Glam Ceases House Ads

by Gavin O'Malley, Mar 31, 2008, 7:00 AM

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News that ad network Glam Media has chosen to cut certain guaranteed payments to publisher partners had the blogosphere buzzing over the weekend.

Preexisting commitments aside, Glam no longer offers "house ads," which were served for unsold inventory throughout its network, according to an email to publishers last week from Scott Swanson, Glam's general manager and vice president.

In the email, posted online Saturday by industry blog TechCrunch, Swanson said the move was designed to give publishers "more choice when it comes to how you use your unsold inventory."

Yet, the ads are believed to have generated significant incremental revenue for publishers, and at significant cost to Glam. The decision, therefore, is seen by some as merely a cost-cutting measure.

As one anonymous publisher told TechCrunch: "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 (sic) 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."

Running with the conspiracy theme, blogs like TechCrunch and Silicon Alley Insider went so far as to accuse Glam of now turning its back on smaller blog publishers, who gave the company the market credibility to raise large sums of capital investment. (Last month, Glam secured $84.6 million in financing, which valued Glam at approximately $500 million.)

"Glam really needed to keep all those bloggers happy last year while they were raising capital," posits TechCrunch. "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."

The strategy is necessary, added TechCrunch, for Glam to meet its projected revenue this year of $150 million with $40 million in profit.

However, Samir Arora, Glam's chairman and chief executive, told Online Media Daily last month that the company is targeting $100 million by the end of next year.

Glam could not be reached over the weekend for comment or clarification.

Swanson, however, did respond to critics in a TechCrunch comments thread on Saturday:

"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)," he said. "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," Swanson said, adding: "I want to acknowledge that Glam is successful because of our publisher partners."

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