DataSphere Lands $8 Million in Additional Funding

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DataSphere Technologies has raised $8 million in investor financing to continue growing its business, which creates and maintains community websites for TV stations owned by Gannett, Meredith, and other major “legacy” media companies. With the new financing, the Seattle-based hyperlocal network has now raised a total of $32.5 million in four rounds.

The 1,900 community and neighborhood sites served by Datasphere now reach 50 million unique visitors monthly, with coverage area reaching 45% of the U.S. population, according to the company.  Their UVs dwarf the 9.9-million UV reach of the 863 Patch community sites of AOL.

Among the 1,900 sites, 1,300 provide a menu of community news while the others – going a “lightweight way” for starters – focus more narrowly on event coverage. Many of the sites are operated by TV stations in Top 20 markets – Seattle, Tampa-St. Petersburg, Washington, D.C., Atlanta and Charlotte among them.  Others are in mid-size markets like Birmingham and Montgomery-Selma, Ala.

DataSphere provides a variety of turnkey services.  It operates sales phone banks in Seattle that prospect for ads from local merchants in its 1,900 communities. The sites typically have as many as 25 to 30 small-square (150 x 150 pixels) ads or sponsorships, indicating that the long-distance, centralized sales approach is working.

Besides providing ad and marketing services, DataSphere offers supplementary features, including comprehensive local search, to the stations’ content management systems, and delivers technological support across the community sites’ operations. The TV stations can spread these costs across the sites to strengthen their bottom line. The sites keep editorial costs low by  augmenting their own coverage with stories originated by reporters who work for – and are expensed to – the TV stations’ main site, and by running press releases for school, crime and other news.

DataSphere’s investors have watched the company grow at a hot pace since the first round of funding –$6.5 million in July 2006.

“With its leadership position in local online marketing and broad range of technology and sales capabilities, we believe DataSphere is in a unique and powerful position to capitalize on the ongoing disruption in local advertising,” said Howard Smith, managing director of First Analysis, one of the investors, in a press release. “Local businesses are facing an increasingly complex marketing environment and DataSphere’s ability to reach and service these businesses in a simple and effective manner will be an important contribution to the evolution of this space.”

“DataSphere’s dramatic growth trajectory is a reflection of the value it provides to over 100 media partners and tens of thousands of local advertisers,” said Satbir Khanuja, CEO of DataSphere, in a statement. “With our content solutions, local targeting technology and sales capabilities helping local businesses build their brands and reach new customers, and compelling profit increases delivered to our partners, DataSphere has the skills and momentum to dramatically improve the way local businesses harness online marketing. We are thrilled to have First Analysis join us on this exciting journey and will benefit greatly from their extensive experience and domain expertise.”

Tom Grubisich writes the New News column, which appears Thursdays on Street Fight.