VentureBeat

Glam, the controversial fast-growing woman’s online content and advertising network that just raised $85 million, is making some significant changes in the way it runs its advertising, VentureBeat has learned.

The changes are three-fold, and are significant because Glam has garnered widespread attention — some positive, some negative — lately in the industry for its efforts to apply new ad technologies and strategies to build its network of sites.

The latest changes include small changes in the way it delivers cheap, back-fill ads, but also more significant changes that offer publishers more control and which haven’t been disclosed until now.

First, perhaps most significantly, Glam is moving to open its ad platforms for publishers to exploit directly, letting them select the various premium ads that are available to them, or text ads available from Google, video and other ads. This also includes letting publishers run their own ad server. This is a step beyond what other networks such as Federated Media offer publishers. (VentureBeat uses Federated Media for its ad partner, for example, and Federated Media controls access to our ad server). The program, called “Glam Evolution for Publishers,” will provide software called “yield management,” which gives publishers more insight into how to maximize ad revenue.

Second, Glam is about to offer the ability to target ad inventory even more finely. Internally, it calls this “hyper-targeting,” and it allows advertisers the ability to place premium ads during certain times, such as primetime (by watching when traffic to a site hits a peak, for example). This is added to the ability to target prime placement areas on a site, which Glam determines by watching where on a Web site users tend to click through more often than in other places, for example. It ads this to its existing targeting of gender, age, geography and other demographic information.

Finally, in a change first reported yesterday by TechCrunch, Glam has made some changes in some of the “back-fill” ads it runs on publisher sites. Back-fill ads are used when no premium ad is taken out by an advertiser. Until now, Glam has run what it calls Glam brand house ads in these spots, for example ads announcing Glam Network’s upcoming blogger awards. Glam pays its publishers a small amount to run these ads, low rates (we’re hearing typically $2 CPM or less, though Glam won’t comment on specifics, citing confidentiality agreements with publishers) so they can be considered similar to Google Adsense which many publishers use for remnant advertising. Now, Glam is no longer running those house ads in many cases. It says it made the move to give its publishers more options, such as letting the publishers run their own brand ads, or open up the space to ads from other third-party servers. However, TechCrunch thinks differently. TechCrunch claimed the move is part of an effort to slash revenue it gives to publishers — suggesting Glam is doing this because it is losing money. It also accused Glam of a bait and switch, promising publishers guaranteed revenues per month initially (which the house ads were partially used to pay) in order to sign up publishers. Now, after impressing investors and raising a big round of capital, Glam will cut back on those payments, TechCrunch claims.

However, Glam tells me TechCrunch got it wrong. Scott Swanson,VP & GM Glam Publisher Network, said Glam will hold to the deals it has cut with publishers, including the minimum amount of revenues per month. Glam will continue to run house in cases where it needs to meet minimum revenue guarantees, Swanson said. (We asked Swanson several questions by email today about this house ad change, and we’ve run his answers below).

Finally, TechCrunch’s Michael Arrington suggests in comments the Glam banking relationship with Allen & Co had fallen apart. However, Glam’s Samir Arora told me this isn’t true. Allen & Co. and Banc of America Securities were the lead bankers in the last round, and the two banks continue to advise the company for M&A and business development deals, he said.

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Here’s the Q&A with Glam’s Swanson

VentureBeat: According to TechCrunch, you reportedly guaranteed a payment between $3 to $5 CPM for the house ads. Is that correct? And by taking that away, doesn’t that effectively take away real revenue from your publishers?

Swanson: This was reported incorrectly. [Editor's note: Swanson wouldn't comment on the CPM rate for house ads because, saying it is under contract confidentiality.] Glam is making no changes in paid for house ads to ensure our publishers will make the minimum levels of revenue they expect when they sign their agreements with Glam. The spirit of Glam’s unique contracts is one of trust — Glam sells premium ad inventory for its publishers and shares revenue with them — 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.

VentureBeat: So before the change just reported, you’d run paid for house ads even above the minimum guaranteed in your contracts?

