Bezos Leads Business Insider's Latest Round - But The Pressure's On PubMatic

Blodget BezosBusiness Insider, the chief digital tabloid with its screaming headlines, bold commentary and incessant slideshows, attracts a lot of pageviews, controversy and ad spending. But the mix has left it grasping for profitability. Now, with Jeff Bezos' venture capital group leading a $5 million funding round -- bringing the total raised to $18.3 million over the past five years, notes Bloomberg's Ed Lee -- the pressure on BI to grow revenues is only going to intensify.

That's not to say that BI is shying away from high revenue expectations. (Or outside media attention, for that matter; BI and its founding editor Henry Blodget, were the subject of a Ken Auletta profile in this week's New Yorker.) As the that magazine pointed out, 85% of BI's revenues come from advertising sales and the site expects to draw $15 million in total revenues this year for what would be a 50% gain.

Given the importance of ad dollars— more than conferences or its subscription product — BI's decision to work with PubMatic on a private exchange to, in the words of Bridget Williams, SVP/business and audience development, "fill the middle layer," and augment its direct sales was no surprise.

As Williams told our John Ebbert  in last month's Q&A, when the PubMatic deal was announced, there was no fear that it would cannibalize direct sales. Essentially, the feeling is that by serving up remnant inventory to the exchange, the advertisers who just want basic banner placements can simply go use the programmatic tools PubMatic offers. In theory, that will free up the ad sales team to look beyond that "middle layer" and pursue more lucrative sponsorships or perhaps some form of native advertising.

BI's monthly traffic is around 24 million globally, according to Google Analytics, as comScore's US traffic has it at 13 million monthly uniques for February. That's still an impressive number, considering that Bloomberg.com, which has greater resources, highlights comScore's tally of 8.2 million US uniques.

PubMatic, as well as rivals Rubicon Project and Google, have been making a bigger play for "premium" placements lately, which tends to mean inventory sold on a reserve basis. After all, if private marketplaces are just seen as a place to dump what PubMatic's executives prefer to call "under-sold inventory,' then it will be difficult to attract higher CPMs. And if PubMatic can't deliver higher CPMs for that private marketplace ad inventory, it will be more difficult for BI and other publishers to find the value it needs in automating part of its ad sales.

In other words, as investors like Bezos, and earlier backers like Huffington Post co-founder Ken Lerer and VC Marc Andreessen, make more demands on Blodget and BI CEO Kevin Ryan to produce a profit -- or sell the property at a high price to another entity -- a good deal more pressure will fall on PubMatic, given the media and ad world's scrutiny of BI and its business.

 

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