Web publisher Alloy Online is continuing its efforts to diversify the ways it reaches out to its predominately teenaged audience, this week finalizing the purchase of a media buying agency.
New York-based Alloy is shelling out about 1.7 million in stock and $9.7 million in cash — about $33 million in all — for Evanston, Ill.-based CASS Communications, which specializes in niche and alternative markets.
While the 33-year-old agency has budding ethnic, military and recruitment practices, Alloy’s eager to get its hands on CASS’s college and high-school media planning and buying business. According to its own estimates, the agency reaches about 28 million readers, through college and high school newspaper advertising and outdoor/out-of-home media.
“The combination of CASS and Alloy will allow us to better serve the advertising community as CASS significantly increases our reach into the teen and young adult demographic groups,” said Matt Diamond, Alloy’s co-founder and chief executive. “Additionally, CASS’ management team, with over 30 years of experience helping organizations connect with college and high school students, enhances Alloy’s capabilities in providing comprehensive and effective marketing programs for advertisers seeking the teen and collegiate audiences.”
The news continues Alloy’s efforts to branch out from the troubled online ad market, into areas like book publishing (churning out more than a hundred teen-focused titles last year) and mail-order catalogs. Earlier this year, Alloy also snapped up Carnegie Communications, a publisher with about thirty titles geared toward college students.
As with the Carnegie purchase, Alloy stands to benefit by increasing its ability to hawk e-commerce wares to youth audiences. As the bottom has fallen out of the online ad market, Alloy’s found e-commerce merchandising to be quite lucrative — it’s made about six times more from sales of skateboards, clothing and other items than it has from ad and sponsorship sales.
In addition to income from media planning and placement and potential merchandising opportunities, CASS also brings an undisclosed number of big-name marketing clients — like Amazon, Bell South, and Starbucks — which Alloy is expecting to cross-sell into ad buys on its flagship outlet, the teen-focused Alloy.com, and into online direct marketing.
“By joining CASS’ experience in the market and extensive relationships with advertisers together with Alloy’s vast name database and broad array of media assets, we will be able to better capitalize on the growing demand for access to the vibrant college and high school markets,” said CASS CEO Alan Weisman.
Additionally, Diamond said that CASS should make a “meaningful” contribution to Alloy’s advertising-dependent bottom line — contributing about $4 million in revenue through the rest of 2001, and about $1 million in profit for the same period. (During last quarter, ALOY reported a loss of $10.3 million.)