ALLOY IN DEAL FOR CASS
Byline: Valerie Seckler
NEW YORK — Matt Diamond, chief executive of Alloy Online, has a broader vision for the dot-com brand he helped create back in 1996 — and Monday the multimedia marketer targeting teens took a step in that direction, striking a pact to purchase CASS Communications, provider of youth marketing services, for roughly $33 million, including $9.7 million in cash, plus Alloy stock.
While several publicly held, fashion-lifestyle dot-coms struggle to stay aloft on a stock exchange — let alone remain solvent — Alloy has been able to parlay its own stock, and approximately half the $18.2 million it nabbed in a private placement last month, to acquire Chicago-based CASS in the deal, expected to close Aug 1.
“Our challenge, in the next three to five years, is to get more [ad] clients,” Diamond noted in an interview Monday at Alloy’s Silicon Alley offices. “Right now, we have more depth than breadth — some big deals with a handful of ad partners, like Kodak, Cover Girl cosmetics and Zest soap.
“While we’re a five-year-old dot-com brand, we’re a two-year-old media brand,” Diamond continued, referring to Alloy’s beginnings as an Internet portal and eventual expansion to embrace print magazines and catalogs aimed at teens.
Diamond, 32, described CASS as a leading owner of rights to sell ads in college campus newspapers across the country. Alloy is aiming to leverage those newspaper rights, by mounting its own ad campaigns, to build a base of readers and Web site users ages 18 to 24 — a market Diamond admitted Alloy is now missing, since nearly all of Alloy’s users are between 12 and 17.
Although he doesn’t expect that to happen overnight, Diamond envisions CASS being cash-flow positive for the rest of the year, producing $600,000 in EBITDA and $400,000 in operating income on revenue of about $4 million, with 75 percent of it coming in Alloy’s third quarter, ending in October.