For the first time in its five-year history, female-focused ad network Glam Media has moved into profitability, CEO Samir Arora told paidContent in an interview. Reflecting the company’s ability to buck recessionary pressures and the growth of its U.S. business, the company is promoting Jack Rotolo to president & general manager of its North American operations, a new position. Some executive jobs will be eliminated as part of the reorganization but Arora said no details are available yet.
By moving Rotolo, who created Glam’s original sales team, up from EVP of North American sales, Arora will be able to step back a bit. “I have been hands on managing global for the past few years,” Arora said. “We don’t have a president or COO of the company. And while we have CEOs in Japan and Germany, that level of operational delegation in other countries has not been present for us in the U.S. But in the past year, the U.S. has become a large, standalone business. … My operational responsibilities will diminish somewhat as we prepare for the next stage of the business.”
No details on that next step. But sources have told paidContent that Glam has been approached about doing a mezzanine round in preparation for a possible IPO to help promote its continued overseas expansion. A company rep confirmed that Glam has been asked about doing such a deal. Arora said only that Glam has not been seeking out such a deal. He was also mum about specific dollar figures when it came to Glam’s profits, claiming only that Q2 revenues were up 50 percent. He also declined to provide specific numbers on profits, but according to a source who has seen the books, starting EBITDA profitability will be about 5 percent, targeted to grow in 2010 to 12- to 15 percent. Glam expects profits over the long term to grow 20- to 30 percent. As for revenues, Samir sought to compare Glam’s gains to other companies’ display performance, such as Google (NSDQ: GOOG), which had only been up 3 percent in Q2, while AOL (NYSE: TWX) and Yahoo (NSDQ: YHOO) declined 30 and 14 percent, respectively.
“Glam’s Armstrong”: Some executive positions that will be eliminated as a result of Rotolo’s promotion, sources said, though Arora said no decisions have been made. He characterizes Rotolo’s position within the company as similar to the one that current AOL CEO Tim Armstrong had when he was the head of Google’s North American ad sales. As part of his move, former Scripps Interactive (NYSE: SNI) exec Alison Kennedy has been promoted to VP, sales-eastern region, and Carl Portale, former publisher of Elle Group, will head an expanded Brand Relations group.
The road to profitability: Arora says several aspects of Glam’s business enabled it to beat back the recession. For one, it sells only premium display ads and only works through ad agencies. With categories like consumer packaged goods now making a bigger shift to online ads, Glam was able to take advantage of the continued spending for select categories like women’s retail, living and food. At the same time, portals, which depended heavily on autos and finance were more vulnerable to the pullback due to the downturn. As for CPMs, Arora declined to provide numbers of what it charges, but one source who knows the company’s ad rates says Glam typically charges between $8 to $35 depending on the placement. In addition, Glam has been pushing custom sites, like AWomensWorld.com, which is a micro-site created for Frito Lay; CPMs for such sites range from $25 to $150. “We’re in categories that marketers had previously under-spent in,” Arora said. Sources close to the company told paidContent that while the company did acquire two companies in the past year, those new businesses, such as its Glam Japan unit, remain fairly small within the company.
Staffing levels: With most companies looking to lower headcount, Glam has added to its workforce despite its annual “performance-related reorganzations,” which include some layoffs last year. In all, lam employs 110 staffers in the US and 210 staffers worldwide, up from a total of 160 last year. “Every three months, we do performance reviews,” Arora said. “And every six months, we realign the company. We will evaluate a couple of positions by the end of the year, but it is not because of the economy. The company will continue to grow — mostly, the growth has come from M&As. But we also plan to start hiring in Q4. For 2010, our size will grow 10 to 20 percent in staff.” As for restoring the 50 percent salary cuts that Arora and other Glam execs took last year — another way the company achieved profitability — Arora said it’s likely those cuts will start to be undone next year.
This is very good news for Glam and for the industry. Revenue growth in a downturn, managing operating expenses and reaching profitability are signs of a solid company.
It will be interesting to see How Glam evolves, privately and as a public company through an IPO. They have certainly stirred the traditional media companies position, taking the #1 spot from iVillage and Hearst. Their model is clever.
As a publisher, glam is unlike any other company we've done business with. Yes, we LOVE the money they make for us, but they always provide a whole lot more. They do not get enough credit for what they have done — bringing top brands to small sites. Before glam it was always understood that big equals good quality — like you get in Vogue or In Style. But the web has changed that. Just because we are small and not a big magazine or tv network, does not mean we are not read and influential. Just like google did for web masters for search, glam is doing for us niche publishers. The more they grow, the more we grow. The more we grow, the more they grow.
Glam has always been able to deliver on what they promised. Thought their payout on non-Beauty and non-Entertainment channels has been decreasing.
Instead of re-instating the pay cut, i firmly believe all employee should take additional pay cut in exchange for more equity in the company. In which, the profitability achieved through opex reduction is able to propel Glam towards an IPO or M&A. This would show how much the company is will to pull together behind a strong leader and an excellent company.
They continue to reduce guarantees and that is helping their bottom line after years of non-ecconomic deals. It will be very interesting to see if they can keep their publishers as they see checks lower. Still have almost 14mm UVs coming from classmates.com. Always surprises me that so few people seem to care about the site quality in this network. Some good, lots of mediocre sites.
@roger,
I think your facts are not correct — classmates.com at 14m is not and don't think it has ever been a part of the Glam network. Glam doesn't have large publishers, of the over 100m in reach, the largest is women's forum that is 6m visitors. Glam is really a large network of small, tiny publishers – over 1,500. This is their power and why they are different than rep firms like Federated Media. With such a wide but built using small sites network they use technology to provide ads with the scale of Yahoo or AOL as portals. They sound like a Google AdSense for display based on jj's comments of their virtuous cycle.
I see that Glam rallied all of their bloggers to comment per usual.
I am shocked by the claim that the layoffs were due to performance evaluations. Anyone with knowledge of the situation knows this is absolutely not the case, and also knows how close to the edge this company came. I understand they have a story to spin, but to make an allegation like that in this economy is cruel and irresponsible.
as someone that was laid off from glam along with many many others, my jaw dropped when i saw this story. perhaps the ONLY people laid off for performance were salespeople not making their numbers.
the individual contributions of those laid off helped glam get to where it is today. they are outstanding people and hugely talented and i consider myself in good company.
i never felt bad about being laid off until today.
this is a crock of sh*t. they are becoming the premium remnant ad fillers, the days of even $8 CPM is long gone for this company.
The only performance review that i know of when i was there is in the beginning of the year when everyone was called in to be told of their 5% to 20% pay reduction.
Other than that, there weren't any planning, reviews or any sort. Pretty ad hoc company.
i did not make the previous comment. i am glad glam finally acheived profitability and proud and happy for my dear friends that still work there. glam mgmt. did a fantastic job of hiring smart, nice people and had a great "family" culture. that is why i am so disappointed with samir and his comments. shame on him.