Hearst will be using a platform built for big media publishers by Group Commerce, a New York-based company founded by former Google and DoubleClick executives David Rosenblatt, Jonty Kelt and Andrew Glenn.

The offers, which will start rolling out later this summer, will primarily target the male-dominated audiences of the two magazine brands. Later, Hearst will expand it to other demographics through such well-known magazine properties as Marie Claire, Cosmopolitan and Esquire.

So far, Group Commerce has launched with other major media outlets, such as DailyCandy, Thrillist and the New York Times. It has raised $18.5 million in capital and grown to 75 employees since officially launching in March. In all, its network of publishers is already reaching 15 million subscribers who have signed up to receive deals.

Rob Houghlin, the publisher and chief revenue officer of Car and Driver and Road & Track, said they’ve been looking at doing something in the social commerce space over the past four or five years.

“It’s a brand new way to connect some of our advertisers with our most trusted asset — our users,” he said. “Advertisers are looking for new ways to talk to current and potential customers. They don’t want to move distressed products, but they want to offer special products to consumers who want it. It’s a platform of credibility first and value second.”

The deals will be promoted through the magazines and through other online experiences, such as newsletters, blogs, Facebook pages, Twitter feeds and mobile applications.

Some of the initial offerings include a custom product bundle from Gladiator Garage, which sells workbenches and storage units for garages, and an exclusive Corvette driving school package at Spring Mountain Motorsports Ranch in Nevada.

Kelt, who is the CEO of Group Commerce, said the company will be working with Hearst to get all of its magazines up and running with deals by the end of the year. He said the magazines serve perfect niches that can be catered to.

“The whole premise of our business is that relevance is really important,” he said. “The media companies have strong vertical titles and know who their reader is.”

Kelt said there are two distinct advantages to partnering with publishers: The cost of acquiring customers is much lower because they already have the readers and combining offers alongside content can be particularly powerful.

If you think about it, newspapers have always had content and advertising — from classifieds to display ads — that people have been interested in. That will likely be the company’s only hope if it wants to contend with the massive marketing machines already assembled by Groupon and LivingSocial.

“Great content is really powerful, but great content with great commerce is even more powerful,” Kelt said. “You’ll be more engaged and more valuable than if you just had content from that brand.”

Here’s a mock-up of how the deals will look on Road & Track. This is not a final version, obviously:

Think again.

New York-based Group Commerce, which is coming out of stealth today, has the funding and the pedigree to be a viable contender.

Founded by former Google and DoubleClick executives David Rosenblatt, Jonty Kelt, and Andrew Glenn, has raised $8 million in capital.

Investors include: Spark Capital, Carmel Ventures, Lerer Media Ventures, and Bob Pittman, the founder of MTV Networks and now chairman of media and entertainment platforms at Clear Channel.

What’s more, it is coming out of the gate running with four major publishers added to its platform: DailyCandy, Meredith Corporation, Thrillist and The New York Times.

In an exclusive interview with eMoney, Rosenblatt and Kelt explain that unlike Groupon or LivingSocial, Group Commerce is not building its own consumer brand, and won’t be targeting deals directly at consumers. Rather, it’s banking on building a platform that other media companies can leverage.

Rosenblatt, who was the former CEO of DoubleClick, is the company’s chairman, Kelt is CEO, and Glenn is the company’s CTO. All three were at DoubleClick when it was acquired by Google for $3.1 billion

Ironically, they are now building a business that Google desperately wants to get into, but failed after an unsuccessful $6 billion bid to acquire Groupon.

Rosenblatt said:

“Of course, this is going to be a very big market, and there will be many more players than just two. Each participant will have a different approach. Google clearly has one, but we believe collectively that publishers have the strongest advantage. They have the audience and the brand loyalty, but they are missing the mechanics and industry expertise.”

The daily deals space is getting exceedingly crowded.

The market is expected to soar to as much as $3.9 billion in the next four years, and there’s roughly 200 players in the space, according to estimates by BIA/Kelsey.

Rosenblatt compared the market to the early days of online advertising when AOL and Yahoo dominated.

“In the early days of the display market, a big share of the market was dominated by two players, but overtime advertising was redistributed to where the audience was. Groupon and LivingSocial have done a great job creating a market, and they will continue to be very large, but there will be a similar redistribution in favor of publishers,” he said.

Beyond Groupon and LivingSocial, which are considered the market leaders, there’s other companies attacking several niches, ranging from furniture to baby apparel, travel and families. There’s also companies that say they offer exactly what Group Commerce is describing–a white label solution for publishers–including Seattle-based Tippr and ReachLocal, which recently acquired DealOn.

