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Federated Media, the Sausalito, Calif. ad network that is in a land-rush to sell ads for independent publishers, has landed a big customer, the technology information site DeveloperShed.
DeveloperShed, part of Ziff-Davis Enterprise (a company that spun off last year from the decaying Ziff-Davis Media group, which filed for bankruptcy in March), boasts 6 million unique visitors and 27 million page views per month — with its readership consisting mainly of IT developers and programmers. Its traffic is also growing.
The coup is a relief for Federated Media, which in the past few months has lost some big customers, including Digg (which it lost control over to Microsoft last year; though it should be noted that Microsoft did turn around and sign a deal with Federated Media to keep selling ads for Digg), Ars Technica (which Federated Media lost two weeks ago, when that site was bought by Wired), and Celebrity Baby Blog (which was acquired two weeks ago by Time’s People.com).
DeveloperShed’s viewership is about 40 percent higher than Ars Technica’s, which is a big tech site with a similar IT profile among its users. DeveloperShed also has far more page views and visitors than Celebrity Baby’s 6.9 million and 720,000 unique in April, according to Comscore.
The DeveloperShed deal will be announced tomorrow. DeveloperShed owns 12 sites, which feature daily news and articles, as well as popular developer forums. The sites focus on developer technologies, including PHP, MySQL, Linux, Oracle, Microsoft and other platforms.
I learned about the deal tonight after I started asking FM about the challenges of its business model. Federated is in a bind, I told Chief Revenue Officer Chas Edwards, if its properties keep growing up, and getting acquired by others. In other words, the more successful Federated is in creating business for its properties, the more it is grooming those properties for an eventual sale to a hungry acquirer — and the vicious cycle continues.
So, despite the DeveloperShed deal, I’ve got questions about how Federated Media will evolve. It owns the ad relationships for hundreds of authors and publishers (including VentureBeat’s, by the way). but it could be argued that the only way it scooped up DeveloperShed as a customer is because that company’s parent is in financial straits. [update: DeveloperShed is actually part of an entity called Ziff Davis Enterprise that was spun-off from the struggling Ziff-Davis. Ziff Davis Enterprise, which in turn was bought by a private equity group, owns a number of other content publications. So while the financial situation at Ziff Davis has no effect on this deal, it still makes sense that these are looking for an ad representation; more details below].
On the bright side, there are endless numbers of individuals and small groups creating vibrant blogs, and FM may be able to keep growing this mass stable of blogs and retain a robust business. No one site represents more than one percent of FM’s entire business, Edwards said. So it will be a continuous cycle of signing up blogs, which FM can pull off — though other players have entered the business too. Glam, for example, has a similar model, except focused on female audiences, and the two have clashed in this area. Glam, no doubt, is likely to try to enter the tech market soon. Unless the sides conspire to keep off each other’s turf.
While we’d love each partnership to last forever, we don’t expect zero turn-over, and our model anticipates more turn-over than we actually experience. We know that a handful of our partners each year will decide that an exit and a day job will beat out the appeal of entrepreneurship. For many many others, there’s a long-term desire to operate an independent content business supported by premium advertising rates — rates previously unavailable to anyone but Big Media.
…Because of this dynamic, we do two things at once. One, invest aggressively in supporting the growth of our partners’ businesses, because the more successful they are (and the fewer stress points they need to overcome each day), the more likely they are to be long-term partners. Two, we are always on the hunt for the next rising star.
Update: Here’s more explanation about the background of the DeveloperShed from Federated Media’s Vice President of Author Services Neil Chase:
DevShed was started by Jon Caputo and Shari Caputo, a husband-and-wife team in Florida. They had earlier done another startup that became part of CNet. They were bought in late 2006 or early 2007 by Insight Venture Partners (http://www.insightpartners.com/).
Last year, Insight bought ZD Enterprise [a spin-off from Ziff-Davis]. They kept using the ZD name and merged some of its operations together with DevShed, so they now share some tech and operations resources. I think Jon Caputo now has a title that covers both ZDE and DevShed. We’re selling the developer-focused DevShed properties, and the team that came from ZD with that acquisition is still selling the ZDE stuff.
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