NewsCred backed into brand publishing, now it has $15 million to do more of it

By Erin Griffith , written on March 19, 2013

From The News Desk

NewsCred started four years ago as a way to help publishers distribute their content and legally pull in content from other news outlets. Simple licensing and distribution. But last year, the site realized the real demand for more content was not from publishers, but from brands. The company began selling content from its media outlet partners to brands, and holyshit, a fast-growing business was born.

The site grew revenue by 12 times since last year, all of it driven by brands. In January 2012, NewsCred had not taken in a single dollar from brands. Now 60 percent of its revenue comes from 130 brands like Pepsi and Orange Telecom, which pay anywhere from $3,000 a month up to six-figure sums to re-use the content on NewsCred's platform.

The company is on track to break double-digit millions in revenue by the end of this year, says CEO Shafqat Islam. Publishers, which are paid when brands use their content, earn six figures a year or more from NewsCred; one publisher will likely break the seven figure mark this year.

The remaining 40 percent of NewsCred's revenue comes from the company's original business model, where publishers like Business Insider, Huffington Post, and BuzzFeed, pay NewsCred for content. (This is how you see a full Economist story posted on BI rather than a hasty rewrite.) But publisher-to-publisher sales are no longer the focus for NewsCred.

In brand publishing, NewsCred has found a line of business that it believes can can be very large. That's why today the company announced a $15 million Series B round of funding from Mayfield Fund, alongside Greycroft Partners and existing investors FirstMark Capital and IA Ventures. Previously NewsCred raised $5 million from Floodgate, Lerer Ventures, AOL Ventures, FirstMark and IA. The 70-person company (which last year acquired DayLife) will use the capital to expand into new languages and increase its presence globally.

Of course, there is the chance that this whole "brands as publishers" trend will end up as an experimental fluke that'll fizzle out. Ad spend from the big CPG brands like Pepsi is fickle, and since the return on this kind of spending is difficult to prove (do you measure "engagement"? brand lift? Tweets?), the company could decide NewsCred's content is simply not worth the six-figure-a-month investment.

NewsCred is prepared for that possibility, says Islam, and its future may well be in B2B publishing. "The sexiest category for us is insurance," he says. NewsCred works with insurers like AIG, The Hartford and Zurich. Insurance companies are eager to educate existing and new about risks because it makes them better customers. "Using content to educate prospects is hugely valuable," he says. "They can tie back the ROI from content marketing very easily." The Hartford, a company with its roots in wealth management, is using NewsCred to power a portal which positions the company as a business insurance seller.

"There are some question marks on the consumer side," Islam says. But in 10 years, content marketing on the B2B side will be here, he argues.

The challenge then is to get those obscure publishers, from Plastics News to Oil & Gas Journal onto NewsCred's platform. The company has already won over major, top-tier publishers like The Economist, Reuters and The Associated Press. Today it landed the biggest fish -- The New York Times. (NewsCred gives publishers a veto option when brands want to pull in their content.)

It's common for startups to build a cool product and hope they eventually back their way into a viable business model. Hell, that's basically what happened at Google with paid search ads. We built this search engine, and surprise, it prints money, too!

The idea was perhaps best articulated by Marc Andreessen, who wrote: "In a great market -- a market with lots of real potential customers -- the market pulls product out of the startup." NewsCred built a platform, but it took three years to find its market. Last year the company found it, and now it's running full speed ahead in that direction.