“There’s a huge number of Groupon clones,” Rosenblatt said. “The insight here is that none of those clones have established publishers, they don’t have brands or trusted relationships, or customer lists….We don’t have a b2c business, but that is the case with most of the other white label providers. They also don’t have teams and our breadth of services.”

He says the three components that you must have in order to be successful in the space are: A loyal audience; great content and deals; and a technology platform.

“The publishers we’ve worked with for many years [at DoubleClick] are in the process of transitioning to a new digital economy,” Rosenblatt said. “They have an audience and the ability to match the audience to deals that are contextually relevant. Our role is to offer the third part.”

Group Commerce is not just offering a technology platform, but also is sourcing the deals for its media partners, and finding a large audience and wide range of demographics for the merchants across publications.

Daily deals typically offer discounts at restaurants or other services for as much as 50 to 70 percent off. The customer pays for the voucher up front and then redeems it later. Typically, the merchant only gets half of that cash, while the other half goes to Groupon or another provider. For the merchant it’s a new form of advertising, replacing traditional methods, like Yellow Pages or newspaper ads.

Group Commerce would not disclose its revenue splits, but said it is paid with a portion of gross revenue of each deal, and that it’s a shared risk model. “If the deals don’t work, we don’t get paid,” Kelt said.

Kelt added that they believe their model will work because it combines the publisher’s knowledge of the audience with the merchants. For instance, DailyCandy’s audience is young and female, and a reader may be interested in an offer for a ladies night out at an upscale restaurant.

Although a potential customer does not have necessarily have to be a publisher, Kelt notes. It can be anyone with an audience, including a celebrity with a large following on Twitter.

Today, Group Commerce has 35 employees in New York, Chicago, Florida, San Francisco and Los Angeles. It’s planning to grow to 100 employees by the end of the year with the majority being sales people.

Meet the newest batch: Lerer Media Ventures, a new fund run by Huffington Post co-founder Ken Lerer and his son, Thrillist co-founder Ben Lerer.

The two men say they’re closing the fund’s first round in the next few days. When they’re done, they will have around $7 million to put into angel/early-stage investments–primarily in New York tech/media companies, though they intend to play on the West Coast too.

If you want a sense of what the Lerers are looking for, check out deals they’ve already done, like Hot Potato, Paperless Post, and GDGT.

Their investors include a number of bold-faced names, at least by tech/media standards. Among them: Pilot Group’s Bob Pittman, ZelnickMedia’s Strauss Zelnick, SoftBank Capital partner Mike Perlis, Hunch co-founder (and prolific blogger) Chris Dixon, uber-angel investor Ron Conway and Lerer’s Huffington Post co-founder, Arianna Huffington.

The Lerers join the ranks of other investors interested in New York start-ups, including early-stage venture capital shops Union Square Ventures, Spark Capital and First Round Capital, and a set of smaller funds like IA Capital Partners, Betaworks and Founder Collective.

The fact that the last two funds are directly connected to the Lerers–Ken is an investor in Betaworks (and shares office space with it), and Chris Dixon is an investor in Founder Collective–shows just how interlinked the New York start-up scene is. The same players seem to invest in the same deals, and now they’re investing in one another.

For instance: Check out the investor list for Brooklyn-based Hot Potato, which looks a lot like the Lerers’ group.

Or consider the fact that Pittman once worked with Ken Lerer at AOL (AOL) and now funds Ben Lerer’s newsletter company. Or the fact that Perlis, via SoftBank, is a Huffington Post investor and that former SoftBank partner and current Huffpo CEO Eric Hippeau will be an adviser to the new fund. Etc.

If you’re a cynic, you might call such familiarity overly cozy. And you might worry about the chances for a start-up that doesn’t find favor with the collective. If you’re an optimist, you’d say there’s nothing wrong with like-minded investors who like to collaborate.

No surprise what side Ken Lerer is on. And what about the growing number of people who want to invest in Web start-ups again? Not a problem, either.

“In angel investing, you don’t really have competitors. You go ahead and do your thing,” Lerer insists. “I don’t look at Internet or Internet investing as competitive, generally.”

Fair enough. If anyone feels otherwise, sound off in the comments below.

And in the spirit of full disclosure, I’ll note that even I have the faintest of links to this group, though it’s mainly aspirational. Ken Lerer was an early backer of my former employer, Silicon Alley Insider, and I have the tiniest of investments in that company, too.

[Image credit: Tony the Misfit]

The New York-based service opened its doors last week, but it won’t really kick into gear until Apple (AAPL) signs off on its iPhone app, and that’s taking a bit longer than the company expected. Founder Justin Shaffer still thinks he’ll be up and running on Apple’s platform in a few days, but until then, you can check out this video interview I shot with him yesterday, where you can get a sense of how the app will work.

