Clearspring Plus AddThis–But Does That Add Up to a Real Business?
In a move to dramatically increase its traffic and give it more tools to offer publishers, Clearspring Technologies said it will acquire AddThis, the top bookmarking and content-sharing tool on the Web.
As with many social-networking start-ups, whether this disparate traffic can be easily translated into a reliable revenue-generating business remains to be seen.
The McLean, Va.-based Clearspring–one of several widget networks seeking to connect publishers and advertisers with social tools by helping them embed small pieces of content across the Web and monetize that content–would not disclose the price it paid for the Princeton, N.J.-based AddThis.
My guess: A few million dollars in cash and maybe more in some kind of stock swap.
What exactly is Clearspring getting for this?
For starters, a tiny icon with a lot of popularity to help it toward its goal of being the universal sharing standard in the new socially-networked Web paradigm.
Clearspring claims the pair together will reach 20 billion views per month and more than 200 million unique visitors, noting it would now have a “worldwide audience comparable to the seventh largest Web property.”
While adding up such piecemeal traffic is not quite the same to advertisers as a major central Web site like Yahoo (YHOO), for example, AddThis is the most used tool for sharing Web pages through email or from Web site to Web site.
Its main competitors are ShareThis and Yahoo’s Del.icio.us, even though it has only a handful of employees.
Of course, that viral success around universal sharing might not mean massive revenue generation, even if it is a popular consumer tool.
But Ted Leonsis, chairman of the board at Clearspring, and CEO Hooman Radfar said revenue would come via advertising and, eventually, valuable data analytics the services collect about Web behavior.
Currently, said Leonsis, AddThis has negligible revenue and Clearspring has about $10 million in annual sales. Neither is currently profitable.
Nonetheless, Radfar said, “AddThis is the biggest small thing on the Web,” referring to its tiny icon that expands to offer users a choice of Internet sharing services and updating tools to a variety of social networks.
And indeed, AddThis icons are widespread across the Web, seen mostly at the bottom of content items on big sites like Time.com and MySpace.
While some question whether a big business can be created through such a far-flung network, Leonsis–one of the early execs at AOL in its glory days–said it was how the Web is evolving.
“If you said to me 10 years ago that you were going to be successful by sending people away from your site, I would have said you were crazy,” said Leonsis. “But that is what the Web is about now, and having a central network that can track this is important for advertisers.”
Well, we’ll see about that, but Clearspring certainly has a lot of money to try.
The company has received more than $35 million in funding since it was founded in 2004. Investors include former AOL head Steve Case, as well as the venture firm New Enterprise Associates.
Clearspring has about 100 employees.