Swanson: In some cases, Glam has run house ads above the minimum levels to help manage ad inventory and quality of primetime ad spaces — though was not required to. Glam holds a strict definition of premium ad inventory with its publishers — audience (women, US, age, demo), behavior, primetime placement (above the fold, near post), context (channel, article) and engagement. This is the way Glam ensures brand advertisers can hyper-target audience across a wide network of publishers.

When Glam launched in 2005, we realized that most sites and blogs were mixing all ad inventory together and selling through any partner they could find- mainly Google AdSense and other low level ad networks. Unlike print or TV where premium ads are clearly defined and separate — inside cover, back cover vs. deep in the magazine or primetime and event based vs middle of the night for broadcast — on the Internet it is typical to see high end ads, followed by low level brands- sometimes on the same page at the same time. Glam found that brand proximity, audience targeting and primetime placement were critical deterrents for advertisers to move large brand $’s to the web. Glam started house ads to ensure premium ads were defined in display. This makes Glam unique — defining premium while paying publishers for it. Glam will continue to sell and serve premium ads and Glam house ads to publishers — is adding new options not unlike local stations in TV — they can sell used car ads or late at night non primetime ads.

VentureBeat: For most publishers, you reportedly sold only about 30 percent of your allotted inventory to advertisers, meaning your house ads accounted for 70 percent of inventory fill. Taking that away, publishers reportedly are losing anywhere between 30 and 80 percent of their revenue (depending on the CPMs of the house ads) according to TechCrunch. Is that right?

Swanson: [Editor's note: Swanson wouldn't answer this, again citing confidentiality agreements. However, I'm hearing that the 30 to 80 percent drop reported by Techcrunch is too high, because the house ads weren't paying anywhere near the $3 to $5 CPM TechCrunch's single undisclosed source claimed. In a conversation I just had with Arrington, he conceded the $3 to $5 numbers may be high. ]

VentureBeat: If you’d really meant more choice, presumably that would have meant allowing publishers to keep running the house ads, right?

Swanson: Glam is in the business of selling advertising to premium brands and creating a marketplace for publishers and owned & operated sites to generate revenue for Glam and its publishers. Several publishers on the network had been asking for these options once they made the revenue levels from Glam — this is a part of the roll our of more publisher services by Glam. Currently Glam is in the premium ads business and does not offer remnant display ads — offering brand ads is not a solution to this — allowing publishers to variably manage their non premium ads is. Stay tuned for other ad services and choices on the Glam Insider Publisher platform.

VentureBeat: The rumor, again according to TechCrunch, is that you’re looking to acquire blogs you sell ads for, and may be cutting revenue you give them, so that they are squeezed, and are forced to sell – and this lets you acquire them cheaply. Is that correct?

Swanson: 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. Glam is a transparent, trust-based company that has built a solid reputation with its publishers — that is earned through consistent actions over time. For Glam, publishers are the heart and soul of everything we do, and they expect Glam to run a company responsibly, yet provide them with options and choices. The business model of Glam helps bring power to unique and independent voices and will continue to provide the best services to them.

VentureBeat: Why would a publisher choose Glam with these changes? How is Glam different from other options?

Swanson: Glam, with over 29 million monthly visitors as reported by comScore MediaMetrix, uniquely provides the largest reach for Women 18-49 to premium brand advertisers. Glam is the number one choice of publishers targeting women in lifestyle categories because Glam brings the best brand advertisers to the most unique content in this vertical. The combination of wide reach with focused niche sites provides a compelling solution for publishers. Glam offers significant revenue net to the publishers, the best brand advertisers, custom advertorials, sponsorships and site specific sales. In addition, Glam has built a suite of content, technology, ad serving and other services that help the publishers save time and money. Like Google AdSense for text ads, Glam believes providing the best monetization to publishers, while building the best returns for advertisers in display ads will create the best display ads marketplace in the long term.

Disclosure: VentureBeat’s business manager is related to a Glam co-founder.

Glam Media, the fast-growing women’s content and ad network, launched its GlamLiving channel today, focused on home and design, and boasted that it has more than twice the reach of Martha Stewart’s recently announced vertical network, Martha’s Circle.

