Federated Media Sells Content Marketing Biz, Spins Off Programmatic Unit Into Sovrn

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Walter Knapp, CEO, SovrynAs the publishing industry attempts to find a way to bring the brand-friendly values of native advertising together with the scalability and speed associated with programmatic, blog network Federated Media Publishing (FMP) has decided those two functions would be best handled under separate roofs.

FMP whose network includes heavily trafficked sites like Boing Boing and VentureBeat, will sell the content marketing business it started with in 2005 to Lin Digital Media, while the programmatic arm, which was formed through FMP's October 2011 acquisition of supply-side platform (SSP) Lijit Networks, will not be included in the sale. Instead, the programmatic business is being rebranded as Sovrn Holdings and will be based in Boulder, Colo.

"It was a mutually beneficial deal," said Walter Knapp, the former COO of Lijit who is now Sovrn's CEO. "This arrangement allows Lin Digital to get deeper into conversational marketing and expand their portfolio. And [it] gave us at Sovrn a nice investment to back into the area of our business that was growing so dramatically."

FMP founder John Battelle said he’s splitting the company because although he believes native ads and programmatic can work together well, if an organization can't invest in each area equally then it should find ways of growing each on its own. As part of the deal with Lin, Battelle is relinquishing the CEO role he held at FMP and will become executive chairman at Sovrn. He will consult with Lin on running the FMP business, which also includes a large conference business, for "as long as necessary."

"I don't know how long the transition will be," Battelle said. "FM is very important to me. That's why I chose this acquisition. They're committed to it. Whatever happens, I'll never stop being the founder of Federated Media."

The content marketing business will take its 65 staffers to Lin, while Sovrn expects to have roughly 100 employees in Boulder and San Francisco. The two will also continue to collaborate on some existing projects, Battelle said.

"Most programmatic business has been driven by direct response the last few years," Battelle said. "But we have always had a better understanding of brands' needs, as our programmatic business learned from the content marketing work we've done. As a corollary, the content-marketing side has learned how to apply the scale that comes from programmatic. Those two areas will still be working together, such as through products like our Content Rich offerings that we released last September. Certain relationships will naturally remain constant."

Sovrn’s Knapp also downplayed the magnitude of the split.

"If you think about the period when Lijit was acquired by FM, in the programmatic space, two years is an eternity," Knapp said. "The market moves really quickly. So it's not fair to say this is retrenching.”

In 2013, Knapp said that programmatic arm grew the network's reach by more than 168% and saw revenues rise by over 93% "off an already large number," though he did not provide specific dollar figures. At the end of last year, that business was paying out $2 million a week to publishers, Knapp added.

FMP has experienced significant upheaval in the past two years. Under former CEO Deanna Brown, the company unveiled its first private marketplace offering in the summer of 2012. Earlier that year, the company drew attention for shifting away from direct guaranteed sales and toward programmatic buying, laying off much of the sales team.

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