When will Samir Arora admit that Glam Media, his online ad network, is running out of money? Glam buys up ad space on websites and resells it to advertisers, as well as operating a few token websites itself. But it has overpaid for much of that space, and revenues are running dangerously short of projections. Now, Glam is delaying its payments to partners by up to 120 days, claiming that the move is necessary because advertisers are slowing their payments to Glam. Which is utter nonsense.A well-capitalized ad broker would be able to pay its publishers promptly; it's part of the reason why such middlemen take a big cut of advertisers' payments. The only sensible reason why Glam can't pay Web publishers promptly is because it no longer has the capital to float its accounts receivable, despite raising $85 million earlier this year. I'm sure Arora will deny that he's running low on money — in which case he will be tacitly admitting that he's stiffing his partners.
Online ad networks are set to consolidate, reports the Wall Street Journal. There are 400-some networks, which act as middlemen between advertisers and publishers to broker space on websites, modeled after Google's successful AdSense business. But the big deals in this space have already taken place — aQuantive to Microsoft, Right Media to Yahoo, DoubleClick to Google. The remainders are starting to realize that, like bad leftovers, they're about to be thrown out. So the bigger players are starting to snap up the smaller ones, at bargain prices.Or what seems like a bargain. But even the bigger online ad networks are troubled. Take Glam Media, for example, the splashy ad network founded by Samir Arora, which he has pitched as "the future of all media." A dismal future indeed, if so. Glam grew quickly by promising publishers rich ad-rate guarantees, and then ran into trouble selling the inventory it had acquired at those rates. In the third quarter, according to two sources familiar with Glam's finances, Glam took in $14 million — $11 million short of the $25 million forecast Arora gave investors when he was peddling a stake in the company. Layoffs ensued. It's not clear how much of the $85 million Glam raised in February is left to buy up competitors. And if the advertising market is due for a deep downturn, as many in the industry fear, then the more successful ad networks would be wise to husband their cash, rather than spend it on weaker rivals. Darwinian market forces will do away with the lesser ad networks soon enough. Roll up, or roll over? The latter seems wiser.
It's a predictable routine: Write about Glam Media, Samir Arora's dangerously bubbly online-advertising startup, and get bombarded by comments from website operators for whom Glam sells ads. The latest victim: Saul Hansell of the New York Times, who dared to point out that most of Glam's traffic comes not from the kind of high-quality, editorially driven websites his salespeople promise to advertisers, but from horoscopes, social networks, and gaming sites. Two Glam publishers promptly weighed in. It almost makes one wonder if, like a political campaign, Arora gins up faux grassroots complaints. (Valleywag has attracted its own reliable Glam commenter, AretinaAegeus.) Like a well-done Astroturfing, as the process is known in politics, the comments seem genuine enough — original wording, no cutting-and-pasting of talking points. But the process may backfire on Arora. Goaded by the commenters, Hansell updated his piece with a more concise — and damning — explanation of why Glam may be scamming its advertisers:
We were so hoping that our source was kidding when we first heard of online ad network Glam Media's plans for a men's website called Brash last month. Alas, no. The site has launched, but no need to visit: If you've read Esquire or Men's Journal, and can imagine the palest possible imitation of those publications, then you've got the picture. What's really happening here:Glam's whim-seeking CEO, Samir Arora, in his efforts to create the illusion of a game-changing new media company, is expanding willy-nilly into new fields, without the sustained effort or attention required, hoping that someone will buy his company before they notice all the failed initiatives that trail in Arora's wake. Our prediction: Brash will go the way of Glam's "wellness" channel, an initiative of Arora's wife, Rebecca Arora. Six months after its launch, Glam laid off all the salespeople involved in selling it, several sources confirm.
