Online marketing and sales company Velo Holdings Inc. filed for Chapter 11 bankruptcy Monday amid demands from Visa Inc. (V) and its credit-card processor after the passage of a federal law quelling aggressive online marketing practices caused revenue to plummet.

“Facing the threats from Visa and Paymentech, among other things, the debtors in consultation with their advisors determined it was prudent to file for bankruptcy,” Velo said in court documents.

Velo said it plans to auction two segments, its health insurance sales and lead generation businesses, while restructuring the credit and identity theft protection and retail businesses. Barclays Bank PLC, which holds the first-lien loan, will credit bid $80 million for the insurance business and $20 million for the lead generation business, Velo said.

The company is also asking the court to approve $40 million in bankruptcy financing from Barclays so it can continue operations during the Chapter 11 case.

Velo blamed, in part, tighter regulatory control of one of its online marketing practices for its strained finances. The method redirects customers who have completed a purchase on its discount retail website to another website, a Velo subsidiary that sells fraud and identity theft protection services, and asks the customer to enroll.

V2V Corp. sells these services on freescore.com, idenityhawk.com, creditfyi.com and debtplan.com for a monthly fee charged to the customer’s credit card.

In late 2010, regulations surrounding this practice changed. Under the new law, merchants are required to ask customers to re-enter their entire credit-card numbers, as opposed to only the last four digits, to sign up and authorize Velo to automatically charge the card a monthly fee.

The change caused company-wide revenue to drop to $485 million in 2011 from $590.8 million in 2010.

As revenue fell and debt levels remained high–it has $385 million and $205 million in first and second lien credit facilities–Visa demanded that Velo implement a new risk identification metric by May 2012. Velo projected this would cost it $13 million in earnings, but Visa threatened to stop allowing Velo to accept Visa credit cards if it didn’t comply.

Velo defaulted on both its credit facilities in December to avoid a liquidity crisis, it said, prompting Moody’s Investors Services to downgrade the company’s debt ratings. As a result, Chase Paymentech LLC, Velo’s credit-card processor, notified Velo it would terminate their agreement on April 20.

Velo claimed between $100 million and $500 million in assets and between $500 million and $1 billion in liabilities in its bankruptcy petition. It also put 13 subsidiaries under Chapter 11 protection Monday.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)

-Stephanie Gleason, Dow Jones Daily Bankruptcy Review;             202-862-1347      ; stephanie.gleason@dowjones.com

React2Media, ad pepper media U.S. Display Unit Merge to Create Industry’s First
RTB Video Advertising Platform with Semantic Targeting
Ad networks’ combined proprietary technologies deliver scale, transparency and brand
protection
NEW YORK, MARCH 28, 2012 – Interactive marketing technology companies React2Media
and ad pepper media USA, known for its semantic-based targeting and RTB technology,
today announced a merger in which ad pepper media’s display products and services –
iSense, SiteScreen and the RTB platform adEXplorer – will now be represented in the U.S.
by React2Media.
“Combining forces with ad pepper media allows us to offer the first video platform with realtime
bidding and semantic targeting capabilities while providing transparency for our
advertisers,” said Alex Schaller, CEO and co-founder of React2Media. “Having helped ad
pepper introduce iSense to the U.S. market in 2007, we have a great history working
together and are thrilled to move forward as a team to offer clients a more comprehensive,
cost-effective suite of advertising technology solutions.”
Integrating ad pepper media’s real-time bidding solution adEXplorer into Act2 –
React2Media’s comScore-rated video ad network – delivers relevant ads at significantly
lower rates than currently available pre-roll video ad units. The adEXplorer platform
outperforms current technology solutions because it relies on semantic targeting technology
combined with optimization against selected URLs and 3,900 targeted categories. Placement
of campaigns is available in 12 languages.
With the addition of iSense’s capabilities, including true semantic display ads, React2Media
will now also serve video ads that are contextually relevant based on what users are reading
or viewing in real-time. Additionally, ad pepper media’s SiteScreen prevents ads from
appearing next to objectionable content so that brand integrity is protected.
“We pride ourselves on not just volume, but quality. Having a vast network of top-tier
websites with unprecedented global reach is just one step, protecting the integrity of our
clients’ brands is the next,” said Schaller. “There is an ever-growing field of video ad
networks so we work tirelessly to develop and perfect our strategies. By merging with ad
pepper media’s U.S. display business, we help to set ourselves – and as result, our clients’
digital campaigns – apart from the rest.”
About React2Media
React2Media is an online marketing and advertising platform specializing in customer
acquisition, lead generation and branding solutions. The company’s in-house proprietary
technologies have been designed from the ground up to deliver industry leading targeting
(iSense) and brand protection (Site Screen). React2Media’s suite of solutions also includes a
premier lead generation, validating and delivery engine (ReactionAds) and a video platform
(Act2) that integrates with all online video players. Advertisers and publishers alike are able
to utilize these technologies for better optimization, monetization and increased ROI. For
more information, visit http://react2media.com/.
About ad pepper media
ad pepper media is one of the leading international digital marketing services and solutions
providers. The company provides a broad range of display, lead generation, email, search
engine and affiliate marketing services as well as semantic targeting, ad serving and eCRM
technology solutions to media agencies, advertisers and publishers. With adEXplorer, the
Company offers a leading RTB bidding platform, combinng its sophisticated targeting and
optimization technology with global marketplaces and exchanges.
The Company’s U.S. branch, ad pepper media USA, focuses on display solutions and affiliate
marketing. Following the merger with React2Media, ad pepper media USA will focus on its
equity holdings and the further operational scaling of its successful affiliate business
(Webgains).
ad pepper media operates out of 12 branches in six European countries and the USA, and is
currently managing campaigns for thousands of national and international advertisers in
more than 50 countries. For more information visit www.adpepper.com.

