Selling online ads the old-fashioned way

With sex appeals, sales calls, and personalized service, Gorilla Nation gives midsize websites access to the biggest brands.

By Peter Viles, Business 2.0 Magazine

(Business 2.0 Magazine) -- Brian Fitzgerald and Aaron Broder want you to know they're not geeks. Yes, they're dotcommers in the increasingly automated business of online ad sales, but their real business, they insist, is people.

"We're not technologists," says Fitzgerald, a former entertainment attorney and the president and co-founder of Gorilla Nation, an L.A.-based ad sales force for midsize websites. "We really represent Web publishers," says Broder, his partner and another recovering Hollywood attorney. "We form one-to-one relationships with these people."

That he feels obliged to add this says volumes about the state of an industry that's increasingly dominated by programmers, data analysts, and -- at Yahoo (Charts, Fortune 500), anyway -- an actual rocket scientist.

Broder, Fitzgerald, and their 120 employees represent 500 websites, including babes-and-beer-fest sites like FHM Online, news and political hangouts like the Huffington Post, and celebrity blogs like Jossip. They package the websites into small networks of like-minded users (cooking, men's lifestyle, automotive, etc.) and sell those networks to national advertisers.

They also create custom promotions like the Snakes on a Babe website, part of the campaign for the movie Snakes on a Plane. Gorilla Nation's biggest categories are horror and entertainment -- no surprise, given the founders' backgrounds. The company's horror network, for example, has more than 40 sites, including eSplatter and Slasherama, with a combined reach of 4 million monthly unique visitors.

Gorilla Nation calls itself an online ad "rep firm" as opposed to an ad "network" -- a distinction that's two parts substance and one part marketing spin. Ad networks like ValueClick Media, which link thousands of websites into giant pools of advertising opportunities, dominated the first wave of online ads. But they often couldn't answer a crucial question on Madison Avenue: Exactly where, and when, will my ad run?

Enter the boutique rep firms like Gorilla Nation and Tribal Fusion, which may have fewer clients but can answer the question.

For independent midsize websites, Gorilla Nation provides something else that's hard to get on their own: direct access to national media buyers who funnel billions of ad dollars. Its ad reps "get in the faces of buyers," says Marc Hodgins, president and CEO of TeenHollywood.com, based in Calgary, Alberta. "On our own, we'd just be cold-calling."

The biggest advertisers are a tough sell. Gorilla Nation has to hustle to land a campaign from, say, an automaker. But its personalized approach also gives it a leg up. When Hyundai wanted to market its Santa Fe SUV to women, for instance, Gorilla Nation captured a piece of the ad buy by creating a dedicated fashion-oriented website (thehyundaisantafesweepstakes.com), complete with celebrity photos, that it promoted across its own network of women's sites. A traditional ad network couldn't afford to give that kind of special attention.

Focusing on premium ads for niche websites and campaigns built around original content also allows Gorilla Nation to charge advertisers higher rates --expressed in cost per 1,000 visitors, or CPMs. "Ad networks usually don't get the kind of brand advertising that Gorilla Nation gets for us, which means better CPMs," says Karl Heberger, advertising director at eBaum's World, a video and humor site.

TeenHollywood.com's Hodgins says his CPMs from the major networks are typically less than $1, but Gorilla Nation's system has allowed him to charge as much as $30. "The big networks have a bucket of billions of impressions and unbelievably low rates," he says, "and they're just looking to empty the bucket."

Gorilla Nation's cut of the revenue ranges from 35 to 50 percent of the ad buy, which is pretty standard for the industry. The privately held company says it's profitable and that revenue has been growing roughly 70 percent a year since it launched in 2001. It expects to take in $50 million in 2007.

That's a good thing for Broder and Fitzgerald, whose first startup, a collection of celebrity websites called Celebrityblvd.com, imploded in 2002. They had quit their day jobs to start it, and rather than return to the law racket, they decided to try again in the emerging Web 2.0.

"We didn't have funding," Fitzgerald says. "But it was the only opportunity where someone with no money could start a business and compete, because the expectations on the publisher side in terms of ad revenue were nonexistent."

He and Broder are aggressively recruiting new clients; FHM and HuffPo are recent acquisitions. They're also planning to offer new services to existing clients, like video-enabling technology for ads, which would allow Gorilla Nation to raise its markups.

Those are smart plays. But Gorilla Nation's insistence on forging personal relationships -- what JupiterResearch analyst David Card calls its "dependence on humans" -- means that the company is not a likely candidate for explosive, leveraged growth. On the other hand, Card says, "one thing humans are good at is selling stuff." And that's no monkey business.

Peter Viles is a Los Angeles-based freelance writer.

BIG NETWORKS VS. THE APES

Traditional Networks:

1. Advertiser or ad agency contacts network.

2. Network finds sites with relevant demographics, largely ignoring the sites' content. 3. Advertiser delivers finished ads to network, which distributes them via an automated system. Gorilla Nation 1. Advertiser or ad agency contacts network.

Gorilla Nation:

1. Advertiser or ad agency contacts network.

2. Gorilla Nation offers up sites in its network by genre (cooking, movies, etc.).

3. Ads are customized for individual sites, and additional pages are built to house sweepstakes or games.

4. Both agency-made ads and Gorilla Nation's custom work are distributed to relevant sites across the network. Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.