Layoffs at Federated Media Signal Blogs' Ill Health

John Battelle is the salesman for a host of indie sites, from the futuristic Boing Boing to the Web-obsessed TechCrunch to mommyblog Dooce. What does it say that his company, Federated Media, is canning workers?

A memo from Neil Chase, one of Battelle's top lieutenants, explains the move as a strategic shift, with FM downplaying regular banner ads and playing up "conversational marketing," a fancy term for the kind of shilling that's common for radio hosts but considered verboten for print journalists.

Famously, Battelle got dozens of top bloggers to recite a Microsoft slogan in one of his "conversational" campaigns; several quit the campaign after Valleywag exposed their participation. More recently, Battelle has signed up less difficult spokespeople; a recent campaign for Intel features so-called "social media marketers" — PR and marketing consultants who are used to promoting the wares of paying clients.

Advertisers pay well to borrow bloggers' credibility. But getting them to purchase advertising on their sites? A far more difficult business. Online ad rates have been dropping fast, a result of ever-expanding supply and recession-softened demand. Federated Media had to discount rates last month, and lost a key customer in Om Malik's GigaOm, a tech blog network. No wonder Battelle wants to get out of the cutthroat online ad-network business, and focus on selling his customers' reputations instead.

Here's the memo:

Dear Authors,
We've been preparing for a tough 2009 by talking extensively with advertisers, agencies and authors about what's changing and how we need to adapt to do well in a tough economy. We've learned a lot, and today we're acting on it.

Sometime in the next hour or so, John will announce on the FM blog what we're telling the staff right now: A small number of employees are leaving FM today. We're sad about losing good people who have made valuable contributions to FM. We honor their service, we wish them well, and we'll do everything we can to help ease their transition.

Today we're changing FM to better support the conversational, customized programs that advertisers tell us they want. They're asking for more innovation, new ways to engage more deeply with your audiences, additional conversational tools and better measurement of results. While we're losing good people who primarily supported basic advertising campaigns, we're moving people within the company and adding new positions to beef up the teams that run our most complex projects. That means more help for engineering. It means additional project managers for conversational campaigns.

It means reassigning some salespeople to better serve those advertisers who told us they want to take advantage of the downturn to win market share from competitors.

John's post will explain more about these changes, and I'll be in touch again next week to introduce a new face on the Author Services team and tell you about some improvements in the ways we'll work with you when you're participating in conversational campaigns. Please contact me with any questions or concerns.

As always, thanks for being our close partners.
All my best,
Neil