3by9

Glam Puts The Halt On Easy Payouts

Everyone loves getting paid for nothing, and up until this past week, Glam was paying between $3 and $5 CPM to its publishers on unsold inventory. This generated a nice, steady bit of cash for bloggers who weren’t big enough to warrant ad buyers looking their way, but not anymore:

But according to one large publisher partner to Glam, this is actually nothing more than a way for Glam to dramatically cut payments to partners. He said “While they’re spinning this as positive news, it sucks for publishers. Publishers were previously guaranteed $3 - $5 CPMs for house ads. By no longer running any house ads, that revenue dies. And, given Glam’s fill rates retwork wide are only 30%, that’s 70% of traffic (for most publishers) that’s no longer earning revenue from Glam…It’ll basically cause a 30 - 80% drop in revenue for publishers”

Paying publishers guaranteed amounts was cutting into Glam’s bottom-line in a deep way, and it was one of the causes of their $3.7M loss on $21M in revenue last year. Now that they’ve raised a bunch of new money, they’re tightening the ship and buckling down for the long haul, and that means cutting off the freebies. Giving out guaranteed payments was great at bringing the hordes of female-centric blogs into the Glam fold (and buttering them up to give good reviews whenever prodded) but now that they have the numbers and the cash, it’s time to get down to business.

This is bad news for Glam bloggers no matter how the Glam executives want to spin it. A commenter at TechCrunch echoes my opinions:

“This is a classic example of what happens when you build a network purely based on minimum revenue guarantees. Glam took on too many publishers too fast merely to get their comscore reach to the leading position in their vertical and it has become increasingly difficult for them to generate any profits with the high revenue guarantees in place.” - Link

To attract a high valuation they had to scale incredibly fast, and telling small bloggers who had previously made no income from their site that they’d get a check each month was an easy way to accomplish that feat. Now that they’ve scaled and they have the Comscore numbers, their tune has changed. It’s changed for the better for their investors, and for the worse for their smaller publishers. The medium- and larger-sized publishers won’t get hit as much because they know how to monetize their unsold Glam inventory but the smaller publishers either don’t have the know-how or the traffic, two things that led them to Glam in the first place (outsourcing ad sales to a knowledgeable third-party).

So for the smaller publishers who relied on Glam for guaranteed payments, what they do now? Do they go to another ad network (not likely) or do they enter the tough world of ad sales on their own? Now that Google click-through rates are plummeting, it puts smaller Glam publishers in a very tough spot.