GlamLiving has 3.5 million unique readers per month, compared to Martha’s Circle’s 1.5 million, according to Glam. Glam Chief Executive Samir Arora said that some of Martha’s publishers have been defecting to Glam — he cited Apartment Therapy as an example. Glam’s executives argue Glam offers a better advertising technology than other sites (see our story here about this). Martha’s Circle relies on a third-party advertising company called Adify, and Martha Stewart has reportedly spent more than $100 million on its internet strategy.

GlamLiving consists of more than 25 new web sites, including 1st Dibs, 101Cookbooks, Apartment Therapy, BedandBreakfast.com, Danispies.com, Cookthink, EcoFabulous, HostessWithTheMostess, Low Impact Living and The Food Channel.

Glam says it has 29 million unique viewers per month in the U.S, and 44 million worldwide. It is now ranked as the 18th most trafficked site, according to Comscore Media Metrix, up from No. 28 in January. Glam’s media network now features six separate channels: Style, Fashion, Beauty and Shopping, Living, Entertainment and Wellness.

The controversy around Glam is well documented. Critics point out Glam is largely an advertising network, that it doesn’t own the publisher’s sites, leaving it vulnerable to defection if Glam doesn’t continue to offer a better advertising deal.

Glam Media, the controversial Silicon Valley company that says its network of woman-oriented sites is the fastest growing on the Web, has released a new set of features designed to boost traffic even more.

One is a Digg-like feature for recommending stories, only designed for non-geek woman. Call it the anti-Digg.

See our earlier coverage of the company, and the notable follow-up piece in Forbes about the company. What makes this company so interesting is that promises to be a raging success if it gains a certain critical mass in time — by signing up enough bloggers and ad deals that it can sustain itself after a its rapid buildup. Or, if the steam runs out of the economy, and spending on advertising dives, Glam could just as easily go down in flames. It is about to finish raising another $200 million.

Today, at the DEMO conference in San Diego, the company has released three more features. First is a new navigation bar, to make its expanding empire — now numbering 400 publishers — more navigable. The navigation bar organizes all content items according to whether they are articles, blogs, photos, quizzes, products or part of a specific theme area with its own channel, for example “health and wellness.” A blog item about health would fall under this channel, but would also fall under “blog,” for example. Glam will soon introduce video as a content type.

The move is significant because the content is all indexed and processed with tags, so that it can be better searched, including by search engines — all part of Glam’s effort to make its content rise higher in result rankings to give it more traffic as it tries to distance itself from competing networks like iVillage.

Second, Glam has introduced a “Story Box” feature, or a widget that shows what other “hot” content exists around the Glam network is relevant to the page the user is looking at. Glam’s Samir Arora says the box has been tested, and has already produced two billion ad impressions a month.

Finally, it has unveiled something called “Curate It,” which lets users recommend an article or other piece of content for others, similar to how Digg or Yelp let users recommend news or restaurants. However, Glam is holding to the reins, by picking professional curators to guide the content-ranking process.

Here’s how it works: Regular users can being curating, and then work their way up to get more status. As they do, their votes count more. They work themselves up from curator, to senior curator, to power curator. At that point, like eBay does with its “rising star” system, Glam steps in and anoints someone with “executive curator” status. Finally, the top step is “curator-in-chief.” See images below. In another twist, Glam lets users choose which curators they like, and which ones they don’t. That way, Glam can see which curators are maintaining a following and can reward them with promotions, accordingly.

Users can take their curates and distribute a “curate badge” as a widget on their site, on Myspace, Facebook, Glamspace, and so on.

updated

We finally “get” Glam, the network of Web sites for women’s fashion and lifestyle.

Last month, VentureBeat was incredulous when venture capitalists invested in the company at a value of $150 million. Glam is just another new media company, dependent on ads. How could an upstart team of 40 employees produce that sort of value?

The company has just demonstrated why. It is the fast growing of the country’s top 500 web sites, according to Comscore Media Metrix numbers just published — and shared with VentureBeat by chief executive Samir Arora (pictured here) during an interview Monday.

