Google Nourishes Online Ad Presence: Web Giant Purchases Chicago's FeedBurner

Jun 02, 09:25 AM

Current Headlines: By Eric Benderoff, Chicago Tribune

Jun. 2--At a time when everyone from stay-at-home moms to international media conglomerates call themselves publishers, a small Chicago company sitting in the middle of a distribution revolution was purchased Friday by Web giant Google Inc. for an undisclosed sum.

FeedBurner Inc. offers a service that provides constant updates directly to computer users of just about any type of content found on the Web, from blog postings to podcasts to big-city newspaper columns. Along the way, the company can attach advertising to those feeds, representing an opportunity to extract revenue from a unique and fast-growing delivery method.

The company distributes more than 67 million content feeds a day to desktop computers, laptops and mobile phones for 431,171 publishers of all types. That's up from 200,000 daily feeds two years ago, a pace that Google found hard to resist as it seeks to dominate Internet advertising.

"We think of ourselves as a publisher's service company," said Dick Costolo, FeedBurner's chief executive. "But it's fair to say we're an advertising company. The way we make money for publishers is by selling ads."

Susan Wojcicki, a Google vice president for advertising products, said FeedBurner is a good fit because both companies focus on selling advertising that is "very measurable," meaning publishers can track each time a computer user looks at content.

How much revenue FeedBurner generates is unclear, as the privately owned enterprise did not disclose financial figures in the wake of the deal. Google wouldn't discuss the transaction price Friday, but several Internet news sites said the deal is worth about $100 million. Costolo would not comment on that figure.

Regardless, the deal was a significant win for the Chicago company, which was formed in 2004 and has about 30 employees, all but one from the area, Costolo said. The firm will remain based in Chicago.

"When we started, it was just content distribution for blogs and a few other commercial media properties," Costolo said. "Now the variety and types of publishers are exploding."

He cited retailers and travel companies as a new breed of publishers that provide feeds, even if they are just special offers, by using FeedBurner's RSS service.

RSS is short for really simple syndication, a technique that delivers news and blog posts directly to a user's desktop or into what's known as a "reader," a Web page designed to gather various feeds a user subscribes to. Google and Yahoo, for instance, both offer RSS readers.

Essentially, users subscribe to feeds, bypassing the need to keep checking individual Web pages.

Brian Bolan, a research analyst at Chicago's Jackson Securities who covers the big Internet companies, uses a Yahoo RSS reader to collect updates from the 30 or 40 blogs he tracks.

"This works for Google," he said of Friday's deal. "FeedBurner took an existing technology, tweaked it and made it very useful. When you have the FeedBurner update going, any update [to a blog or news site] is directed to a certain spot," like a reader.

The attraction for Google is the way FeedBurner can deliver advertisements in the feed along with a variety of content.

"We distribute the feed, it's routed through us," Costolo said of the company's role as the middleman between content publishers and users. "As that feed gets routed through us, an ad is stapled to it."

Any revenue an ad generates is split, with 65 percent going to the publisher and 35 percent to FeedBurner. How that financial arrangement continues in the future is unclear.

Google's Wojcicki said a lot remains to be discussed among the two companies on their future direction. But it was clear this deal was about generating more advertising options.

"From a publisher's standpoint, they can reach more advertisers [through FeedBurner], which can improve monetization," she said. "If you're a Google advertiser, now you will be able to advertise on those feeds."

Another big beneficiary of the deal is Portage Venture Partners in Northfield. The venture funding firm was the first major investor in FeedBurner, starting with a $1 million investment in 2004.

In all, through Portage and other venture capitalists, FeedBurner raised $10 million.

"It was a fabulous investment for us. One of the best we ever made," said Matt McCall, a partner. "The FeedBurner team executed flawlessly from Day One.

"It's another example of how really exciting tech companies can be successful here in Chicago. I think you can expect a number of next-generation start-ups that will come out of the lieutenants at FeedBurner. They really put together a great team over there."

ebenderoff@tribune.com

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