Ex DailyCandy CEO’s Quest to Build Smarter Links Yields $5M From VCs

5/10/13Follow @MichaelXBD

In their never-ending quest to harvest clicks from visitors, Web publishers have taken some strange turns.

They’ve tried videos that start as soon as a page is loaded, whether visitors wants to watch or not. They’ve tried widgets that load “link bait” articles that all seem to go to the same three or four sites. And then there are the dreaded pop-ups.

Pete Sheinbaum, LinkSmart’s founder and CEO, thinks they’ve missed what could be one of the most powerful tools of all: the humble hyperlink.

While it’s a foundational element of the Web, the link doesn’t get much attention. It just sits there on the page, waiting for a user to click it, almost like it’s hiding in plain sight.

“It’s one of those things that people forgot about. But it’s part of the fabric of the Internet,” Sheinbaum says.

He believes well-placed links can boost traffic and revenue. That’s why LinkSmart is developing software that publishers can use to analyze, optimize, and automatically manage links—and hopefully increase page views, the amount of time readers spend on sites, and ad revenue.

So far, some major Web publishers and investors think LinkSmart’s idea and product are promising.

LinkSmart announced last week that it has closed a $5 million Series B round, bringing total VC investment in the company to $9.7 million. Costanoa Venture Partners and Boulder-based Foundry Group led the round.

LinkSmart, which is based in Boulder, will use the money to continue with product development and open new offices in San Francisco and Los Angeles. It also will expand its teams in Boulder, where it employs 18 people in its downtown office, and New York, where it has one employee. In the past few months, LinkSmart has added veterans from Federated Media and Hearst Digital to its management team.

The company needs to be near media hubs where it has greater access to publishers, Sheinbaum says. LinkSmart’s commercial rollout was last summer, and Sheinbaum says several hundred publishers already are using it. He declined to identify clients, but he said they include some of the Web’s largest publishers.

It can’t hurt that LinkSmart is trying to be “publisher-centric,” and that Sheinbaum once was a successful publisher himself.

Sheinbaum is the former CEO of DailyCandy, an e-mail newsletter that gives tips about fashion, nightlife, hot trends, and the latest gossip. It developed a reputation as being essential reading for young, in-the-know women in New York City, and Comcast bought the company in 2008 for $125 million.

While DailyCandy had enviable buzz, it still faced the challenges all online publishers face, like building an audience, making money, and keeping up-to-date with new publishing tools and technology.

“I felt those challenges as a publisher, to keep up with what I needed to keep up with, but more importantly [learned] how challenging it was for us to really develop our audience and make a business out of them,” Sheinbaum says.

Above all, publishers want something that delivers results, helps them attract and please advertisers, and is simple to use.

LinkSmart does that by measuring how many people visit a site, how long they are staying, what links they click on, and where they are going.

A lot of companies offer software that can provide those types of analytics, but Sheinbaum thinks that’s “just the tip of the iceberg.” LinkSmart’s big advances are under the surface.

After analyzing the information it gathers, LinkSmart identifies … Next Page »

Michael Davidson is the editor of Xconomy Boulder/Denver. He covers startups, venture capital, clean tech, energy, aerospace, telecoms, and whatever else happens above 5,280 feet. Contact him at mdavidson@xconomy.com. Follow @MichaelXBD

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