choice for the impressions that our house ads would normally fill. This default ad technology simply replaces the Glam house ads with a host of options. This is similar to standard network ‘default’ technology that’s been in general use for years.
I want to acknowledge that Glam is successful because of our publisher partners. As a company, our focus is on convincing the brands to engage in new ways with a media landscape made up of independent premium publishers with passionate audiences. We welcome the ongoing dialogue.
Hi Debbie,
I am the same Shannon, however I was speaking on behalf of myself as I have my own beauty blog.
Michael–lol I have to remember that Twitter is fair game and not just casual conversation.
However, it is no secret that Total Beauty has asked me to join their advertising module when my contract expires with Glam. I love my contacts at Glam, but I can’t say I am happy with the ads that I see on my beauty blog. Many times it doesn’t match my content. However, Total Beauty is strictly focused on beauty (as is my blog) which then may benefit me with high click through ratios=more money as a publisher.
I was wondering, have you looked at Total Beauty’s advertising module? I’d love your insight, it will definitely help me to make an informed decision.
Shannon – sorry about that. If it was a direct message or email I would have asked before posting. Given that Twitter is public, keeping the source confidential wouldn’t have made any difference.
Shannon’s thinking is 100% sound. I am also a publisher and my blog is such a small niche that I would probably benefit from more tailored ads as well. The running other ad networks option sounds interesting, but I wonder what the catch is?
Have to agree with Shannon and Sandra on this one. it bites hard… Especially when you aren’t making the money that you used to make
It sounds to me like the publishers in the Glam network have it pretty good. I doubt that Federated Media pays that high for house ads. Tribal Fusion, Burst, Gorilla Nation, Value Click…none of the other ad networks do this.
My suggestion for any publisher that will see a drop in revenue would be to place Google AdSense or any other adnetwork ad in there for their house ads. It’s better than nothing.
You can be upset with Glam as much as you want, but the bottom line is that they took better care of you than any other network would have, and at least they are being upfront with the changes. Most companies wouldn’t be.
Michael, why don’t you share with everyone what the Federated Media House Ads pay? I would be curious to know as would others…
WOW, IAN BELL- i too am curious.
wow, I actually applied with them recently. I havent heard back yet, but now I couldnt care less
It does amaze me, that publishers would rather make $100-200 bucks extra a month from an outside source — instead of promoting the Network that makes them the big dollars. It’s not rocket science, Glam does well = We do better.
Glam took my blog when it was only getting about 100 uniques a day – now it gets about 200,000 uniques a day. They ( GLAM) have stood by me, why wouldn’t I want to stay by them) I do appreciate everything they do. Specially their Community Director(love you gurrlll).
To all the whinners out there please think about it:
1) switch to Blogher: No ads and $1000 to attend their feminazis workshosps
2) switch to Gorilla Nation: Be treated like crap
3) Tribal Fusion: 50 cents ads
4) Glam Ads:a response withing 24 hours and being listen you…………………….
Ian – FM doesn’t have house ads as far as i know. I think they put in remnant inventory from google or somewhere else, which effectively pays nothing.
@fashiongalk-it doesn’t sound to me like anyone is whining.
@Partial_to_Glam-congrats on your huge success! I think the downer here is that this change will affect smaller blogs like mine. But we all have options. I could argue with you on several other points you made, but I won’t. Not here.
I, for one, don’t know of any other ad networks that pay fashion blogs as much as Glam does. But I also don’t know much about ad networks, period. I think the option of running another ad network when there is no Glam ad running may be the way to go for smaller blogs like mine.
I’m also wondering why Glam publishers are hiding behind anonymous names? I don’t feel we are discussing anything bad here. But then again, maybe I’ll get flamed!
Why hiding behind anonymity? Because, while everyone wants it to change, people want to make sure the “next thing” is lined up before pissing all over glam.
The long and short of this issue is simple: for publishers who were guaranteed 100% sellout (and there are a lot of us), this is an immediate decrease in revenues.
