(Daily Camera (Boulder, CO) Via Acquire Media NewsEdge) April 06--Earlier this year, Federated Media Publishing sold its content marketing business to LIN Digital Medial LLC for $22.4 million.
As a result of the purchase, Federated Media spun out its programmatic media business -- created when the company acquired Boulder-based Lijit -- into a stand-alone firm called sovrn.
Walter Knapp, formerly chief operating officer for Federated Media, relocated the headquarters of sovrn to Boulder from San Francisco and since has reinvested the millions from the asset sale into the growing sovrn.
Knapp spoke with the Daily Camera last week about the changes, the company's growth plans and the state of automated ad buying.
The following has been edited for clarity and length.
1.) What brought about the sale and spinoff?
We merged Lijit into Federated Media back in October 2010. The intent there was to put those companies together and take that combined entity public and that didn't work out for a host of reasons. But the Lijit business continued to take off and grow and the Federated Media business sort of stalled.
About last year we started to notice a real discrepancy in the growth patterns of both businesses. The company formerly known as Lijit continued to grow, it was growing well over 100 percent year over year. What we decided to do is invest more into that business.
We found a buyer for the Federated Media business and put the cash into (the publisher platform).
We found that when we were building Lijit that online publishers -- this could be local newspapers ... it could be niche magazines ... maybe digital-only publisher or even a blogger -- they all share the same motivation. They want to engage their readership (base) and they want more readers.
What we realized was those publishers lack any real advocate for them. Our business is about advocating for publishers and to help them make money.
By doing that and having a very publisher-centric or very advocacy-centric culture, we've amassed a network of more than 20,000 publishers representing well over 1 million websites.
2.) A study released March 31 by the Association of National Advertising showed that 33 percent of advertisers understood the concept of programmatic buying. How do you overcome that challenge?
I think (programmatic buying is) still early in its evolution. I think that the industry does itself a disservice, to a degree, by using too many acronyms.
(Programmatic media) is simply using information and data to drive marketing decisions. That's all it is. If you understand that a webpage is about food and, in part, about Mexican food and you understand the person visiting the site is on a particular type of computer in a particular geographic location that might have certain demographic characteristics ... once you start to understand those things -- which the Internet was purpose-built for -- you can use that information to place a message, a coupon.
Programmatic advertising is simply using that information or that data to make a decision.
3.) What growth are you seeing from real-time bidding?
Once you understand where you want to place (the ad), why not let other marketers bid on that? The publisher gets to have multiple people competing in an auction format.
Two years ago, I would say 30 percent of our revenue came from our real-time bidding infrastructure and today it's closer to 70 percent.
4.) How do you intend to grow sovrn's operations?
We re-headquartered the company to Boulder from San Francisco. There are 98 employees total in the company, about 85 of them are in Boulder. We've got another dozen in San Francisco and a small presence in New York.
A month ago, we had 20 open positions. We filled eight of them here in Boulder.
5.) What does sovrn's future entail?
The business is growing really quickly and we have very large venture capitalists that have invested in us. (Boulder-based) Foundry Group is a lead investor. Oak Investment Partners is the largest investor.
They're in the business of getting multiples on their money. They're pushing us to grow as absolutely quickly as possible. Who knows what the outcome will be.
The asset is very attractive to a larger company or companies or (sovrn) can grow as a stand-alone firm that can go public.
My goal is to build a very fast-growing company and that will take care of itself.
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