Or if you’re impatient, here it is in a nutshell: The service is supposed to let users converse in real-time about “events”–whether a football game, business conference or maybe even a really good house party.

You can already do that on Twitter and Facebook, but the pitch is that Hot Potato will help “curate” the chatter, so you will end up talking to both your friends and interesting people you don’t know–and that’s something Twitter and Facebook don’t do well right now.

If it works, there are some obvious advertising/sponsorship opportunities available for the service: The NFL could sponsor chatter about its games, for instance. Or someone who isn’t related to the football league could sponsor chatter about the games–since this is user-generated content in its purest form, Hot Potato isn’t required to get the go-ahead from anyone before it creates a conversational stream.

In any case, Hot Potato now has a pile of money to help it figure this stuff out. Last week, the company closed its first funding round of $1.4 million (I had originally reported that it was raising “about $1 million”), and in addition to VC backers First Round Capital and RRE Ventures, the start-up has an array of high-profile angel investors who have pitched in.

Here’s the roster: Super-angel investor Ron Conway; real-time start-up incubator Betaworks; Huffington Post co-founder Ken Lerer and his son Ben Lerer, who runs Thrillist; New York Observer owner Jared Kushner and his brother, Josh Kushner; ZelnickMedia’s Strauss Zelnick; Hunch and Founder Collective co-founder Chris Dixon; About.com co-founder Scott Kurnit; Facebook executive (and Apple vet) Dave Morin; Boxee’s Zach Klein; angel investor Allen Morgan; and entrepreneurs and investors Scott and Cyan Banister.

]]> http://allthingsd.com/20091125/hot-potato-is-ready-to-eat-do-twitter-facebook-users-want-another-realtime-chatter-service/feed/ 0 http://allthingsd.com/20091104/netted-a-web-centric-newsletter-tries-squeezing-into-you-inbox/ http://allthingsd.com/20091104/netted-a-web-centric-newsletter-tries-squeezing-into-you-inbox/#comments Wed, 04 Nov 2009 11:00:43 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=12715 Everyone loves to complain about email. Except for the growing batch of entrepreneurs using it to launch newsletter businesses. Latest example: Netted, a Web-centric tipsheet from the guys who bring you the Webby Awards.

The pitch is straightforward: The newsletter will bring you one cool and/or useful online site, service, app, etc., per day. The alpha versions I’ve seen suggest that subscribers try out the likes of Gazelle, Zeni Optical, and Hazelmail.

If the concept sounds familiar, it should. There are several popular Web sites, like Gawker Media’s Lifehacker, that tread similar thematic ground.

And there are many variants in newsletter industry. Very Short List, the newsletter started by IAC (IACI) and now owned by the Observer Media Group, offers up a cool book, movie, video, etc., per day; DailyCandy, now owned by Comcast (CMCSA), tells its subscribers about cool sample sales and boutiques; Thrillist*, the DailyCandy for dudes, informs dudes about cool restaurants, bars, etc.

One other commonality: This newsletter business, like many others, is getting a boost from Bob Pittman’s Pilot Group. The investment fund, which has invested in newsletters, including Daily Candy and Thrillist, owns a piece of Recognition Media, the New York company that produces the annual Webby awards, among other silly/serious events.

*Your story is coming, Ben. Patience!

[Image credit: polmuadi]

]]> http://allthingsd.com/20091104/netted-a-web-centric-newsletter-tries-squeezing-into-you-inbox/feed/ 0 http://allthingsd.com/20091016/its-another-tequila-start-up-bob-pittmans-new-venture/ http://allthingsd.com/20091016/its-another-tequila-start-up-bob-pittmans-new-venture/#comments Fri, 16 Oct 2009 09:14:45 +0000 Kara Swisher http://kara.allthingsd.com/?p=19478

Earlier this week, while in New York, BoomTown paid a visit to well-known media and Web exec Bob Pittman to hear about his newest venture.

And, as it turned out, it tasted pretty good.

That’s because the former MTV wunderkind, AOL top exec and currently, investor in a wide range of media and Web companies, is making tequila instead of Internet sites.

Thank God it’s Friday!

That might be the liquor talking, since accurate reporting is a requirement at All Things Digital–but this was one of the more enjoyable interviews I have had with Pittman over many, many years.

After leaving the job of COO at then-troubled AOL Time Warner (TWX) in 2002, Pittman has been investing via the Pilot Group in Web start-ups like Thrillist, iLike, Zynga, Next New Networks, as well as radio and television properties.

Pilot sold DailyCandy to Comcast (CMCSA) in 2008 for a reported $125 million.

