With $US40m in hand, a Kiwi in New York is on a mission to save publishing
The web has been rough on traditional publishers. Most advertisers will only pay a tenth, or less, of what they’ll shell out to reach print readers. Subscriptions revenue is non-existent, or hard work. You know the story.
Jonty Kelt is here to help – and he now has $US40 million in backing.
The Hawkes Bay-born Mr Kelt is co-the founder and chief executive of Group Commerce, a company that helps publishers supplement revenue with (whisper it quietly) daily deals.
"Daily deals" sounds inherently trashy, but the Manhattan-based Group Commerce takes a tailored approach. Early, high profile client The New York Times, for example, offers its readers discounts on items like high-end picnic hampers and tickets to wine tasting experiences and high-brow events and concerts. If you’re willing to get a bit dirty, deals can be tied to particular articles.
With services, typically the merchant keeps 50% of the sale price, with the balance split between Group Commerce and the publisher (the split various). For hard goods, the merchant typically keeps 65%.
Speaking to NBR from Manhattan, Mr Kelt also stresses his company’s service isn’t just being used for daily deals (something of a pejorative phrase these days as Groupon goes out of fashion and its stock sinks). It also supports “shopping mall” type selling. The idea is that there are hundreds of daily deal sites out there, but as a publisher with a trusted brand, you can parlay it into a successful e-commerce operation.
ABOVE: Jonty Kelt speaking at a KEA event in August 2011.
I want to believe such a service could help give online a leg up. Several money men already do. MTV co-founder Bob Pittman was one of the initial investors who chipped in $US8 million early last year. A second round of funding brought in $12 million. And a Series C round just closed hauled in another $21 million.
The New York Times became a foundation customer last year. It’s now been joined by others including Comcast, Rogers across the boarder in Canada and, recently, the Telegraph in the UK – where Group Commerce opened an office just last week. The company employees 125, and is looking to add 20 bodies in the UK as soon as possible. Next up is a German office.
Group Commerce is aiming to help out anyone with an online audience. Often that means newspaper sites. But others are so-called deep verticals such as Active Network – a site that caters to around three million endurance athletes. Next up, the company plans to work with high-profile celebrities on Facebook and Twitter, with the aim of finding a way to sell to their followers.
Right now, Mr Kelt’s company has around 35 staff devoted to helping publishers source deals – but his aim is to make them self-reliant in that regards. When Group Commerce began, it has to source 100% of the products and services sourced by its clients.
This month, the figure is closer to 40%. Mr Kelt has come a long way. After studying finance, marketing and philosophy at the University of Otago, he joined Australia’s Macquarie as an investment banker.
Positions with various dot coms followed, culminating in a role as international vice president at DoubleClick, the online ad serving company bought by Google in 2007 for $US3.1 billion. Is he making money from Group Commerce yet, or is it more in (your correspondent asks politely) “investment mode”. Mr Kelt plumps for the latter. Revenue is increasing at a rate of around 30% a month.
The CEO says an IPO is “likely” in his company’s future – hinting at a big payday down the track. But for now, it’s finding all the money it needs from private equity.