Q&A: Group Commerce Plans Hires, European Growth with $21M Funding
Years ago it might have seemed strange to see publishers and media companies getting into e-commerce, but New York-based Group Commerce is helping them do just that these days. Working with players such as The New York Times, Thrillist, and DailyCandy, Group Commerce offers content publishers a platform to bring in more cash with deals and other revenue channels. The company recently raised $21 million in a Series C funding round that included Jafco Ventures, Spark Capital Ventures, and others. Group Commerce, founded in 2010, has raised more than $40 million in total and plans to use the new funds for technology development, new hires, expansion in Europe, and to grow its domestic client base. In March, Group Commerce acquired British rival Dealised.
Jonty Kelt, CEO and co-founder of Group Commerce and previously a vice president with DoubleClick, spoke to Xconomy about the ways the media companies can monetize their assets, and how his company plans to grow.
Xconomy: How has the media landscape evolved over the last few years?
Jonty Kelt: Media companies and publishers have the assets to be successful in e-commerce. They have brands that people trust. They have great content, they have engaged audiences. So why only sell advertising around the content? Why not provide e-commerce offers to their audiences and generate a new revenue stream, which could be a lot bigger than their online advertising ultimately? That goes to the transition of media companies in a digital world.
Who says they shouldn’t do e-commerce? Our view is they should. At our heart we’re a technology company—software-as-a-service, white label e-commerce technology. On top of that, we have a range of services and knowhow to help them enter this new world. A lot of them haven’t done e-commerce before. Things like merchandising strategy, sourcing of offers, customer service, and marketing are services we add to our technology. One of the things we’ve proven is media companies can be successful in e-commerce. A number of our customers are on very fast growth tracks and have meaningful businesses that they are investing behind. We have developed a playbook of what works, what doesn’t work. We have a way for media companies to generate a new revenue stream.
X: How will you use the latest funding?
JK: Our solution is pretty complex and requires a lot of human resources. We’ve got about 120 people in the company, a good chunk of whom are technology people here in the New York office. That requires capital. We raised about $18 million previously with Spark Capital, Carmel Ventures, Bob Pittman, and Lerer Ventures. We looked at the revenue ramp and we’ve grown 30 percent, month-on-month, in the last year. We decided to raise more money to do three things. The first is supporting the growth value of our U.S. customers, be it technology and services. Number two is investing in new product, sales, and other technology within the platform. Number three, we acquired [Dealised] in the UK and we wanted double down on that investment, beefing up our operations in Europe. The same conditions that exist there exist here.
In New York, we will add engineers, sales, and account management people. At the end of last year we had about 90 people in total in the company; we’ve added 30 people since the beginning of the year. In total by the end of this year we’ll be 175 to 180. In the New York office we’re pushing 90.
X: How did the Dealised acquisition enhance growth of your technology and customer base?
JK: It was a company that was ostensibly a competitor of ours. They hadn’t had a lot of investment to build out a meaningful technology platform. They had made a lot of progress in the UK, so we acquired them and they gave us immediate momentum and a team of ten people. We are looking to add fifteen to twenty people to that team before the end of the year and give us a solid UK-based foothold in the European market. We’re also looking at investing in Germany.
X: What are media companies looking for when they decide to embark on e-commerce?
JK: There is fear and opportunity that this new world is bringing to media companies. They’ve been able to do the same kind of thing for about 100 years and now their world is getting challenged. They need to adjust or they won’t survive. Our business can bring them a new revenue stream. As revenues are under pressure, being able to add a new revenue stream is very attractive to them. The second is a new form of content for their audience. Words and video are how we think of content, but content can be engaging well-curated commerce, as well. It’s entertaining; it’s relevant to the audience’s interests. A new form of content that engages the audience is very powerful.
The third is creating a one-to-one relationship with the audience. In the traditional world, media has been about broadcasting to many. Not a lot of media companies have a good understanding of individual consumers in their audience, where they live, what their interests are, what they recently bought or consumed. In a digital world that is infinitely possible. E-commerce is one way to do that. When a consumer buys something from you, they are giving strong intent and information about themselves. That can be used by a media company, in a positive way, to extend their relationship with them.
X: What kind of new content can media companies leverage?
JK: DailyCandy for ten years has been sending content to two and a half million young women in urban centers about what’s hot, what’s cool to do in your local city. It’s all about content monetized with advertising. About 18 months ago we helped them launch their first local, curated offers in Philadelphia and subsequently rolled that out to 11 cities, and we’ve got national products shopping area on their site. Now if you go to DailyCandy in the New York area, there are about 100 things to buy. That’s all curated with the audience in mind. It’s an example of DailyCandy as a content brand taking a small step from what they know about curation of content to curation of commerce. It’s all transparent; they’re not trying to trick their audience. That’s a deep [audience segment] all about young women.
Local media tends to be horizontal. The New York Times and Boston Globe are local media brands. What they lack in deep verticality they make up for in a lot of local authority.In both cases, they are providing consumer with another reason to love the brand. Some of our customers now have traffic coming to the e-commerce shopping area. In the early days of e-commerce program you did a lot of push marketing to get people to come to your site. What that evolves to is people going directly to the site to buy stuff.
X: You and Group Commerce chairman David Rosenblatt are expatriates of DoubleClick. Are you drawing on those experiences as you develop Group Commerce?
JK: Very much so. At DoubleClick we built a scalable, software-as-a-service, monetization technology for publishers. How do you build a technology team that produces a reliable robust, feature-rich technology platform for enterprise-level clients? That’s not an easy thing to do. We draw a lot from our experience there. We hired our CTO from Google. He built the DoubleClick Ad Exchange for display ad inventory.
Publishers aren’t that savvy on e-commerce, so we have to offer a lot of help with the merchandising strategy, marketing, and launch of the initiative. That’s where our services compliment our technology. That was another lesson from our days at DoubleClick. We’ve hired experts from AOL, Amex, Gilt Group, 1-800-Flowers and other companies. We’re trying to make it easy for publishers to use our platform.