Image Space Media Raises $2.9 Million For In-Image Ads


In-image ad startup Image Space Media has raised $2.9 million in a first round of funding led by New Atlantic Ventures. Image Space Media puts small overlay ads on the lower half of images on a website; ads only show up when a user mouses over a photo (See an example here). The company says its system—which “serves hundreds of millions of impressions per month”—provides publishers with additional “incremental” ad revenue, while still allowing them to participate in traditional ad networks.

Image Space Media is led by Jesse Chenard, who was chief strategy officer of heavily funded online video ad network Tremor Media, until he left as part of a management shakeup at that company over the summer.

The cash will be used in part to “support publisher network growth.” The startup also announced that Limelight Networks (NSDQ: LLNW) co-founder Michael Gordon is joining its board.


Lee Enterprises’ Profit Rises, But Online Ads Fall 8.4 Percent

newspapers on table

Lee Enterprises (NYSE: LEE) may have achieved achieved consecutive quarterly profitability for the second time in row in Q4, but the turnaround in advertising revenue is still slow-going. In the case of online ads, the segment fell 8.4 percent to $10.6 million in Q4. Compared to Q3’s 24 percent drop in website ads for the Davenport, Iowa newspaper publisher, Q4’s results could mean that the bottom has been passed and there’s no place to go but up. However, Lee’s resurgence could be short-lived. Like other newspaper publishers who swung to profit in the second half of last year, the turnaround was based largely on deep cost-cutting. Since there are only so many employees that can be laid off and only so many printing plants that can be closed, sustaining those profits could be even tougher stemming the losses.

In all, the company posted a Q4 profit of $27.9 million ($0.62 EPS), swinging from last year’s $48.6 million (-$1.10 EPS) loss.

Looking at the specific revenue categories, Lee, which owns the St. Louis Post-Dispatch, still has a long way to go to reverse the fall off in advertising:

For example, combined print/online ads decreased 16.4 percent to $154.4 million, with retail ads down 15 percent, national down 16.1 percent and classified down 19.7 percent. Some things are clearly out of Lee’s hands, such as employment advertising, which won’t turn around until the larger economy does. Combined print/online help wanteds plummeted another 41.6 percent—though, on the bright side, that decline was 56 percent in Q3—while autos dropped 19.6 percent and real estate fell 21 percent.


LSF Interactive Acquires B2B Online Marketer ClearGauge

Clear Gauge

Performance-based marketer LSF Interactive has acquired B2B online ad firm Clear Gauge. Terms weren’t disclosed. After a year in which M&A activity was relatively chilled in the online space, things are starting to heat up. Both companies represent two areas ripe for consolidation, especially in the case of smaller companies who made it through 2009. Chicago’s Clear Gauge’s search optimization will be added to San Francisco-based LSF’s technology offerings. The company was particular attracted by Clear Gauge’s B2B offerings in the technology, business services, healthcare, and manufacturing industries. Although LSF has its own B2B practice, Clear Gauge will effectively be in charge of LSF’s B2B division in the U.S. Release

Atlas Venture Reorg Moves European Investing To Boston

Fred Destin

Dailymotion and Seatwave investor Atlas Venture is turning down the dial on Europe, shifting all its future focus to its Boston HQ. London-based partner Fred Destin, who had helped kick-start those two startups, is moving across the Atlantic, where Atlas will open a new office.

Partner Christopher Spray will remain in London, along with partners Graham O’Keefe and Regina Hodits, who take new venture partner roles, but they will also only service existing portfolio companies. New European investments will be coordinated from Boston.

“We took the decision because we’d like much better to be a smaller, more focused fund and have all our partners around one table,” Destin told paidContent:UK. “There’s always a trade-off between being a global platform ... we came to the conclusion that it would be better all of us sitting in one room making fast decisions.

“We’ll continue to invest in Europe but decided… the industry is moving toward a smaller fund. Nothing beats a small, focused team that sits in the same room, it maintains the connective tissue.”

The big European internet companies of the last four years have hardly been enormous successes State-side - and Bebo struggled to integrate in to their US acquirers, Joost was unable to make headway; Atlas’ own Dailymotion went off the boil before injecting new management and cost cuts last year. Depending on which way you look at it, Atlas’ move either leaves European startups with fewer potential investors - or means an enhanced platform to the U.S. market…

For European deals, Atlas will now likely partner with local investors such as Sofinova, Accelerator Group or Accel Europe, Destin said: “It will change the shape of things we do. I would liken us to Bessemer or Union Square - you will be looking at deals with a global outlook from the outset and will partner with someone locally. There is a lot of appetite on the European side for someone who brings a global flavour.”

Atlas opened up a new $283 million fund 12 months ago. The focus remains “firmly early-stage”, Destin said.

Other Atlas venture partner changes, according to Destin…

Jeffrey Andrews has stepped aside to become SVP at portfolio company AEB.

—Max Niederhofer, who was also an angel investor, is stepping aside to return to entrepreneurship.

Social Media Marketer Shoutlet Raises $2 Million First Round


Shoutlet, a company that connects brands with social media, has raised a $2 million first round. The round was co-led by Origin Ventures and Leo Capital Holdings. This funding follows a $1.2 million seed round raised in 2007. The funding will help Shoutlet broaden its distribution abilities for itself and its parent, Middleton, Wisconsin-based Sway Inc. In addition to expanding its marketing abilities across online video, widgets, text messaging and podcasts, Shoutlet hopes to add more staff and build up its sales team.

The financing also comes a year-and-a-half after Sway rejected the $30 million acquisition offer from online video site CornerWorld. The deal fell apart because CornerWorld was unable to secure the necessary funding to complete the acquisition, Sway CEO Jason Weaver said in a statement at the time. There are more details about Shoutlet’s funding in a Sway blog post. Release


Google’s China Phones Postponed

Google sent a signal that it may retreat from its pursuit of China's cellphone market by delaying the China launch of two phones that use its Android operating system.