AdExchanger | The Sell Sider

The Sell Sider” is a column written by the sell side of the digital media community.

After this exclusive first look for subscribers, the story by AdExchanger’s Sarah Sluis will be published in full on AdExchanger.com on Wednesday.

Toddler-age publication Fatherly was designed for the future of digital media.

Fatherly CEO Michael Rothman, a veteran of Thrillist, envisioned a branded content-focused publication, with maybe a sideline of commerce via product licensing (not the JackThreads variety).

Programmatic was out as an option.

“We are at a place where audience doesn’t grow at a pace where you can survive with programmatic as your sole source of revenue,” Rothman said. Although platforms like Facebook and Google used to enable publishers to amass scale quickly enough to make display advertising profitable, that’s no longer the case, he said.

To build a branded content business, Rothman sought uncharted territory: content for dads.

“The market has traditionally assumed that most men will only engage through sports or humor,” he said.

Fatherly’s 500,000 email subscribers, 3 million Facebook followers and 5 million monthly visitors (according to internal analytics) prove otherwise.

Chrysler, Disney and Gillette advertise on Fatherly, which usually creates multimedia ad packages that include content, video, display ads and social media.

Fatherly’s branded content focus has attracted investors such as ad agency WPP, VC firm BDMI and talent agency UTA. Fatherly raised a $4 million Series A last fall, two years after it was founded and raised $2 million in seed funding.

Rothman spoke to AdExchanger about how Fatherly’s 55-person team is meeting the changing needs of advertisers and diversifying its revenue.

AdExchanger: What’s the opportunity at Fatherly in terms of one-to-one communication with readers?

MICHAEL ROTHMAN: Our hypothesis is that if you are in a particular phase, especially with a first child, engagement rates are going to be through the roof if the messaging is precise, down to the week. We have a corpus of 11,000 articles, and we can be that much more microscopic in targeting. We are looking to build a product that is more specific to the first 1,000 days, from prenatal to year two.

We are also getting more sophisticated about connecting your profile to your behavior on-site and on social. Having a unified profile is the holy grail. We have 500,000 email subscribers and an ESP [email service provider] that allows us to ingest that type of data. We have developed a much more nuanced understanding of who this audience is and how that ladders back to content strategy.

What is Fatherly doing with commerce?

There is affiliate linking at the moment. We have ambitions to partner with manufacturers and put together a JV [joint venture] where we can create products leveraging their manufacturing expertise and our data and insights about what this audience wants and our brand – we’ve had people tattoo our logo on their body.

That’s also a lower-risk commerce proposition than taking inventory or hiring an entire team to focus on affiliate revenue.

Facebook traffic has been rocky for many publishers lately. Has that been the case for Fatherly?

We have seen the same macro declines since July of last year that many other publishers have seen. Not precipitous, but gradual. Certain pubs fell off a cliff in January, and we didn’t’ see that. In fact, in March we saw an organic uptick.

Our content is designed to be shared with friends and family and whoever else: I can tag my cousin in an article about why cousins are important. Second, we have always focused on high-quality content. Third, the overall denominator has gotten smaller. As publishers that dealt with less quality content have gotten wiped out, there is less of that competing in the feed. 

Where do you get your traffic from?

Everyone is searching for the golden ratio, and it depends on the category. We get our traffic from organic social, social partnerships and SEO.

Swiping up on Instagram is a not insignificant amount of traffic. Apple News and Flipboard have been good to us. Twenty publishers on a monthly basis syndicate our content, from Yahoo to Brit + Co. SEO will be big an opportunity for us. We have a lot of content that’s evergreen. Our “Thunder Road” on search is what to do if you drop your baby, which people search for in incognito mode.

As the content marketing space matures, do you see any trends in where budgets are coming from?

Today, in a marketing organization, you may have 10 people for which content marketing is a relevant tactic. You have to make sure that one person is the right person for that moment in time. That’s the root of the chaos you are hearing about.

We are still working a bit more on the media side, but the trend is that more of these buckets – whether it’s CRM, creative, comms or a performance marketing team – are getting content marketing budgets. For good reason.

CRM [agency teams] are saying, “We can use this content to drive our retention metrics.”

You hear the same things from performance teams: “Yes, it’s more upper-funnel, but the branded content on Fatherly will help us. The sixth or seventh touch point will be programmatic, and the [original brand] recall will be Fatherly.”

What are publishers worrying about these days?

A lot of publishers that don’t have as much of a well-carved-out market position are worried about the fact that we are in a universe where marketers used to be RFP’ing 12 publishers and working with six of them. Now it’s a winner-take-all environment.

Agency people are getting pinched with procurement teams, and it trickles down to publishers: “Oh, we love this idea you proposed for $1 million. Now do it for $500,000. Or there’s nothing for you.”

Do you take the cut in margin? Where do you stand on principle vs. practicality?

Will Fatherly raise more money to fund growth?

We are running a break-even-or-better business, as we have from the start. We raised last year a bit more opportunistically. We had an opportunity to grow even more quickly, and we only raised from strategics.

BDMI gives us access to an international audience, and they have a ton of operational experience with media companies.

WPP is incredibly helpful at giving us a 30,000-foot view of the market. Their investment is largely immaterial from a campaign-by-campaign investment decision.

And [talent agency] UTA is helping with all the original programming we are developing.

What kind of original programming?

We are going to launch a broader podcast network. On the existing podcast, we’ve had some celebrities with their help, and some without. We have Ken Burns to Michael Strahan to Mike Tyson – an eclectic group of people and guys who aren’t in the press talking about their experiences as parents or son.

What do you make of the podcast market?

I’m bullish on it. I see a lot more innovation in the space, and there are well-funded, VC-backed companies trying to solve problems in the podcast ecosystem, like the distribution of content, analytics, the ease of content creation or the metadata problem for podcasting.

The trend line is that listenership is going up and to the right. As a platform, podcasting tends to be a confessional medium, which lends itself to the kind of emotionally honest content that we develop.

This interview has been condensed and edited.

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