TechCrunch looks certain to dump Federated Media as its ad partner with the growing media organisation now investing in a direct sales force.
Michael Arrington has previously questioned their relationship with Federated Media, complaining about both the margins Federated were taking and also the fact that TechCrunch was effectively holding up other lesser blogs. Then today, I noticed that on the Crunch Board, TechCrunch is advertising for not one, but two sales directors.
The ad says: “[Techcrunch is] expanding our direct-sales effort to deepen sales relationships with each agencies, branded advertisers and start-ups. Sales directors will be self-starters who can both design custom programs and sell packages to agencies and direct to clients.”
Given that in January this year, Arrington wrote a post which for all intents and purpose, looked like a final warning that Techcrunch was about to give Federated the flick, it seems almost certain the relationship is about to end.
Arrington wrote: “I don’t make any advertising or revenue decisions around here, that’s left to our CEO Heather Harde. But I’m nervous about our ad partner Federated Media, which supplies about a third of our total revenue. They’re going through layoffs (I read this on their blog), and payments from them have dipped substantially in recent months (which isn’t a surprise given market conditions).”
This raises two issues. One is the future health of Federated Media. If they do lose Techcrunch it comes on the back of Digg, and Om Malik’s network going elsewhere. They have restructured recently, cutting back staff. In that ‘Is it time to switch ad partners?’ blog, Arrington beefs that when TechCrunch generates a lead, it goes to Federated Media who will then disperse the budget around a variety of blogs. Clearly, Federated gains a great deal from having those flagship blogs which do an awful lot of its marketing legwork for it. Its problem is, as organisations like TechCrunch become bigger and able to support a direct force they don’t need Federated anymore. But Federated kind of needs them.
The second point is this would apprear to signal an aggressive growth strategy from TechCrunch. The company is also hiring an Events director, an executive assistant and a bookkeeper. Certainly, TechCrunch looks well placed to start thinking bigger. They have been profitable since inception so Arrington would have built up a relatively tidy warchest over that time. And with ad income plummeting and other blogs likely to be in financial trouble, I can see TechCrunch starting the great tech blog rollup that Arrington has blogged about previously.
If TechCrunch wasn’t planning a big growth push, it would likely have just switched ad networks, the fact that it’s investing in a significant internal sales force suggests its aiming to go into expansion mode and to do that in this climate, it needs to expand its network.
If you’re betting on the outcome at The Industry Standard, I think it’s a whole lot greater chance than 33 per cent of this happening.