Sites Vying for Lad Ad Dollars Start to Take Hits

Heavy, Break Lay Off Staff As Competitors Targeting Young Men Proliferate

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NEW YORK (AdAge.com) -- One could say that the once-dominant lad-magazine category, epitomized by Maxim, was felled by a swift kick to the groin. Gone are many of the glossies (Stuff, FHM) that once dominated the market, replaced by dozens of websites purveying stupid videos of, well, anything that might get forwarded around by a guy to his pals.

But now, after several years of growth, the lad sites are starting to shield their own loins. Heavy, which runs a video site and an ad network, cut 20 staff members earlier this month, and Chief Marketing Officer Eric Hadley left last week. ManiaTV and Ripe TV, which create branded content for men, cut 20 jobs. Break, which has amassed a large audience for amateur and semipro video of groin shots and skating accidents, also laid off staff from underperforming spinoff sites.

The problem: While there is still a robust group of young males trolling the net, they are a lot more fragmented and harder for advertisers to reach. There is a huge proliferation of sites trying to reach them, leading to cutthroat competition. And there's a general tightening of online ad dollars. All three factors combined threaten to hit the lad sites where they live.

"Everyone is expecting the market to get a little bit tighter; you want to give yourself some room in anticipation of that," said Heavy co-CEO Simon Assaad. "Everyone is going to have to do a better job in the next 12 to 18 months if you're going to stick around."

Next year could be a tough one for online publishers, meaning the gold rush of the past five years could turn into more of a scramble for available ad dollars. No market will be more competitive than the men 18 to 34. The sector already includes dozens of well-funded players such Break, IAC's CollegeHumor, News Corp.'s AskMen.com, Maxim.com, Ripe TV and AOL's Asylum, not to mention YouTube and MySpace, which dwarf them all.

Little Brash
At the same time, the category just got another well-funded competitor in Glam Media's Brash.com, a sparse website attached to a big ad network sold by Glam's formidable sales staff, which has established a significant presence in the online women's market.

The good news for these sites is that young males spend a large and growing portion of their time online and spend less time watching TV than women in the same demo, according to Nielsen. The challenge is that they're one of the most fragmented audiences sought by advertisers, forcing marketers to split a static pie of dollars among an increasing number of outlets.

Five years ago a typical media plan targeted to young males might have 10 outlets, dominated by TV networks and a few magazines. "Today, you still have some of those TV outlets and a few magazines, but you also have 10 to 15 digital outlets, and while current ones continue to grow, more keep popping up," said Andrea Kerr Redniss, managing director-digital at Optimedia.

The sites are already feeling signs of softness in the fourth quarter, typically a crucial one for the genre, which relies on spending from movie studios, consumer electronics, automotive, video-game publishers and console makers. The automotive category is struggling. Movie studios have maintained spending but are more likely to spend on one site, rather than spread the dollars around as they have in recent years. Given the economy and the fact that such niche sites are sometimes considered experimental buys, package goods are pulling back. Players such as Axe and Frito-Lay have significantly cut spending this year.

"What we are seeing is [consumer package goods] are slower to come to market, and when they do make the commitments they have been scaling back," said James Green, CEO of Giant Realm, an ad network that targets young men on gaming and tech sites. "Some are canceling buys completely."

Following the money
Helping drive the proliferation of sites and ad networks targeting young men has been the shift of ad dollars trying to reach the demo online. In 2003, Gillette, for example, spent less than 1% of its ad budget online, according to TNS; in 2007, online received 8%. Unilever's Axe, the golden goose of the category and one of Heavy's biggest advertisers, spent $5 million online in 2007, but only $1 million in the first half of 2008, according to TNS Media Intelligence. Frito-Lay, another big spender in the space, cut spending due to crippling fuel costs for its truck fleet.

Mobile operators remained big spenders but, like the studios, are consolidating their spending on fewer sites. "The dollar amounts haven't changed; there are just many more vendors to talk about. There's more strategy, more tactics," said Paul Leys, director-West Coast innovations at Initiative. "The destinations may not be big, but you're hitting the demo spot-on."

To get a sense of how fragmented the market is, consider that once-dominant brand Maxim is a virtual peon compared with its web-only competitors. Compete estimates 344,382 people visited Maxim.com in September, compared with around 2 million for Heavy, 3 million for Break, 1.2 million for CollegeHumor and 1.3 million for Asylum, not yet a year old.

"It's clear young men are spending more time online, but they're harder to reach," said Bill Wilson, exec VP-programming at AOL. Men 18 to 34 visited slightly more web pages (2,353 vs. 2,305) than women during the month of August and watched 63% more videos than women, according to Nielsen.

Better than sex?
Break commissioned a national poll in which 69% of men said they couldn't live without the internet vs. 31% who said the same about TV. Amazingly, 24% chose surfing the web over sex. "Even in a recession, if you want to be in one demo, this is the one," said Break CEO Keith Richman.

The question is whether the market can support the sheer number of outlets or if a year of slow-to-no-growth means the market might be as glutted with publishers as the lad-magazine genre was earlier in the decade. "We could do nothing but meet with [online] publishers 24/7 and still not meet with everyone," said Optimedia's Ms. Redniss.

"There certainly is caution in the marketplace," said CollegeHumor President Josh Abramson. "It makes it that much harder for people in our space that are not on the same level of must-buy as old media."
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