Samir Arora, the superslick salesman who runs online-advertising startup Glam Media, spun last week's layoffs of 14 people as a routine move to contain costs. Just another amazing act of presciently efficient management at a company Arora has sold to investors as the future of all media. What story, we wonder, will Arora come up with to explain the company's disappearing customers?As an online ad network, Glam buys ad inventory from publishers and resells it — hopefully, at a markup. Some of those publishers are now becoming restive. We hear Lifetime, which signed with Glam less than a year ago, wants out of its deal. MyYearbook, the second-rate social network which provides much of the traffic count Glam touts to advertisers, is said to be disappointed with the revenues Glam has been providing. And Global Grind, a hip-hop social network startup which only signed with Glam in June, may also be moving on. CEO Navarrow Wright tells me the company is already "seeing success" with its Glam partnership, but at the recent Mixx conference in New York, talk was that Global Grind was examining its options and thinking about breaking its Glam deal. (Photo via San Francisco Chronicle)
Samir Arora, the CEO of online-ad network Glam Media, is often described as "brash." Is that where he got the idea for his newest network? A tipster says Glam's "Brash" network will target men. Glam has long positioned itself as a way to reach women online, but people with access to Glam's real demographics say that the split is close to 50/50. Rather than admit he's been lying to advertisers looking to reach women all along, how gutsy of Arora to turn the deception into a new product to sell. The only question: Who's going to sell Brash if Glam's rumored layoffs come to pass?
A tipster says Glam Media, the women-focused online-ad network, is going through "material layoffs" — 14 out of 200 employees, mostly in sales, Silicon Alley Insider now confirms. The cutbacks, coming just seven months after Glam raised $85 million, mark the popping of the ad-network bubble. The move is consistent with what I've heard from inside the company: Tales of wild spending, chaotic decisions, and mismanagement. Glam, cofounded by slick serial entrepreneur Samir Arora, has embraced a risky business. Arora pitched the company as the future of online advertising, a "distributed media" network, targeting the lucrative female market, overtaking established players like Time Inc., Hearst, and NBC and transforming the economics of the industry. In reality?Glam is a poorly run middleman operation which has been buying high and selling low, ad-industry players tell me. Glam has spent millions of dollars buying up sites' advertising inventory, to create the illusion of bulk, and hiring expensive salespeople, in the hopes of later reselling the ad banners at a profit. Arora could argue he's cutting back in the anticipation of trouble in the advertising market to come. Or the company could be using layoffs to weed out salespeople, many of them recruited from the traditional media world, who aren't making their numbers. Glam, we hear, has been buying traffic at a $6 CPM, or cost per thousand pageviews. That is a rich price for traffic which is mostly low-end social-network content for which advertisers balk at paying, and it would not be surprising if some Glam salespeople found that challenging. More worrisome, given the ongoing credit crunch: $20 million of Glam's last round was "revenue-based debt financing." The way Glam has been spending, if the revenue underpinning the debt is not materializing, Glam could face a hard time getting new financing.
Web metrics firm ComScore says it going to begin tracking ad networks' "potential reach" and "actual reach" for online-ad buyers and sellers. A translation: Ad networks, in theory, can place ads on all of a Web publisher's pages, and those are the numbers they trot out when luring ad dollars. Operations like Glam Media compound the confusion by portraying some of the sites they represent as if they were websites they owned. In practice, publishers of a respectable size use networks only to fill a small percentage of their least valuable inventory. The net effect: industrywide, advertising inventories look much larger than they actually are, leading ad buyers to drive harder bargains. If ComScore can expose this part of the ad-network scam, publishers may benefit from higher rates. Ad buyers? They won't complain: As soon as they've spent their clients' online budgets, it's time for a two-martini lunch..
MyYearbook, a social network for teens turned off by the old people thronging Facebook and MySpace, has raised an additional $13 million in venture capital. The social-network startup wooed by Barry Diller's IAC last year, but a deal never happened. The site claims to be the third biggest social network in the U.S.
