Contently, a New York tech outfit that is emerging as a leader in the native advertising world, just landed $9 million in new funding from two venture capital firms — San Francisco-based Sigma West and Boston-based Sigma Prime Ventures, Media Ink has learned.
“Content marketing has proven to be a powerful approach for companies of all sizes, building their brands and awareness,” said Sigma Prime’s Paul Flanagan .
Among Contently’s clients are General Electric, American Express, Pepsi and, on the media side, Forbes and Gawker.
Shane Snow, chief creative officer of Contently, said his company “is a mix between two business models, a software technology company and a talent management company.”
Snow, along with CEO Joe Coleman, a boyhood friend from Idaho, and Chief Technology Officer Dave Goldberg, founded the company in 2010. About 80 percent of its revenue is derived from software and the other 20 percent comes from managing an extensive stable of writers — matching their editorial skills to advertisers looking to get a message across.
Snow uses a network of more than 28,000 journalists to develop content. Of that number, he said, “about 5,000” are A-listers — drawn from top media companies which have been downsized or are simply looking to moonlight and earn extra income.
Snow matches writers with brands and extracts a 15 percent fee. Generally writers are getting paid at the rate of around $1 a word.
The company won’t disclose its 2013 revenues, but Snow said they grew by 400 percent last year and he hopes to see them cross the $20 million barrier in
2014.
Snow said that until recently, most of the expenditures for native advertising were coming out of public relations budgets, but more recently he noticed more of the funding coming out of traditional ad agency creative and marketing budgets.
“There is going to be a lot of market share stolen from banner ads,” he predicts.
Native advertising is contracted content written and designed not to look like the advertising it really is.
The larger debate that will undoubtedly play out across the media world this year is whether branded advertising threatens or helps traditional media — magazines, newspapers, TV and radio networks.
“Right now this looks like a way for traditional publishers to make a premium on their page real estate,” said Snow.