The RGM Group has carved out a niche by making sure that rich people see ads from luxury and premium brands on the internet. And in good times or bad, the Venice, Calif.-based company has proven that it can profit from the growth of internet-related ads that target the right people at the right time.
Kamran Razavi, who founded the company in 2004 when he was 25, said in an interview that RGM is on its way to tripling its revenues in 2011, and it hasn’t raised any money.
The company’s RGM Alliance division is an ad network that matches luxury and premium brand advertisers with 250 publications that focus on high-end readers, including Yachting, Luxury Travel, Burda Style, Zagat, Men’s Fitness, Woman’s Day, Elle, Boating and Esquire (disclosure: and VentureBeat). The alliance now reaches 117 million unique visitors per month and generates over 2.5 billion page views. The numbers are enough to put RGM on comScore’s list of the top 50 internet audiences. Back in May, 2009, the company had just 21 million users per month among 66 publications.
“It’s a point of pride that we have been profitable since 2004 and haven’t had to raise any money,” Razavi said. “In the last few years, we have evolved our approach to ads. We create a new niche for both publishers and advertisers.”
Back in December, 2010, RGM reached 91 million users a month via 200 high-end publications, and it generated 1.5 billion page views. The differentiator for RGM is that it can reach so many page views with a relatively small number of publications.
Razavi said the company stringently pre-screens web site publishers so that it works only with those that meet the standards required by premium advertisers in areas of brand integrity, site content, ad placements and audience. Razavi says the alliance continues to be transparent to both advertisers and publishers, with no hidden sites or traffic sources. Advertisers select a channel and can target their campaigns based on geography or desired behavioral categories. RGM’s advertisers include luxury brands such as Jaguar, Cadillac, Waldorf Astoria, Bombardier, SkyJet, Debeers and others. But the advertisers also include premium brands such as Acura, HSBC, Bose, Qantas, Horchow, Arizona Tourism, and Bosch.
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The company also has its own luxury goods web site, JustLuxe, which has a couple of million unique monthly visitors. And RGM has a site-specific exclusive media representation business and a creative services division that creates high-engagement ads. The company was recently named the exclusive media representation firm for OpenTable.com, which has become the world’s largest restaurant reservation system. That means that RGM provides the ads for OpenTable.com.
Razavi said the company recently hired Gabe Greenberg, a former Microsoft marketer, as chief revenue officer. Razavi said the company strives to create highly effective custom ads that have a unique feel yet can be run across many publications across the network. RGM separates its publications into channels, such as a health channel, which is one of the largest on the internet.
The company has 35 employees. For custom content, the CPMs (cost per mil, a measure of ad revenue per 1,000 people) is something like $100. For standard ads, the CPMs are around $8 to $10 for the RGM Alliance. Lower-quality ad networks generate CPMs of $3 to $5.
Razavi said that luxury markets have recovered since the recession of 2008-2009, but the company has diversified beyond luxury brands to premium brands as well. One question is whether rocky times in the stock market will prompt another recession that will affect luxury spending.
“The last recession stunted our growth, but we continue to grow and benefit from widespread adoption of internet advertising,”Razavi said. “There are more people coming online and more brands that want to reach those affluent people than ever before. There could be a pause in spending, but most companies have more cash now than ever before.”
Razavi doesn’t disclose the company’s revenue numbers, but he said that profits are in the eight-digit range. Rivals include companies such as Glam Media, Travel Ad Network and Conde Naste Digital.