Group Commerce Powers Buying Efforts For Web Publishers

Jonty-Kelt

At the risk of reshaping online advertising, Jonty Kelt is on a mission to turn every Web publisher into a Groupon-like deal service.

As CEO of Group Commerce -- which he recently co-founded with some fellow DoubleClick and Google alums -- Kelt is out to prove that publishers hold a key advantage over Groupon and its many clones. Simply put, publishers have "connections with unique audiences," Kelt tells Online Media Daily.

Sure, commercially inclined publishers with targeted audiences might be better-suited to the deal game. But Kelt says: "Ultimately, all audiences have needs, and no one knows those needs better than publishers."

Off to a strong start, Group Commerce is already powering group-buying efforts for The New York Times, Meredith Corporation, Thrillist and DailyCandy.

Amid a crowd of white-label technology platforms, Group Commerce hopes to set itself apart. It's offering what Kelt calls "merchandising strategy," which helps publishers plan and execute their own deal strategies.

Presently, the company has four staffers dedicated to such merchandising efforts, along with three customer-service representatives that can help a publishers' audience answer any questions or concerns they have regarding a deal.

Group Commerce also has 15 sales associates that will cultivate merchant deals for publishers, if they prefer not to put their own salespeople on the job.

Having just raised $8 million in capital, however, Kelt says the company plans to employ about 100 salespeople by the end of the year, and expand their presence from five cities to 20.

For its services, Group Commerce takes a share of deal-generated revenue, which varies based on the extent to which it helps publishers. Some publishers, including the NYT and Thrillist, use their own salespeople to sell daily deals. According to Kelt, however, daily deals do not threaten existing media buying and planning structures.

On the contrary, he insists, "we're opening up a new area for them -- local, in particular. That doesn't mean that national advertisers can't participate [in daily deals], but it serves a very different purpose" than other forms of online advertising.

Forrester analyst Sucharita Mulpuru agrees. "It's its own separate channel," she says. "It's a different bucket."

As such, Mulpuru believes that adding daily deal services to content and marketing mixes is a "no-brainer" for publishers. "There's a lot of hype [around group buying], but it's a very lucrative model ... and publishers are struggling to figure out how to make more money."

Formerly head of DoubleClick's search technology and services businesses in Europe and Asia, Kelt co-founded Group Commerce in 2010 along with David Rosenblatt, formerly CEO of DoubleClick and now Group Commerce Chairman, and Andrew Glenn, credited with developing the DoubleClick Ad Exchange and now CTO of Group Commerce.

The company's current investors include Spark Capital, Carmel Ventures, Lerer Media Ventures and Bob Pittman, who founded MTV Networks and now serves as chairman of media and entertainment platforms at Clear Channel.

Over the next four years, spending on domestic "deal-a-day" offers will approach $4 billion, according to recent estimates from BIA/ Kelsey. That's up from $873 million in 2010, which would represent a 35.1% compound annual growth rate, according to the market research firm.

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