John Battelle on Federated Media's CEO search

...and why owning properties to nurture publishing partners is a consideration

In this interview, John Battelle, CEO and founder of Federated Media, talks to Bambi Francisco about his search for a new CEO, and why he'd consider owning properties to have a deeper relationship with publishing partners.

Here are some highlights from the interview, partly edited.

BF: How's the CEO search going? Do you have a short list? And, what qualifications are you seeking?

JB: Not yet. We’re still early in the process. There’s a lot of people we want to talk to. As for the person we're seeking, FM has gotten to a certain size and scale. There is a set of skills you need to have in order to grow a business from where we are mid-eight figures to where we want to be (nine-figures). We need an executive that has a passion for growing a business and one who can move the business from a classic startup stage to a growth-stage one. It's the growth stage where companies stumble. That’s where we stumbled at the Industry Standard (John's previous startup). I want to bring someone in who’s got the experience in making that transition.

BF: You raised $50 million for FM. It generated $40 million in sales last year. There are a number of advertising companies that sold to Microsoft, Google, and Yahoo, etc. at the several hundred million dollar range. What’s next for FM and would you consider an acquisition at that level?

JB: We’re motivated to go prove the business out. Whatever else might come, we’ll listen. But it’s not the goal. If that were the goal, I probably wouldn’t be looking for this person. We see a large business developing. In understanding how to execute marketing in social media at scale with quality is a very difficult ocean to boil.

BF: How’s the advertising environment? Are you seeing signs of a turn around?

JB: We grew through this period. Did we grow as much as we thought we were going to? We saw a fair amount of pain as others had. What we’re seeing - end of second quarter start of third quarter - is a return to robust conversations and a strong pipeline of business.

BF: You build a business around nurturing a number of high-profile blogs, many of whom left to sell directly or left to go with other ad networks. Is this the biggest challenge of not owning the properties you represent?

JB:It certainly is something you have to think about it. We have core sites we’ve been working with for a long time. If you’re approach is you don’t want to own or operate or control, there’s going to be some times when some site owners want to sell out. Or others where business models don’t align and they want to go into an endemic market, where they want to sell specific advertisers that are not national, which is what we focus on. It’s not a good or bad thing, it’s part of our model.

BF: Would you consider owning properties like a Demand Media?

JB: Yes, we’d consider it but not in a way that you’d think of owning a site. In other words, would we own one business site. We’d consider owning an asset that might feed that whole portfolio. There are assets that one might own that could nurture your publishing partners.

BF: You brought in $40 million in sales last year. What's revenue tracking at this year?

JB: We’re looking to be up. We’re a little up from the new up [new up being flat]. We’ll be happily up.

BF: Yahoo shut down its video advertising network service recently. What are your plans to service video ads?

JB: We’ve never seen ourselves as an ad network. We’re a collection of high-quality sites that we work very closely with that we bring to market. You can say it’s an ad network, what you’re really talking about is direct-response networks, not branding environments. In video, the models are still working out for how you do branding in video at scale. We work with NextNewNetworks and BoingBoing Video. We’re finding consistent revenue streams in those environments are difficult to come by right now, especially in this environment. Figuring the ad products and how they interact with the content is  aproblem yet to be solved.