Ad network Glam Media turns down $1.3 billion buyout
A source close to Glam Media — the ad network that rounds up websites for women and then resells their ad inventory at higher prices to advertisers targeting the demographic — told VentureBeat the company has turned down a $1.3 billion acquisition offer. Glam turned down the offer because it expects a "bigger opportunity" down the road — perhaps an IPO. One of Glam's own partners tells us it'd be "crazy of them if they did." And likewise, we've never taken much stock in Glam's business model. (Disclosure: Our parent company, Gawker Media, owns Jezebel, which competes with some sites in Glam's network.)
Publishers rarely stick with ad networks when they reach a certain size, and Glam has a reputation for signing up new sites with expensive guarantees. (A Glam spokesperson claims it's not seeing sites leave after the guarantees expire.) Ultimately, though, Glam's sites have two fates: Either they never get large enough to matter, or they grow too big for Glam to justify its cut of sales. At that point, they'll likely leave or get bought outright by Glam — a considerable future liability for shareholders.
None of this means Glam won't sell. Glam CEO Samir Arora sold a majority stake in his startup NetObjects to IBM in 1997. Four years later, IBM sold the company off in parts for a pittance. Glam backer Tim Draper of Draper Fisher Jurvetson profitably sold similar lemons — Hotmail to Microsoft, and Skype to eBay. We doubt Glam's viability. We don't doubt Glam's backers ability to sell the company. To suckers.