Sep 09, 2009 at 08:06 PM
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Checking In On Alloy; 10-Q Watch

Alloy Media and Marketing, a diversified non-traditional media and promotions company, yesterday reported a rise in second quarter net income on flat revenue for year over year Q2. As one of the largest companies in the category, its can be a bellwether for the rest of the industry.

Alloy has three operating segments (primarily focused on the teen market) —Promotion, Media and Placement. The Promotion segment is comprised of businesses whose products and services are promotional in nature and includes our AMP, OCM and sampling divisions. The Media segment is comprised of Company-owned and represented media assets, including display board, Interactive, database, specialty print, educational programming and entertainment businesses. The Placement segment is made up of businesses that aggregate and market third party media properties owned by others primarily in the college, military and multicultural markets. These three operating segments utilize a wide array of owned and represented online and offline media and marketing assets, such as websites, magazines, college and high school newspapers, on-campus message boards, satellite delivered educational programming and specialty print publications.

The promotions side of Alloy's business was down 2% year over year. The AMP agency has improved dramatically versus the prior year, by successfully increasing margin and reducing cost, while on-campus marketing business has performed below expectations as consumer demand wanes. In addition, revenue decreased in the Company’s OCM and sampling businesses.

With respect to media; Alloy Digital, Channel One, and in-store marketing business, Front Line all experienced positive gains, while traditional media continues to suffer. As an example, college newspapers are declining at a double digit clip.

Interactive, and specifically as its anchor portal, are doing quite well. As a complement to online advertising, Alloy has seen good success with sponsored webisodes.

"The first webisode that we aired was Haute and Bothered, which did very well for us and the sponsor, with good viewership," CEO Mathew Diamond told analysts. "We're about half way through the viewing of [our second webisode, Private] and the numbers and the views continue to impressive. We are in the 5.0+ million views now and growing rapidly so we are very happy and so are the sponsors as it relates to those."

Look for Alloy to integrate a similar type of sponsored content strategy with its newest toy, Takkle is a social network focused on the teen sports segment.

"We still have a lot of execution to do but we feel like we're in a fantastic position to really capitalize on broadband professional content, really like no one else is doing in our space," Diamond said.

So which sponsors are spending? Not military. Diamond specifically called out Military as an area of decline.

"We are projecting some weakness in the last half of this year as we expect decreased military advertising spend since recruiting goals have been met," he said.

Oh, and just in case you're looking for a new gig with Alloy:

"As a way to combat these rising costs we plan on a vigorous benefits negotiation later this year and we will continue to be conservative in hiring additional employees."

If you're interested in learning more, check out Alloy's full 10-Q filing here.