Tequila-making is yet another unusual tack for Pittman, who is now busy trying to turn “Casa Dragones”–which is made from the blue agave plant in Mexico–into the next big thing in the high-end liquor business.

Aiming directly at the top-shelf brands like Gran Patrón, Pittman is trying for a “sipping” tequila, in contrast to most versions, which typically deliver a sharp kick.

Using a series of tasting parties and marketing efforts to make the $275-a-bottle tequila a must-have at key bars and clubs, it will be interesting to see if Pittman can turn spirits into profits.

Here’s Pittman talking about his tequila adventure in a video interview (and, below it, Joe Nichols singing one of my favorite country songs, “Tequila Makes Her Clothes Fall Off”):

Joe Nichols – Tequila Makes Her Clothes Fall Off

]]> http://allthingsd.com/20091016/its-another-tequila-start-up-bob-pittmans-new-venture/feed/ 0 http://allthingsd.com/20091012/disney-transitioning-ideal-bite-its-green-lifestyle-newsletter/ http://allthingsd.com/20091012/disney-transitioning-ideal-bite-its-green-lifestyle-newsletter/#comments Tue, 13 Oct 2009 01:27:32 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=11987 Ideal Bite, the green-flavored lifestyle newsletter Disney bought in June 2008, faces an uncertain fate: Its parent company is shuttling the unit from one corporate silo to another and says it’s not sure what will become of it once that happens.

For the record: Disney (DIS) says it always intended to move the company, which offers “bite-sized ideas for green living” via email and a Web site, from its corporate strategy group to its interactive division, which will happen later this year. At that point, “it will still continue in some form,” says spokesman Michelle Bergman.

That doesn’t sound good. Disney says it plans to conduct a review of the unit, so it’s not ready to answer some basic questions about the email newsletter company. Like: Are co-founders Heather Stephenson (who lives and works in San Francisco) and Jennifer Boulden (who until this summer lived and worked in Bozeman, Mont.; she’s now in Los Angeles, I’m told) staying on? Will Disney have to take a write-down on the property? Will there be layoffs? “It’s too early to say. I can’t tell you,” Bergman says.

Okay. But If I had to bet, I’d say at least some of the dozen-plus employees will be hitting the job market.

Disney paid a reported $20 million for the property a year and a half ago, and the plan was to create a big green-centered business around it, but that hasn’t panned out, sources said. The company, founded in 2005, is one of the many lifestyle newsletter businesses backed by Bob Pittman’s Pilot Group.

Comcast (CMCSA) bought DailyCandy, the best known of Pittman’s stable, for $125 million a little more than a year ago. That was surely one of the last “pre-Lehman” Web 2.0 M&A deals, but grunts and murmurs out of Philadelphia and Pilot indicate the business has held up during the recession. And Thrillist, a “DailyCandy for dudes” effort that has yet to sell, seems to be booming.

]]> http://allthingsd.com/20091012/disney-transitioning-ideal-bite-its-green-lifestyle-newsletter/feed/ 0 http://allthingsd.com/20090129/want-bob-pittmans-money-start-a-newsletter-business/ http://allthingsd.com/20090129/want-bob-pittmans-money-start-a-newsletter-business/#comments Thu, 29 Jan 2009 20:01:44 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=3671 Are you an aspiring media entrepreneur trying to figure out how to  raise money during brutal times? Here’s one method: Start an email newsletter business, then give Bob Pittman a call.

Pittman’s Pilot Group Ventures has already taken flyers on two of these things–DailyCandy, a shopping/events guide for cosmopolitan ladies, and Thrillist, a DailyCandy for the ladmag set. Now he’s done it again: He’s invested money in VitalJuice, a DailyCandy for fitness fans. Terms weren’t disclosed, but I’m told that Pilot invested $1 million in the company.

The New York-based company started up in the spring of 2007 and now has 50,000 subscribers; that number should increase as the company launches versions of the newsletter targeting Los Angeles and New York. Co-founder Amanda Freeman told me that she and partner Lisa Blau liked the DailyCandy model and thought it would work well for fitness and wellness tips.

“We felt that email was the perfect kind of delivery for this kind of content,” she says. “If you had a disease, you’d look up something on the Web. But healthy living isn’t something you seek out.”

I don’t know how much convincing Pittman required, but if anyone is a believer in the model, he is: He invested something like $3 million in DailyCandy in 2003 and sold it last summer to Comcast (CMCSA) for $125 million. It’s the biggest win to date for Pittman, who is well into a third career as a private media investor following earlier stints at Viacom’s (VIA) MTV and as one the major players during the ill-fated AOL-Time Warner (TWX) saga.

Some of Pilot’s other high-profile deals include stakes in Huffington Post and Project Playlist.

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