Three Reasons Federated Media is Growing
April 15th, 2008 by Jeff LanctotTags: Ad Networks, Federated Media, FM, John Battelle
After weeks (months?) of rumors, word is out that Federated Media has completed a $50 million round.
I’ll save the questions around valuation of the company for the investors. However, I can say that FM has established a nice track record with Avenue A | Razorfish (my employer) over the last several quarters. Looking back to 2007, we spent nearly 4X more with FM in the second half of the year than we did in the first half. In the first quarter of 2008, our spend with FM matched all of calendar year 2007. Granted, FM started from a small base in 2007, but this kind of growth isn’t common. Looking at the reasons for their success, I think FM has done three things very well:
1. They are clear about what they do. They don’t pretend to be an ad network. In this interview with Rafat, John says ““We don’t view ourselves as an ad network…ad networks are our cousins. We have a portfolio of brands that we represent and partner with, so we consider ourselves a digital media and publishing company. Our next phase is to help those brands grow.” That’s smart positioning, because I don’t think there is room for many more ad networks.
2. They treat every campaign as a unique opportunity. The FM team is quite genuine about providing custom solutions that work for readers, authors and advertisers. This tends to be a labor-intensive approach, so I’m not sure how well it scales. But marketers love thoughtful, integrated, on-brand ideas. FM has lots of them.
3. They haven’t tried to grow too quickly. It seems that Battelle & Co. have been very thoughtful about how quickly they should grow. $50M in funding seems like a pretty good sign they’re ready to speed things up a bit. However, to date I think they’ve been careful not to overpromise- whether it be to authors, marketers, or investors.
4 Responses to “Three Reasons Federated Media is Growing”
Thanks for the thoughtful post, Jeff. You nailed it. We are very focused on value for our clients, on delivering, and on (sustainable) growth!
Jeff–Thanks for the kind words. It\’s our intention, with the help of this financing, to redouble our commitment to thinking big with partners like Avenue A.
Jeff - As an original FM author I can tell you that you missed one important point - they value what makes up their product - their authors - if not for that the other 3 would be irrelevant.
John, you’re absolutely correct that the authors are the key drivers. On my third point, regarding growth, I think their restraint in adding authors has been smart. FM authors all have notable and respected voices- lowering the bar in that regard would change everything.