ViralNova, a Social News Aggregator, Sells to Zealot Networks

Publisher's Tech Will Be Used to Help Distribute Zealot's Content

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Earlier this year, executives at social news site ViralNova had to make a decision. The two-year-old company that has never raised outside funding could stay independent and try to keep up with larger digital media companies like Vice and BuzzFeed on its own as was the plan since Sean Beckner joined as CEO in early 2014. Or it could become part of a larger media company to try to level the playing field. Mr. Beckner and ViralNova's founder Scott DeLong have chosen the latter.

ViralNova has been acquired by Zealot Networks, an eleven-month-old media-and-entertainment company run by Danny Zappin who had co-founded Maker Studios, which Disney bought last year in a deal worth $950 million.

After raising $30 million in funding last year, Mr. Zappin's new company has been building its business by buying a bunch of companies including a couple of talent management firms, three ad agencies, a content-licensing firm, a magazine publisher and a couple of music labels. Of the 15 acquisitions Zealot has completed since launching last year, ViralNova marks its largest one to date, said Mr. Zappin. He declined to say how much Zealot is paying for ViralNova but said that it's a cash-and-stock deal.

"To really build out a media and ad sales component of the business, we needed to have a much larger audience than we currently have off of YouTube," Mr. Zappin said, adding the company is looking for "owned-and-operated properties that we can sell media into."

ViralNova has already proven its ability to gin up advertisers' interests. Claiming to have been profitable since launching in May 2013, the site makes money from standard banner ads and, more recently, sponsored content produced for brands. It expects to rake in $35 million in revenue this year.

But ViralNova's allure to Zealot Networks goes beyond having a site on which to sell ads without needing to share the revenue with another company like YouTube. As Zealot and its confederacy of acquired companies start to push out more content -- including content they create for brands -- it will need an edge to get that content in front of people, especially outside of YouTube, where most of Zealot's content currently can be found, and on Facebook, which has become a major video service. ViralNova could be that edge.

"Our roadmap was always to get to the point where we want to go after a large audience off of YouTube, and we were looking for someone who had expertise on other platforms and had a technology that could be scalable," Mr. Zappin said.

Like BuzzFeed, ViralNova is one of the few publishers that seems to have cracked the code on creating content that people want to share all over Facebook and Twitter. ViralNova claims 100 million people check out its sites each month globally, and Mr. Beckner estimated that 60% to 70% of ViralNova's traffic comes from social channels. According to comScore, 17.6 million people in the U.S. checked out ViralNova's desktop and mobile sites in May 2015, a 151% increase year-over-year.

"We really see ourselves in the audience development of Zealot and as kind of an anchor company," said Mr. Beckner. Mr. Zappin concurred, pointing to ViralNova's technology that could be used by other media firms and content creators under the Zealot umbrella.

ViralNova's tech toolkit includes a content publishing system that's geared toward getting articles attention on social networks such as Facebook and Twitter. In particular, the technology helps editors push out different versions of articles and videos to see which variant is more successful in getting people to check out a piece of content and share it with others. ViralNova's technology also helps the publisher's editorial team find stories from around the web for them to aggregate.

ViralNova's technology is often overshadowed by headlines like "Watching This Pup Experience A/C For The First Time Is The Greatest Thing Ever." Such superlative headlines -- commonly referred to as "clickbait" -- usually overpromise articles or videos that underdeliver; that canine cool-down video is probably not the greatest thing ever. But ViralNova execs maintain that its audience data shows its content isn't clickbait.

If ViralNova was just a clickbait site, the argument goes, then its traffic and engagement numbers on Facebook should have dropped since last fall when Facebook tweaked its news-feed algorithm to reduce the number of clickbait articles popping up in people's feeds. But they haven't. ViralNova's Facebook numbers in the past couple months are better than they were in the two months prior to Facebook's change, Mr. DeLong said.

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