While media’s biggest name cast about for a viable digital strategy, some of the biggest venture capitalists are betting there’s a gold mine out there in cat photos with cute messages written on them.
The Cheezburger Network, which publishes the leading site dedicated to the Internet meme lolcats, closed a $30 million round of funding. Zynga investor Foundry Group led the round, which also included Madrona Venture Group, Avalon Ventures and Softbank Capital Group.
The Web publisher, which previously raised $2.25 million, is using the money to ramp up its attempt to build what chief revenue officer Todd Sawicki believes is “a media company for the digital age” with its collection of offbeat humor sites.
“We think we stumbled on a model that we think is the future of what digital media looks like,” he said.
The funding will go to building out the company’s staff, infrastructure and marketing, Sawicki said.
Cheezeburger is organized around four main properties: I Can Has Cheezburger; Failblog; Memebase; and The Daily What. The sites have dozens of spinoffs, such as Failbook, which is dedicated to mishaps on Facebook. The common thread for the Internet culture sites is that they look to deliver “five minutes of happiness”—and funny posts visitors are likely to share to their friends.
Cheezburger is clearly helped by its low costs. Users submit all of its content. Its 24-person editorial team is dedicated to sifting through submissions to find the best. In Cheezburger’s three-and-a-half year history, Sawicki estimates its sites have had 10 million photos submitted, with about 1 percent published.
The company makes the bulk of its money off advertising. Last month it attracted more than 16 million visitors. Cheezburger complements the ad revenue with a publishing arm that’s done six books, including two best-sellers. It also sells merchandise.
“We think we figured out a way to build a successful media business in a digital dimes universe,” Sawicki said, referring to the argument that the media business is trading analog dollars for digital dimes.
At the top of its to-do list is developing more unique ad formats. Sawicki is positioning Cheezburger as a distribution engine for brands creating their own content. In many instances, the company itself will create that content. For example, it promoted the DVD release of the Will Ferrell movie The Other Guys by putting together a collection of police officer “fail” photos that were interspersed with snippets from the Sony Pictures release.
“The next-generation of media companies are going to have to develop their own unique shtick of advertising,” Sawicki said.