CafeMedia Becomes The Latest Publisher To Join The Consolidation Trend

michael-sanchez-cafemediaIn a media environment that increasingly favors scale, CafeMedia bought AdThrive on Thursday in a deal that will triple the reach it can offer to advertisers.

AdThrive was founded by a blogger’s husband and manages all programmatic revenue for 1,100 other lifestyle bloggers. The deal, whose financial details were not disclosed, increases CafeMedia’s scale from 25 million to 73 million uniques on comScore.

That will create a sea change in the types of conversations that take place between the publication and advertisers, said CEO and co-founder Michael Sanchez. The company will now be able to offer advertisers the scale and efficiency they want on their programmatic campaigns.

AdThrive’s client base includes a strong contingent of food bloggers, while CafeMedia’s focuses more generally on lifestyle and parenting. Sanchez sees expanded opportunities for its CPG advertisers that want to reach not just moms, but moms who are browsing recipes, for example.

The deal closed as the digital media landscape shifts in other ways. Female-focused Mode Media unexpectedly shut its doors last month. Other digital media publications appear to be in demand: Refinery29 raised money twice in the past two years and Time Inc. snapped up HelloGiggles and xoJane last year, for example. As a whole, digital media publications are realigning resources as they see the need to go deeper into both programmatic and custom content.

Sanchez spoke to AdExchanger about the AdThrive deal and his observations on the broader industry.

AdExchanger: Why do this deal?

MICHAEL SANCHEZ: There are many amazing content creators out there who have deeply engaged audiences. No one – for all the activity in this space – has ever focused on them fully. We are going to take [AdThrive’s] programmatic [business] to a new level, but bring in custom stuff. We will help them do more video, more with social media. And the opportunity for programmatic is so tremendous with that scale and that amount of data, in terms of what we can bring to private marketplaces with the combined audience and combined inventory.

Why was AdThrive so good at programmatic? You learn any tricks from them?

They were brilliant in how they set it up. Bloggers create content, they don’t do header bidding or put placements in viewable positions. The average blogger revenue went up 123%. AdThrive has always been word-of-mouth and there has always been a wait list [to join]. They weren’t able to figure out how to scale the opportunity on their own.

What can CafeMedia offer advertisers pre- and post-acquisition?

We can continue to do custom work on our owned-and-operated properties, but also custom content, influencer campaigns, video on these food sites. On the programmatic side, we now are capturing amazing data on these users on food sites, and we can reach them when they are in that mindset.

What’s your take on Mode Media – which also partnered with many bloggers – shutting down?

Bloggers have deeply engaged audiences and quality content. That’s the good news. The bad news for them is that the world gets more and more complicated. How do they figure out programmatic advertising? Social media? It’s getting harder for an individual content creator to do everything around that. Mode saw an opportunity for content creators but for whatever reason, didn’t focus on serving their needs fully. It’s out there that a lot of bloggers didn’t get paid, and it wasn’t their priority to serve these content creators. AdThrive has done the exact opposite. They have a mission-driven approach to serving these creators.

As a company that’s raised money from venture capitalists, with certain expectations behind that investment, how does this deal fit into your long-term vision?

Our founding investors were Highland Capital and Draper Fisher Jurvetson. As part of this deal, we brought in a new private equity investor, ABRY Partners, that helped fund the acquisition. With this acquisition, we have built a leadership position in women’s lifestyle. We can make our core business bigger and better and supercharge what AdThrive is doing.

Is your goal to be profitable or fund growth?

We’ve operated profitably for a number of years.

What are your predictions for the year ahead in digital media?

This is me pontificating, but with partnerships like [NBC Universal and] Vice and Vox and others like it, a lot of the big media companies want the digital capabilities of rapid content, programmatic, video and mobile that the really good digital companies have. Companies proving themselves to be great at digital are of high strategic interest to the more traditional media companies.

Do platforms present the same opportunities and challenges to bloggers as they do to larger publishers?

Bloggers are much less reliant on the platforms than larger publishers. They have huge organic audiences, while big publishers very much live in Facebook land.

Except for Pinterest, right?

For any big publisher, Facebook is their No. 1 platform. For these content creators, Pinterest is No. 1.

You mentioned how transformative this scale will be for your company. But I’ve heard others say that scale will be “meaningless” in the future. 

For us, the limiting factor has always been reaching more people. Scale is critical. But it’s only scale with quality content on quality properties that connect with consumers. If you are just a scale play, that’s not a recipe for success. It’s scale, quality and great execution.

This interview has been condensed and edited.

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