Start-up Phase2Media attracts a major investor

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A major global media company is in the final stages of negotiating to take a minority stake in Phase2Media, the 5-month-old Internet ad rep company launched by former Turner Interactive sales chief Richy Glassberg.

The media company last week was completing legal documents for the investment. It would join investors Vector Capital and Starwood Capital Group in funding Phase2Media, New York, said an executive with knowledge of the deal.

Separately, the Sydney Organising Committee for the Olympic Games and IBM Corp. last week named Phase2 to handle Internet ad sales for the 2000 Olympics Web site in North America, Latin America, Europe, the Middle East and Africa. (Asia/Pacific will be handled by BMCMedia.com, an Australian company.)

It's the first time the Olympics will sell advertising on its site (www.olympics.com). Phase2 has hired John Trimble, former senior director-corporate sponsorships with the National Football League, as first VP-worldwide Olympics sales.

RAPID EXPANSION

Phase2 has been expanding rapidly since opening in April. The company now represents 35 Web sites, including Dennis Publishing's Maxim magazine, National Lampoon, Hachette Filipacchi Magazines' Elle.com and American Greetings Corp.'s site (www.americangreetings.com). Phase2 has 45 employees and plans to increase to more than 100 within the next year.

Phase2 calls itself a "next-generation rep firm," but its message is old school: Marketing is marketing, and the best-known brand with the best team will win.

"Advertisers desperately want solutions. They want to partner with brands," said Mr. Glassberg, chairman-CEO.

Hachette signed the company to sell ads on Elle.com in June, Mr. Glassberg said. Ad network DoubleClick, New York, was the other finalist in the review.

"We decided to [hire] Phase2 not because it's a new company, but because of the people inside the company," said Laurent Negrier, VP-marketing for Elle.com in the U.S.

For the Olympics, Phase2 will sell ads to existing sponsors as well as recruit online-only sponsors in areas such as books, flowers and CDs, Mr. Glassberg said.

NOT DISTRACTED BY TECHNOLOGY

Mark Jackson, head of the Internet business unit for the Sydney Olympic committee, said Phase2 stood out as "a sales outfit which is not distracted by other factors, such as technology."

Phase2 was born from the ashes of Omni-Net, an Internet rep firm that Mr. Glassberg joined in January. That firm self-destructed due to lack of funding.

"What we have is experience and customer service as our mantra," said Rob Chmiel, Phase2's president-chief operating officer.

Phase2's goal is to sign between 75 and 100 sites, represented individually or as part of a network, Mr. Glassberg said. In addition to banner ads and sponsorships, the company will develop e-commerce opportunities for clients. It also is building a consulting practice under Scott Ford, senior VP-network sales and business development.

Can Phase2 live up to its name and bring new life to the Internet ad rep business? It's too early to tell. But in the words of Mr. Glassberg, who's apparently never met a metaphor he didn't mangle, "This is a market desperate for water, and we're bringing them lemonade and everyone's drinking it."

Copyright September 1999, Crain Communications Inc.

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