Glam Achieves Profitability; Promotes Rotolo To North American Head

For the first time in its five-year history, female-focused ad network Glam Media has moved into profitability, CEO Samir Arora told paidContent in an interview. Reflecting the company’s ability to buck recessionary pressures and the growth of its U.S. business, the company is promoting Jack Rotolo to president & general manager of its North American operations, a new position. Some executive jobs will be eliminated as part of the reorganization but Arora said no details are available yet.

By moving Rotolo, who created Glam’s original sales team, up from EVP of North American sales, Arora will be able to step back a bit. “I have been hands on managing global for the past few years,” Arora said. “We don’t have a president or COO of the company. And while we have CEOs in Japan and Germany, that level of operational delegation in other countries has not been present for us in the U.S. But in the past year, the U.S. has become a large, standalone business. … My operational responsibilities will diminish somewhat as we prepare for the next stage of the business.”

No details on that next step. But sources have told paidContent that Glam has been approached about doing a mezzanine round in preparation for a possible IPO to help promote its continued overseas expansion. A company rep confirmed that Glam has been asked about doing such a deal. Arora said only that Glam has not been seeking out such a deal. He was also mum about specific dollar figures when it came to Glam’s profits, claiming only that Q2 revenues were up 50 percent. He also declined to provide specific numbers on profits, but according to a source who has seen the books, starting EBITDA profitability will be about 5 percent, targeted to grow in 2010 to 12- to 15 percent. Glam expects profits over the long term to grow 20- to 30 percent. As for revenues, Samir sought to compare Glam’s gains to other companies’ display performance, such as Google (NSDQ: GOOG), which had only been up 3 percent in Q2, while AOL (NYSE: TWX) and Yahoo (NSDQ: YHOO) declined 30 and 14 percent, respectively.

“Glam’s Armstrong”: Some executive positions that will be eliminated as a result of Rotolo’s promotion, sources said, though Arora said no decisions have been made. He characterizes Rotolo’s position within the company as similar to the one that current AOL CEO Tim Armstrong had when he was the head of Google’s North American ad sales. As part of his move, former Scripps Interactive (NYSE: SNI) exec Alison Kennedy has been promoted to VP, sales-eastern region, and Carl Portale, former publisher of Elle Group, will head an expanded Brand Relations group.

The road to profitability: Arora says several aspects of Glam’s business enabled it to beat back the recession. For one, it sells only premium display ads and only works through ad agencies. With categories like consumer packaged goods now making a bigger shift to online ads, Glam was able to take advantage of the continued spending for select categories like women’s retail, living and food. At the same time, portals, which depended heavily on autos and finance were more vulnerable to the pullback due to the downturn. As for CPMs, Arora declined to provide numbers of what it charges, but one source who knows the company’s ad rates says Glam typically charges between $8 to $35 depending on the placement. In addition, Glam has been pushing custom sites, like AWomensWorld.com, which is a micro-site created for Frito Lay; CPMs for such sites range from $25 to $150. “We’re in categories that marketers had previously under-spent in,” Arora said. Sources close to the company told paidContent that while the company did acquire two companies in the past year, those new businesses, such as its Glam Japan unit, remain fairly small within the company.

Staffing levels: With most companies looking to lower headcount, Glam has added to its workforce despite its annual “performance-related reorganzations,” which include some layoffs last year. In all, lam employs 110 staffers in the US and 210 staffers worldwide, up from a total of 160 last year. “Every three months, we do performance reviews,” Arora said. “And every six months, we realign the company. We will evaluate a couple of positions by the end of the year, but it is not because of the economy. The company will continue to grow — mostly, the growth has come from M&As. But we also plan to start hiring in Q4. For 2010, our size will grow 10 to 20 percent in staff.” As for restoring the 50 percent salary cuts that Arora and other Glam execs took last year — another way the company achieved profitability — Arora said it’s likely those cuts will start to be undone next year.

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