Glam enters 2007 with impressive momentum: Hip social networking company, Facebook, was No. 1 fastest-growing site in 2006 — until December — when Glam doubled its uniques in a single month and blew past Facebook at the last minute. Glam now has more than 8 million U.S. unique visitors per month. Glam overtakes Disney’s women network and CondeNast’s network, jumping to second largest women’s web property, behind only iVillage. (See data below.) Glam has more than 16 million global visitors, Arora says.

Not bad for a company conceived started four years ago in Arora’s Haight-Ashbury Victorian in SF.

There’s a slight caveat. For its traffic, Glam counts visitors to more than 200 partner and affiliate sites, which Glam doesn’t own, but delivers advertising too. On the one hand, these sites could choose to leave Glam if they get large enough. However, they are less likely to do so than VentureBeat originally suspected. Glam has solid relationships with these sites, having spent three years piecing them together. Glam typically contracts with them for two to five years, and Glam requires an exclusive on all prime advertising, in return guaranteeing a minimum payment to the partners. Glam is thus very much in control of the advertising, and so likely to be making a good cut — though it doesn’t disclose exactly how much. He likens the structure to a TV network, where NBC sells advertising for its affiliates, but gets content from them.

Even if the cut with partners isn’t particularly high, Glam would make up for it through its very high banner ad rate for advertisers, which is $12 to $20 per thousand views of a site (CPM). The rates on Glam’s fully-owned sites are $20-$35 for every 1,000 page views — a huge premium over most Web sites get. The reason, says Arora, is because advertisers want to reach women, who have been underserved by Web sites until recently. For email, advertorials and other features, the rate is $50 to $120, he says.

Women are finally catching up online, and the market is rewarding the players embracing them. The Knot was among the top ten Internet stock growers last year (126 percent increase).

Also, Arora points to comparable companies to justify his company’s relatively high value. Leader iVillage traded in 2005 in the $600-700 million market value range, before being acquired by NBC for over $600 Million plus earn outs. Over the course of 2006, as Internet companies became more valuable, iVillage’s value became an estimated $800 million. Other comparables suggest Glam is fairly valued relative to Daily Candy and IGN, a men’s site comparable to Glam, and which was acquired by Fox for $600 million.

Going forward, Arora says Glam plans to use its base in Silicon Valley (it also has an office in New York) to maintain its tech advantage over its competitors — pushing more video and TV content this year. Arora is a great salesman. Closing our hour-long interview, he says the company is headed to 20 million uniques globally. With the market valuing these sorts of companies (iVillage, IGN, etc) at 25 to 32 times unique users, he says Glam’s value is headed to $500 million! And we left believing him.

Glam Media, a Brisbane company that claims its online fashion site network has seven million unique readers per month, has raised $18.5 million in a third round of funding.

It has now raised a staggering $30 million, a huge amount of cash for a relatively new media company. The company is valued at $150 million after the round, according to various media reports, a level that nears absurdity. VentureBeat has not confirmed that value, but if true, it will be very difficult to turn a media company into something worth that much in the real marketplace.

Difficult, but possible, in this climate. It has a strategy. It plans to make a number of acquisitions, buying up Web 2.0 and other media properties. It has also struck a syndication deal with Hearst Magazines, whereby it is allowed to run that company’s content. Investors are clearly betting on the value of eye-balls, and in this sense, we’re back to 1999.

Its name, Glam, is sexy enough to help it grow. Glam cites ComsScore to say it is a top-10 women’s Web network (which include its own sites, but also Dwell, Nylon and 200 other sites and blogs). It runs news on fashion and celebrities, and then runs ads for folks like Guerlain, Victoria’s Secret, DKNY, Max Factor, Estee Lauder, L’Oreal, Neiman Marcus and Target. It pledges 10 million unique readers by the end of the year — representing very robust growth. It says it will be profitable soon.

DAG Ventures led the round, with participation from existing investors including Draper Fisher Jurvetson, Accel Partners, WaldenVC and Information Capital.

Co-founder Samir Arora previously worked at NetObjects (acquired by IBM) and Tickle.