In the past few months, Web advertising has broadened with the proliferation of file sharing sites and alliances of giants like YouTube.com and Google, as well as the shift to ad-based business models by America Online Inc.
By carving out slices of that broad market, Los Angeles-based Gorilla Nation Media has become an 800-pound gorilla in the digital jungle.
Gorilla Nation sells advertising on 400 independent Web sites in 30 categories. The rep firm aggregates traffic across mid-sized sites and then sells the package to national brand advertisers. In a typical month its sites attract 60 million unique visitors or more than one-third of the total U.S. online universe.
"Most sites have no chance to attract brand advertisers, but when you have a bunch of them you reach critical mass," said Aaron Broder, the chief executive. He founded the company with fellow former entertainment lawyer Brian Fitzgerald in 2001.
With their background, they started by signing up movie-oriented sites but have since expanded into music, food, gaming, comics, science fiction and women's interest sites. Broder cites the movie space, where Gorilla doesn't control any of the top three traffic sites but reps seven of the top 12, as an example of his firm's strategy.
"There's power in the nation of our sites it creates a desirable and easy answer for marketers," he said.
In three years, the company's payroll has increased from two partners to more than 100 employees. Although it does not reveal dollar figures, revenues have doubled in the last year, up from 70 percent growth the year before. The company now has offices in L.A., New York, Chicago and Toronto.
Fitzgerald looks for client sites with a specific audience that can deliver a minimum of 1 million unique visitors per month. However, "for smaller or niche sites comic books, anime or horror, for example traffic requirements are significantly different. We tend to sell out traffic in those categories, so we need all we can get. That said, we're never going to sell a site with 500 hits per month because the logistics would never make it practical," he said.
Exposure on these sites sells at the low end of the spectrum, with a cost per thousand impressions in the $6 to $12 range. But Broder points out that lower price gives his sites a competitive advantage over high-profile competitors like IGN, a gaming site owned by Fox Interactive Media, or MTV.com, owned by Viacom Inc.
"Unless you have a MySpace or a YouTube, most site owners are happy to outsource all or most of their sales function, if you perform them. It's a huge headache," he said.
Clients sign exclusive contracts, meaning that only Gorilla Nation can sell their ad inventory. That differentiates Gorilla Nation from ad networks such as ValuClick Inc., based in Westlake Village, or New York-based 24/7 Real Media Inc. Those companies represent thousands of sites, but often handle only the remnant inventory that the site's sales force can't sell.
Ad networks also don't have the site-specific expertise to create a marketing program across sites the way Gorilla can. For last summer's movie "Snakes on a Plane," Gorilla created a site called "Snakes on a Babe," where visitors made snakes disappear to reveal a naked woman. But on the last click a snake bites them and the screen jumps to the film's Web site. By promoting "Babe" across its movie and horror pages, Gorilla Nation pushed more than 300,000 visitors to the movie's site.
Erin Foxworthy, associate media director at online agency Palisades Interactive, likes how Gorilla Nation lets advertisers "cherry pick" sites for a campaign, an uncommon practice among ad networks. The company also supplies site-by-site statistical feedback on ad runs. "We use Gorilla Nation for almost all genres, even Academy Award promotions, but certainly horror, teen, and men's action movies," said Foxworthy.
Local advertisers who want to push a product can buy aggregated exposure, too. "We have the ability to target geographically to Southern California only," said Broder. "Local content, such as newspapers, may be a good starting point in some instances, but it should be supplemented with buying geo-targeted inventory on broader content sites."
Selling to MTV
Besides repping sites, Gorilla Nation occasionally buys sites with high growth potential. Last month it sold its first property by dealing Quizilla, a user-generated site for teen authors, to MTV. Quizilla ranked as one of the top five destinations for female teens with 3.1 million unique monthly visitors, according to ComScore Media Metrix. Financial details of the transaction were not disclosed.
"We were just responding to market demand," said Broder. "As the market continues to demand from us additional unique reach in the entertainment and lifestyle categories, we will acquire properties in those sectors."
On the repping side, the company tracks changes in Web traffic and signs up clients accordingly. In the last year, it has expanded into health and food sites that cater to women. In L.A., in has moved aggressively into the celebrity blog sector, signing up nine of the top sites with a combined audience of 22.8 million unique visitors and 49.1 million page-views. Aside from TMZ.com (owned by Time Warner Inc.), Gorilla Nation practically owns the celeb gossip space online.
"It's a good example of a category that didn't exist a year ago. We reacted by corralling a critical number of the sites into one source and then selling that to brand advertisers," Broder commented.
While Gorilla has mastered the follow-the-market technique, it has prospered because that market has skyrocketed in recent years, a trend that won't last forever.
Dominique Hanssens, professor of marketing at UCLA Anderson School of Management, believes Internet advertising is in a phase of exponential growth. He predicts that before the market really sours, positive growth will decelerate. "As soon as you see that, saturation is impending. Step one is to look for that point and then figure out how to react in time," he warned.
Broder acknowledges the good times won't last forever. He anticipates that in the next few years "the marketplace will consolidate over time and the winners will be the companies that are able to have a differentiated and superior product."
Hanssens also points out the tough sell of exclusive broker contracts with Web sites, but he likes Gorilla's performance-based implementation, which he calls "a wave of the future."
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