To be a “super-affiliate” or a high volume advertiser, you need to choose to offer consumers a product or service that affects the masses; an offer that millions, if not billions of people are going to want or need every day. Mass desire/mass market offers have no limit to the amount of sales that can be made in a day by a skilled marketer. Why? Because every male or female in the world is the target demographic. This article is about determining the difference between a mass market vs. a niche offer and how to do the market research to determine if it is a scalable business model – the type of business you can take from fifty leads a day to well over 1,000+.

I define mass markets as the type that affect almost everybody on this planet, now and ten years from now. Women all want to be skinny and lose weight, and they will always be this way…unless cultures evolve in the future to consider obese women “sexy.” Men want large muscles. Everybody either needs money or wants to make money (there is a difference). People naturally want a companion (dating/adult offers).

Examples of offers you are probably familiar with…

• To serve the “weight-loss” market are HCG, ACAI, African Mango and other nutraceuticals.
• To serve the “male muscle enhancement: nitric oxide supplements and male enhancement pills
• To serve the “make money” market: bizopp, work-from-home opportunities
• To serve the “need money’ market: payday loans and cash for gold

Each one of these verticals are billion dollar industries.

On the other hand, you have “niche” markets. Niche markets affect a smaller group of the population based on more personal preferences and therefore limit your ability to do 500, 1000, 5000 or more sales a day. On a side note, why do I keep referring to sales by the day, and not the month or year? There’s an old saying that marketers are concerned with how much money they are going to make TODAY, and business owners are concerned with how much their business is going to be worth in five YEARS. I recommend treating your offers and campaigns as real businesses so not only do you make money today, but you also own something of value in the future.

A niche market would be golf instruction, for example. I could create a complete golf training program with an ebook and video instruction. I could have the best testimonials in the world and celebrity endorsements. I could cross-sell a golf fitness program and upsell a joint-relief nutraceutical. I’m still not going to do 5,000 sales a day on this offer. There’s just not enough mass cultural or natural desire to sustain this. I could do a comfortable living at 50-100 sales a day and monetize the back-end by offering training aids, golf equipment, etc.

A good way to determine how scalable the model is is to visit a site analytic tool such as Compete.com. Identify who your largest competitors are on the affiliate networks and media buy channels (google, bing, yahoo, ad networks) and see how much volume (unique visitors) they have every month. If you see 8,000,000 unique visitors every month, you can be fairly certain they have a sustainable model that is making their marketing campaigns profitable month after month. If there’s 30k visitors per month, it could still be a great model that is making money, but either a smaller market, less talented marketing team or a lower budget.

So choose your offer, design your marketing creatives and launch.

BlackfinMediaGroup has launched www.GreekAps.com. Applications tailored to College Fraternities and Sororities!

Blackfin Media Group announces partnership with Guy Harvey Magazine and the Guy Harvey Ocean Foundation.

Blackfin Media Group launches its full service e-mail marketing program lifeboatjunction.com