And while Glam wants to spin this as a positive, if it was *really* about taking control of our own inventory, they would have let us sell what we wanted, and filled everything else according to the current contract’s terms. This is a cost-cutting mechanism, pure and simple. The *only* way for them to get out of paying for house ads was to *not* display them (per the contract). The *only* thing to do with the extra inventory was to either put AdSense on there or to allow pubs to sell it themselves.
So don’t be fooled.
And while the deal was always too good to be true, dropping this on publishers without any notice isn’t cool.
Shannon,
Total Beauty approach me as well and I can tell you that there’s just no way I will leave Glam for an unproven company that spends all that money winning and dining bloggers but have no ads to serve. At least Glam pays me very decent CPMs, I know what to expect and they have all those millions behind them.
@Sandra I am not hiding behind anonymity I just prefer not to call attention to my site. I don’t want to hear from the other crazy bloggers who get irrational without analyzing the facts. That’s all.
@fashiongalk-I just don’t see any bloggers here being irrational. Maybe biased, but not irrational. Folks have genuine concerns about this news. Your traffic may be high enough that it won’t affect you. That’s not the same situation for everyone.
Re: anonymity- conversation is kind of the foundation of blogging isn’t it? otherwise, we’re all print publishers. Just my opinion.
Providing guaranteed CPMs for publishers at the beginning of a relationship sounds a classic bait-and-switch tactic the same way sub-prime mortgages often have low initial interest rates.
This is a classic example of what happens when you build a network purely based on minimum revenue guarantees. Glam took on too many publishers too fast merely to get their comscore reach to the leading position in their vertical and it has become increasingly difficult for them to generate any profits with the high revenue guarantees in place. With the new investors in place they are now being held accountable to try to turn the business around in order to generate any EBITDA.
Kontera had the very same strategy in place to try to lure publishers away from Vibrant Media for their in-text product and we saw how that back fired on them.
Looks like Christmas came way too early for Gorilla Nation this year!
-Pirouz Nilforoush
NetShelter Technology Media
Seems like a classic switch and bait to me. When something is too good to be true it usually is. Guaranteeing bloggers $3 – $5 CPM is insance and unsustainable but does represent a brilliant manipulation to gain traffic quickly and fool investors. It also seems like a very bubbly course of action. And we know what happens to bubbles.
Robert Kadar
CEO
Good Health Advertising
http://www.Good...Advertising.com
Seems like a classic switch and bait to me. When something is too good to be true it usually is. Guaranteeing bloggers $3 – $5 CPM is insane and unsustainable but does represent a brilliant manipulation to gain traffic quickly and fool investors. It also seems like a very bubbly course of action. And we know what happens to bubbles.
Robert Kadar
CEO
Good Health Advertising
http://www.Good...Advertising.com
“TechCrunch got it wrong- Michael concedes his numbers may be too high.”
“This was reported incorrectly. If there is a real revenue level that the publisher is guaranteed, Glam ensures that level is met by using house ads, and it will continue to do so.”
“Glam may acquire blogs cheaply….This is not correct. As a web site and blogging business yourself, you would understand that success online comes from tremendous continuous energy to create and build an audience online. Any short term changes simply would not work, as there would be little long term success after the deal closed.”
“This also includes letting publishers run their own ad server. This is a step beyond what other networks, say Federated Media offers its publishers. (VentureBeat uses Federated Media for its ad partner, for example, and Federated Media controls access to our ad server).”
Sounds like minimums have no change, revenue is not dropping as reported, and Glam is offering publishers more choices than networks such as FM???
http://ventureb...akes-ad-change/
@39 Michael – Good to know. Tribal Fusion does the same thing as do others. Glam was the first network I knew of that paid house ads at that high CPM. No wonder they were losing money (as mentioned).
@ Robert Kadar
I wouldn’t say that Glam fooled investors. It’s called a strategy, specifically the “loss leader” in order to get customers in the door. And it worked for them, they got publishers, Comscore numbers, advertisers, and ultimately a high valuation.
Another good example was YouTube, who gained in traffic primarily off of illegal, copyrighted content. Once you have the numbers, no matter how you got them, you can always change the model and retain a high percentage of the traffic. And that’s what’s going on. It’s smart really…