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Advertising - Tuesday, February 26, 2008

Breaking Down Glam Media's Huge New Investment

San Francisco-based Glam Media has just closed $65M plus $20M in debt. It had previously raised $30M. Investors include Hubert Burda Media, GLG Partners, Duff Ackerman & Goodrich and Hercules Technology Growth Capital. The Wall Street Journal values Glam at around $500M.

So what do we make of this. Glam has been widely criticized for making mountains of moll hills. So its easy to run against the grain and argue that Glam is the real deal. But we continue to feel weird about Glam. Should we hear in a couple of years that Glam had suffered a collapse of some sort we would surely not be surprised and would think that of all the hot startups that we cover, this one has some of the last technology and natural user loyalty.

We can convince ourselves that Glam is on the right path. They compete with iVillage which seems like old-school red meat and Glam's model is comparable to Federated Media's in that it wants to empower site owners to do their thing and think of Glam as their top partner.

But this analysis is overshadowed by the logic that an alternative to Glam Media is just around the corner. Advertisers want to get to female audiences interested in shopping so Glam steps in to serve them. But it extracts a steep share of the publisher's meal ticket. We would expect some new startups to step in to deliver qualified categories of sites to advertisers in ways that don't extract the 50% cut that verticals like Glam extract.

Glam's CEO tries his best to make Glam feel like it is more than a vertical ad network

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