Only in Silicon Valley would a marriage be announced by press release. No, Glam Media founder Samir Arora wasn't so crass as to issue a communiqué about his wedding; but he let word slip in the announcement of a new online-advertising network from Glam for health and wellness websites. The former Rebecca Bogle, now Rebecca Arora, is running the network. The two married in March 2008, according to an online gift registry. Her LinkedIn profile tells us that, in addition to working as Glam's "wellness editorial director," she's also a "Zentherapy bodytherapy practitioner at Izii." Aside from that, she had stints at Oracle and Accenture, both less than two years in length. Working for either company, even that long, could lead one to need therapy — as might getting married to the erratic and mercurial Samir Arora. Arora's love note to his bride:
He says he invented the term "website," practices zazen meditation, and would have us believe he would accessorize his custom tailored duds with pink even if it weren't the official color of his Web site. In a gushy profile of girly ad platform Glam.com's founder Samir Arora by the London Times, Arora's over-glossed sense of worth is rivaled only by the rumored $1.3 billion price tag on his company. Which, by the looks of the press rampage Glam is on, is as bolstered by frothy tidbits of their founder's "glam" lifestyle as it is by the slippery story that Glam has cornered the women's market online — which they haven't.
Can Glam Media keep up the pretense of being a way for advertisers to reach a mostly female audience much longer? The ad network has used some of its latest $85 million in debt and equity funding to acquire London-based Monetise. Monetise is an ad network that buys inventory low, aggregates it, and then sells it a bit higher — just like Glam! Except that Monetise's clients are outfits like Flixster, TVGuide.co.uk, and ArtistDirect — none of which sound like they serve overwhelmingly female audiences. The move does allow Glam to grow its raw numbers of represented sites at such a pace that clueless investors may continue funding it at ridiculously high valuations, giving Glam more cash to continue the process — until someday, somebody buys the whole thing and the founders walk away.
A source close to Glam Media — the ad network that rounds up websites for women and then resells their ad inventory at higher prices to advertisers targeting the demographic — told VentureBeat the company has turned down a $1.3 billion acquisition offer. Glam turned down the offer because it expects a "bigger opportunity" down the road — perhaps an IPO. One of Glam's own partners tells us it'd be "crazy of them if they did." And likewise, we've never taken much stock in Glam's business model. (Disclosure: Our parent company, Gawker Media, owns Jezebel, which competes with some sites in Glam's network.)
Glam Media is the "fastest growing company on the face of the earth," according to its backer, the always hyperbolic Tim Draper. In an interview with AlwaysOn's Tony Perkins, Draper compares Glam, an online ad network, to past investments like Hotmail and Skype. But aside from enjoying his backing, there's little resemblance. A better comparison? Enron, another company with metastasizing revenues.
Would the last Yahoo to leave Sunnyvale please turn off the lights? Glam Media has hired Kiumarse Zamanian, an engineer with several patents to his name, to run its ad platform. Chris Szeto, a key developer of Yahoo Messenger has joined Meebo, the instant-messaging startup. Their new employers would have you think that they left for "exciting new challenges." But the truth is their departures say far more about Yahoo.
Samir Arora, the Valley's most talented flim-flam artist, has convinced investors to put in a fresh round of financing into Glam Media, his online-ad network. The deal could be announced as soon as tomorrow. The amount raised: Between $30 million and $100 million, we hear, valuing the company at as much as $400 million. A lofty figure, given Glam's scant sales — but Arora had sought a $200 million round, and a valuation in the range of $800 million to $1 billion. The premise of that valuation: The 25 million monthly visitors to sites in Glam's network, many of them female. But investors likely figured out that Glam doesn't own most of the sites those people visited.
Give Samir Arora this much credit: The founder of Glam Media is an excellent salesman. Especially when pitching a gullible press corps. Folio is the latest to take the bait. The magazine swallows Arora's line that as an ad network, Glam deserves comparison to wholly-owned media properties. (Such as, I should mention, Jezebel.com, the women's site published by Gawker Media, the owner of Valleywag.) It's nonsense, of course. But when Deborah Fine, CEO of NBC Universal's iVillage, points this out, she's portrayed as a disgruntled rival, not a voice of reason. Too bad Folio didn't listen to her, or talk to stock analysts, or do anything, really, besides transcribe what Arora told the magazine. Brokering ads on thin margins is a rough business, and one in which Glam competes with Google, Microsoft, and Yahoo. And now, NBC.