December 16th, 2006
Exclusive: Glam.com Samir Arora on new media valuations
Glam Media reflects an aspirational women’s lifestyle experience, Samir Arora, chairman and founder, told me in announcing the company’s $18.5 million series C venture capital funding earlier this week (see "Glam.com's fashionable $18.5 million").
Arora also shared with me the aspirational business development “story” behind Glam Media, which he says is going “after a multi-billion dollar opportunity”:
In late 2002, a small team of people started to explore some small but revolutionary ideas…
Why is it that in real life we love high glossy magazines and TV for both the content and the beautiful contextual brand ads, but the web largely remains a text-based direct medium?
Why is it that women as consumers account for over 80% of the advertising and retail sales, but account for under 50% of e-commerce and even less for web advertising?
Why does the web have a few large portals and content web sites, while increasingly some of the most compelling content is targeted on indie publisher’s web sites and blogs or user generated?
This is not just a story about doing things right– it’s a story about the 100’s of things we chose not to do, or the “startup wiggle” leading the way to finding “the nugget.”
Arora expressed particular pride in Glam Media’s founding team that came together “with a rich history in transforming internet and media”:
Susan Kare, former designer of the Macintosh, dives into building pages that bring the emotive feel of print online.
Fernando Ruarte, who built one of the first content management systems, starts creating the architecture of the inner core of the Glam Hub.
Raj Narayan, who holds the first patent on Page Layout in HTML, starts to think about an all-new web-publishing platform.
Phil Schlein, USVP, Apple and former President Macy’s California puts it in simple terms “The next stage of Media is bringing entertainment and engagement to the consumer” and joins as an advisor.
Carl Portale, former publisher of Elle and Harper’s Bazaar joins Glam.
On September 19, 2005, Glam.com launched at Fashion Week, New York and at Demo Fall, reaching over 1 Million page-views and 100,000 visitors in its first week, according to Arora.
Today, Glam is the “fastest growing Fashion & Entertainment Web property,” Arora says.
Glam Media’s Growth: comScore MediaMetrix Data (In 1,000’s)
Is Glam Media all about “eye-balls”? Not according to Arora:
Things are very different from 1999, where eye-balls ruled, but without an eye to monetization and with very high marketing advertising spends. Glam is the group of new media companies where the revenue model is clear and also scaling very fast.
ComScore reports Glam Media US was 3.0 million unique visitors in October and 3.8 million, and 7 million global and estimated 8+ million in November. It is about the right target audience, that the brand advertisers want to reach, with the right types of page views, engaged. Glam reaches a very desirable women audience that is engaged in content online, with the contextual ads that make sense.
In addition to audience, brand advertising/CPM’s are very important, a social networking web site could have a large reach, but with very low CPM’s $0.10-$0.20, versus Glam’s typical are $20-$35 for brand Ads, and $50-$125 for email and brand immersion ads.
This makes this space, Fashion, Beauty, Lifestyle, a very attractive market, so not just the eye-balls, which eye-balls and how they interact are also important.
What about the financial markets? How attractive is Glam Media, today and going forward? I touched base with Arora again to get his take:
Q) Tech and VC “insiders” characterize Glam Media’s venture funding as “astonishing” and the $150 million valuation I put forth a “whopping” level that “nears absurdity.”
ARORA: The valuation seems to be in line with the industry- Women/Fashion/Style and Targeted Media companies recently. DailyCandy did a round at $125 million earlier this year with about 1 million users, IGN was acquired by Fox for $600 million. Vertical media companies have seen a 25 times visitors and 7-12 times revenue multiples- so Glam is in line with these transactions that have occurred over the last 2-3 years given it’s results.
What’s also key is the growth rate; Glam is continuing to grow at a very fast rate, this also adds to its valuation.
Most valuations are based on a combination of : Traffic, Revenue, and EBITCA: the mean being: 31.74 x uniques, 5.9 x revenue, and 3.1 x EBITDA. To evaluate Glam’s valuation an analyst would take this model- and look at the growth stage to determine the % between each of these metrics. So for early/traffic growth companies, FaceBook, MySpace, IGN, traffic is key, for Daily Candy, it was revenue, followed by the right traffic and EBITDA, and for IGN it was the network traffic multiple that FOX paid.
Analysis of public content companies from public markets.
Q) Is the Glam URL what Glam Media is relying on for growth?
ARORA: The brand name helps, simple, short and emotive and will certainly help. Glam like Google has two components for revenue; Ads that are placed on Glam, and Ads that are placed on the Glam Network. Like Google, we too are a hybrid and expect both the Glam–owned URL’s and Glam Network to drive growth.
Q) What do you gauge to be the future for Glam Media, from both VC and new media perspectives?
ARORA: 2007 will be about execution. Glam has rather rapidly grown to the the Top 10 Women’s properties, now it will need to focus on continuing to drive growth, and becoming a major media business. From a new media perspective, we will focus on M&A and an expanded focus on rich media; Video, podcasts in addition to graphically rich content…
THANKS SAMIR!
