More On Flipboard’s Acquisition Of Zite: “The Deal Whisperer,” Zite’s Fate, The Price Tag, And Paper

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After Flipboard and CNN today announced that personalised magazine app Flipboard was buying Zite from CNN, I had a chance to talk with Flipboard CEO Mike McCue and CNN’s digital head KC Estenson about the deal (pictured here looking chummy around the time they announced the news).

The two wouldn’t say anything directly about the price of the deal, or any other terms, except to question that CNN itself reported the $60 million figure (a question that has since turned into a statement that the figure is inaccurate, with some suggesting no cash was exchanged). Nor would they comment on a question I’d asked them about whether part of the financial terms included CNN investing in Flipboard, although a later story in Bloomberg, unconfirmed by the companies, noted just that.

What they did talk about was some of the germination behind the deal, the fate of Zite, and a bit about how the two will work on advertising together. Key to the ad agreement is that CNN and Flipboard are working together on ads for CNN content on Flipboard — but also for across other parts of the Flipboard experience.

And lastly, no one’s sweating over Paper.

So, who approached whom?

McCue: It was really down to Quincy Smith [Flipboard investor and former president of CBS Interactive], who I like to call “the deal whisperer.” KC could see how important this technology would be for digital content. And I wondered how we could partner with CNN. Quincy introduced us and ultimately we came up with this. 

Estenson: We actually met on Tinder. (Funny guy.) I look at this as doubling down on news aggregation and personalised news. Flipboard is a bulletproof product on a big growth path. That was the impetus for me looking to reach out to Mike.

Tell me a bit about what happens to Zite.

McCue: Over time Zite is getting closed down, but it will be a seamless transition path for the user base, which includes my own mother.

The tech that powers all of the discovery in Zite will be integrated into Flipboard in the coming weeks and months. People will notice a significant increase in discovery on Flipboard as we roll this out.

Zite has the ability to teach itself what you like as you use it and we are integrating that capability as well. This is important because as we add thousands of new content publishers they will create content of different kinds. We will enable that content to be more readily discoverable by curators.

Can you comment on the terms of the deal? CNN itself reported a value of $60 million.

Estenson: We’re not confirming the number. What I can say is that we bought Zite outright. We advanced it in meaningful ways and it’s much stronger than when we acquired it, and that enabled us to align in a very strategic long-term agreement.

Is CNN taking a stake in Flipboard as part of this?

Estenson: We’re not commenting on any details of the deal, but Mike has agreed to take me out on a date.

Can you tell me anything about comparative user numbers?

McCue: We don’t disclose active users in detail but we do have well over a 100 million activated users and growing very fast. Engagement is extremely good.

Estenson: We’re not breaking out numbers but Zite more than tripled in size in the time that we had it. It’s a meaningful user base but Flipboard’s hand here was to leverage the capabilities of the UI behind the Zite product.

Tell me more about how the advertising will work.

Estenson: The way that this partnership is structured is how Flipboard works with all publishers. There are different arrangements for web share and so on.

Everyone gets to sell this inventory and premium ad executions, but also we will be partnering with Flipboard on new things that are not exclusive to CNN. That’s the key thing. Flipboard has a powerful and unique ad execution and we can help them scale to more users and grow that exposure.

McCue: We are trying to create a platform and ecosystem where publishers feel good about the platform. You’ve got to figure out really great content as the whole world moves to mobile. We format and optimise their content and then we make that content discoverable by repackaging in different ways based on human and algorithmic decisions. 

How have ads been performing to date on Flipboard?

Ads perform incredibly well. We’re finding Gucci and Bottega Veneta and other luxury names are buying really beautiful ads, like the ones you’d see at Vogue. Some just value having those ads be seen [as in a magazine] but of course with Flipboard you can also tap to enter a “native” experience with a curated ad opening up more content, such as catalogues. Then you can create your own look books from those. 

In terms of our click-through-rates, we are seeing 3 percent and sometimes quite a bit higher, some 7-10 percent depending on the native elements. 

Do you feel threatened at all by Facebook’s Paper?

McCue: No. I see it as a different way of letting you look at Facebook. It was inspired by a lot of what we’ve done and it does some content stuff on the side, but it’s not very deep or very broad. What most people do on Flipboard is use it to discover things they really love. Paper doesn’t really do a lot of that. It’s interesting for Facebook but not taking the world by storm, so we don’t see it as any threat whatsoever. Those who use Paper probably still use Flipboard.

Interestingly, we’ve seen an acceleration of downloads since the Paper announcement as some have discovered us as a result.

More acquisitions coming up? More consolidation to come in the personal newsreader/magazine space?

McCue: We’re on the lookout for other teams so that certainly could happen.