Layoffs at ad network Glam Media
A tipster says Glam Media, the women-focused online-ad network, is going through "material layoffs" — 14 out of 200 employees, mostly in sales, Silicon Alley Insider now confirms. The cutbacks, coming just seven months after Glam raised $85 million, mark the popping of the ad-network bubble. The move is consistent with what I've heard from inside the company: Tales of wild spending, chaotic decisions, and mismanagement. Glam, cofounded by slick serial entrepreneur Samir Arora, has embraced a risky business. Arora pitched the company as the future of online advertising, a "distributed media" network, targeting the lucrative female market, overtaking established players like Time Inc., Hearst, and NBC and transforming the economics of the industry. In reality?Glam is a poorly run middleman operation which has been buying high and selling low, ad-industry players tell me. Glam has spent millions of dollars buying up sites' advertising inventory, to create the illusion of bulk, and hiring expensive salespeople, in the hopes of later reselling the ad banners at a profit. Arora could argue he's cutting back in the anticipation of trouble in the advertising market to come. Or the company could be using layoffs to weed out salespeople, many of them recruited from the traditional media world, who aren't making their numbers. Glam, we hear, has been buying traffic at a $6 CPM, or cost per thousand pageviews. That is a rich price for traffic which is mostly low-end social-network content for which advertisers balk at paying, and it would not be surprising if some Glam salespeople found that challenging. More worrisome, given the ongoing credit crunch: $20 million of Glam's last round was "revenue-based debt financing." The way Glam has been spending, if the revenue underpinning the debt is not materializing, Glam could face a hard time getting new financing.