Woven Digital, a two-year-old online advertising startup in Culver City, already sells ads for about two dozen blogs. Now, it’s looking to become a full new-media publisher.
The company made its first acquisition last month with the purchase of popular men’s site BroBible.com, giving the ad company a foothold in the editorial content realm. Scott Grimes, a co-founder of Woven, said he anticipates additional deals.
“It’s an evolution,” he said. “Some of it is to increase margins and part is to grow as a media company.”
By acquiring a network of blogs, Woven hopes to boost profits by taking a greater share of ad revenue. But the deal is turning heads because of the company’s nontraditional advertising strategy.
Woven specializes in creating custom ads for blogs intended to come across as almost imperceptible from the site’s entertainment content. For example, a campaign conceived by Woven this year for Electronic Arts’ apocalyptic video game “Mass Effect 3” included a sponsored blog post titled “The 25 People We Wouldn’t Miss if the Apocalypse Happened Tomorrow,” which was authored by the staff of BroBible and ran on its site.
By including components of a website’s personality, the sponsorships are meant to feel more authentic than a banner ad or a traditional 30-second TV spot. Marketers hope such ads will solve the challenge of reaching young consumers, who are increasingly recording TV shows and fast-forwarding through the ads.
The strategy, all but unheard of in traditional media, runs the risk of alienating readers who feel duped by disguised ads.
But such advertisements are actually expected to grow in coming years from 2.7 percent of all digital ad spending in 2010 to 5.2 percent of the market in 2016, according to research firm eMarketer. Spending on the new ads is expected to reach nearly $3 billion in four years as banner advertisements slowly fall out of favor.
Now, Woven is joining a new breed of media publishers willing to blur the line between the traditionally separate worlds of advertisements and editorial content. Other local companies, including Buzzmedia Inc. in Hollywood and Evolve Media Corp. in Los Angeles, are finding the strategy to be lucrative – and increasingly vital.
“In a digital world, if you’re a content creator, you’re playing a larger role in (creating) ads,” said Tyler Goldman, chief executive at Buzzmedia.
Woven, which now represents about 24 sites, had worked with New York’s BroBible for two years before deciding to purchase the site. Grimes said the site, which mixes sports and pop culture along with humorous posts and photos of scantily clad women, was attractive because it brings back many of the same loyal visitors every day and has content that is widely shared on social networks.
“Much like Buzzmedia, we never want to be acquiring just the biggest sites, we want to acquire things that are compatible,” Grimes said. “Everybody has their subset. Our whole strategy is bringing advertisers what’s relevant and what’s trending with guys.”
More purchases
By acquiring the site, Woven upped its margins considerably. The company gets between 35 percent and 50 percent of ad revenues for the sites it merely represents, compared with 100 percent for sites that it owns. The company will have revenue of about $10 million this year.
Woven, which has raised about $4 million from angel investors, expects to close a round of financing in excess of $10 million, which will allow for more website purchases, executives said.
Thomas Duffy, a Philadelphia lawyer who represents companies in their acquisition of websites, said the consolidation of digital content follows a broader online trend.
“The web now is in a synergistic consolidation phase,” he said. “The web has always been a mess and there’s more and more order that you see in it now.”
Indeed, Woven is not the only company buying up blogs.
Evolve, another large online ad representation firm, bought two sites earlier this year to add to its network of sites aimed at mothers. The firm handles advertising for about 55 websites directed at audiences ranging from moms to outdoor enthusiasts to fashionistas.
Buzzmedia, meanwhile, bought four alternative music sites and an electronic music site – in addition to the assets of Spin magazine – this year.
The company began building its network of pop culture and music sites with teen-focused Buzznet in 2005. The company transitioned from selling primarily banner ads to creating ads that aligned closely with its sites’ editorial content.
For example, in a recent campaign for Chevrolet’s new Sonic compact car, it was promoted on Buzzmedia’s independent music sites with video interviews with indie rock bands.
“People presuppose there’s a conflict between advertorials and the audience,” Goldman said. “In nonlinear digital media, it (just) has to be equally as interesting” as a site’s other content.
