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Thursday, Mar 28, 2024

Online Firms Click to Grow

Barons Media, an online advertising firm in Encino, hopes to expand its technical arsenal with the recent acquisition of Monarch Ads. Barons acquired Monarch, also based in Encino, for an undisclosed price in September. Both firms have the same business model of recruiting website publishers and pairing them with advertisers in order to better monetize the sites – the goal is to help publishers get the most money possible out of their websites. While Barons brings scale to the deal, Monarch brings additional proprietary technology. “Essentially, Monarch did the same thing we do, they just had their own proprietary technology that was a benefit to us,” said Daniel Kornblit, general manager of Barons. “They also had their own set of relationships with advertisers and publishers, so we’ll fold those into our own.” Monarch will continue functioning as a separate entity and all employees will remain on staff. Barons will also retain Monarch’s board, which includes Jeff West, chief executive of film studio One West Productions, and Luke Jacobellis, president of hair care company Paul Mitchell. “This was a great acquisition for us – the technical talent we’re acquiring is unparalleled,” said Jim Larkin, founder and chief executive of Barons. “With a solid tech stack and Monarch Ad’s large video network, we are sure to see accelerated growth.” ‘Exclusive relationships’ Barons Media was founded in 2006 following a $150,000 investment Larkin pulled from his savings. Though six figures seems a big risk for a solo entrepreneur, Larkin said the company broke even almost immediately and within six months it was profitable. Barons Media places 600 million video and display ads on websites a month, and Larkin projected that it will bring in $15 million in revenue by the end of the year. Barons’ network of publishers includes a wide range of domestic and international sites, including Qatar-based news outlet Al Jazeera. On the domestic side, clients include Atlanta’s Open Study, an online community that allows students to connect and study, and Santa Barbara music-streaming service RadioLoyalty. “We have a lot of direct, exclusive relationships with publishers,” said Kornblit. “We’ll come in, take a look at the site and see what advertisements would make the most sense and how best to monetize the site. Then we’ll place those ads and sell our ad base to relationships on the demand side.” Monarch was founded this year with the backing of an angel investor. The company’s technology includes ad placement and tracking systems, in addition to a list of publishers Barons will add to its network with the acquisition. Both companies take a percentage of the advertisers’ budgets, with the rest going to the Web publishers. Barons in particular works with advertisers and larger ad networks including AOL Inc. and Yahoo! Inc. to place ads. “We work with all the other ad networks and we tie all of those other guys together so we can compete with Google. Otherwise, Barons Media against Google itself? No competition,” Larkin said. Combating fraud Both Barons and Monarch come from a fast-growth industry. Digital advertising increased 17 percent to $27.5 billion during the first half of this year, according to New York trade group Internet Advertising Bureau. But while revenues continue to surge, so does the issue of fraud. Distil Networks, a bot detection and mitigation company in San Francisco, estimates 36 percent of all advertising “impressions” on websites are actually generated by software, called bots, a type of virus that infiltrates a computer to generate false traffic. “It’s a difficult problem to address for the publisher and they’re financially rewarded in the short run for ignoring it,” said Steven Rothberg, president of Minneapolis’ CollegeRecruiter.com, a major online advertiser. “But in the long run it’ll put them out of business because their clients are going to get little to no return on their (advertising) investments.” The prevalence of fraud has left ad networks like Barons vulnerable. Last year, the company was swept up in an ad scam with a former client – now-defunct Client Connections Media, a Web publisher in Florida. The company managed hundreds of websites and used ad bots to generate fake traffic that amounted to approximately $1.5 million a month; Barons’ business with the company accounted for roughly $20 million, as reported in the Los Angeles Business Journal. “Like many other large companies in the industry, we were defrauded,” said Kornblit. “Because of that, we’ve layered on even more fraud prevention services.” These services include Monarch’s proprietary software and preventative technology, which Kornblit said was a deciding factor in the acquisition. In preparation for post-acquisition growth, Barons recently relocated from its Burbank offices of seven years. The company purchased a 2,000-square-foot suite at 15915 Ventura Blvd. in Encino for $600,000. Larkin said the move took place in May, around the same time negotiations surrounding the acquisition were being finalized. Employees from both Barons and Monarch have taken residence in the new space. “We didn’t have any outside funding for the acquisition,” Larkin said. “From the start, we’ve been organically funded. Many people take on debt, but we don’t like to do that. Granted, we might grow slower but we feel it’s best to keep private so there’s nobody looking over our shoulder.”

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