Glam slows payments to be profitable

CEO talks about the ad downturn and its affect on the business and industry

"I think overall, there is definitely a slowdown in the marketplace," said Samir Arora, Glam Media's CEO. "The public markets are in turmoil, that creates a cascading effect. Glam and Brash are definitely going to be affected." Glam Media and Brash are vertical content networks, focusing on the female and male audience, respectively.

It's no wonder that Glam Media, which used to give guarantees to publisher partners is only "selectively" giving guarantees. "Over the last year, we’ve slowed down on minimum guarantees," he said. But in the case where the channels are new, Glam may make those guarantees, he said. "With few exceptions, Glam is not in the business of minimum guarantees," said Samir, in this interview we did in NYC recently.

Samir's goal, like everyone's, is to strip down, and be profitable.

"We are set on making this company profitable, starting this quarter," he said. 

In order to hit this goal, this week, Glam asked its publisher partners to be patient and expect to be paid later rather than sooner.

Here's a note to publishers (courtesy TechCrunch):

Dear Publisher,

Please be advised that to better prepare for the current financial situation, Glam anticipates a significant slow down in collection payments from advertisers. Therefore we will need to align the expected timing of payments from advertisers with the payments we make to our publishers. Accordingly, as of November 1, 2008 the revenue payments will now be scheduled on 120 day payment terms. However, in order to help minimize the impact to you and avoid gaps in payments, you will be paid as follows:

For publishers with 60 day payment terms:

Dear Publisher,

Please be advised that to better prepare for the current financial situation, Glam anticipates a significant slow down in collection payments from advertisers. Therefore we will need to align the expected timing of payments from advertisers with the payments we make to our publishers. Accordingly, as of November 1, 2008 the revenue payments will now be scheduled on 120 day payment terms. However, in order to help minimize the impact to you and avoid gaps in payments, you will be paid as follows:

November Revenue: 50% will be paid in January and 50% will be paid in February
December Revenue: 50% will be paid in March and 50% will be paid in April
January Revenue: 100% will be paid in May

Note: There are no changes in the amount you will earn or receive with this payment revision.

We appreciate your cooperation and we will do everything we can to make the transition to the new payment schedule as smooth as possible.

This agreement will go into effect November 1, 2008.

For publishers with 90 day payment terms:

Dear Publisher,

Please be advised that to better prepare for the current financial situation, Glam anticipates a significant slow down in collection payments from advertisers. Therefore we will need to align the expected timing of payments from advertisers with the payments we make to our publishers. Accordingly, as of November 1, 2008 the revenue payments will now be scheduled on 120 day payment terms. However, in order to help minimize the impact to you and avoid gaps in payments, you will be paid as follows:

November Revenue: 50% will be paid in February and 50% will be paid in March
December Revenue: 100 will be paid in April
January Revenue: 100% will be paid in May

Note: There are no changes in the amount you will earn or receive with this payment revision.

We appreciate your cooperation and we will do everything we can to make the transition to the new payment schedule as smooth as possible.

This agreement will go into effect November 1, 2008.

Unlike the last downturn in 2001, where we had this systemic problem wehre dot-coms were a big part of the problem, in this turmoil, the issues are largely outside the Internet. The Internet has also evolved to be a very strong medium.
Given the fact that the Internet is a smart medium – the ability to find the target audience in the engagement mode that you’d like – surpasses any other media in history. My gut the Internet will not be affected as strongly as traditional media, especially print.
We’ve been growing at about 200% y/y growth rate…  I think that in a very strong market externally, that growth rate could have been 300%. 
My gut feeling is that yes the market will slow down, but the Internet will increase in this downturn.
When we started the business, I likened it to be in the billboard business, or the theater business.  Given we were not known, we have a mixter – straight revenue share, some minimum guarantees. Over the last year, we’ve slowed down on minimum guarantees, for one we’re very well established. In our channels that we’ve been in for a long time, there’s less and less reason for minimum guarantees….
In our new channels, we carefully use some minimum guarantees as we enter new markets. With few exceptions, Glam is not in the business of minimum guarantees.
You talk about how the ad industry is affecting publishers out there. Have you sell-throughs dropped?
A: I think right now, Glam is not seeing affect specifically in sell-throughs. Glam has never been the remnant or direct-response display marketplace. This idea remnant came from television. When TV started, it was a movement of event-based, prime time, the rest of the inventory was termed remnant. Now, TV didn’t start by filling remnant inventory. Most companies try to fill an ad on everything. Glam started by saying no ads everywhere…
We run at a fairly high sell-through rates… and 40 to 60% was considered in premium display business.
Layoffs?
A: How’s the morale given the layoffs… where does that reduce your efforts and where? We did a small round of layoffs.. combination of every six months we look at our workflow, make sure we have people in places and channels we needed.  “We will change with the times, much more rapidly than others”
Funding: What is the future of this company? I think it’s very hard to tell, given the current environments… building a company for value, we think that company will go public. In this market, the public markets are really closed, building a company specifically for the goal of being public is out of our control. We’re focusing on building a busiess – not with a quick and close exit in mind. We are set on making this company profitable, starting this quarter.  Goal is to be profitable this quarter in the core business.