Even Programmatic Pubs Need Scale To Survive: Cheezburger Pairs With eBaum’s World

CheezburgerThe wave of acquisitions in digital media is almost always driven by the need for scale. Access to millennial audiences often plays a role as well.

Both of these challenges played a role in the marriage of humor sites Cheezburger and eBaum’s World, which are uniting under the umbrella of Literally Media.

A private group of Israeli ad tech veterans, led by Jacob Nizri of Ybrant Digital, purchased Cheezburger while simultaneously expanding their stake in eBaum’s World from a minority to majority investment. They named Ori Elraviv as CEO.

Cheezburger CEO Scott Moore, who is staying on post-acquisition, originally joined the company to build the publication’s advertising business. But the media climate worked against him.

Though the 8-year-old site was an early leader in memes and GIFs, other publications like BuzzFeed swooped in and competitors multiplied. Cheezburger’s audience eventually starting growing in the past year, reversing a yearslong traffic decline. In January, it posted 5 million unique visitors, according to comScore.

But advertising opportunities were less promising. With the rise of programmatic, it became difficult to get on media plans because of the publication’s small scale, ranked at the bottom of the top 10 in the comScore humor category. So the company laid off its three direct salespeople.

“We weren’t big enough by ourselves to yield high CPMs and advertising partnerships,” Moore said.

Six months ago it started shopping itself around, hoping it would be attractive as part of a larger publishing package and because of its youthful, hard-to-reach audience.

The company matched up with eBaum’s World, which was a similar size and partly owned by Viumbe, a group of publications owned by a similar group of investors. By combining with eBaum’s World, it will reduce some back-office tasks for the staff of 25.

Leading up to the official acquisition, Cheezburger benefited from the ad tech expertise of its buyers. The company moved from working with one programmatic partner, OpenX, to multiple advertising partners, which translated to a “significant lift” in yield, according to Moore.

It also went from one to multiple header-bidding partners and changed its content recommendation partner and commenting system.

“My team is heavier on publishing and product experience, and the acquirer was stronger than we were in ad monetization, which is a strategic fit,” Moore said.

Besides better optimizing ad tech, Cheezburger has other assets it hopes to nurture post-acquisition. One is a largely inactive YouTube channel for Fail Blog that’s amassed 1.3 million followers. Another is Loquillo, its fast-growing Spanish-language humor site that has 7 million Facebook followers and little competition at this point, Moore said.

As for the ad tech vets acquiring Cheezburger and eBaum’s World, Moore summed up the deal as “vertical integration” of publishing and ad tech.

“If you are good at ad tech, then you aren’t giving up as much margin and you can keep the revenue we are driving.”

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