Rival Networks Closes Ad Sales Offices; 12 Laid Off

Seattle-based Rival Networks, which runs the Rivals.com network of sports channels, has shut down ad sales offices in New York, Chicago, San Francisco and Los Angeles, laying off 12 employees in the process.

Rivals Network said it would outsource its advertising sales to Phase2Media, the Silicon Alley advertising and marketing shop known for its hands-on approach to individual site representation. Financial details of the deal were not released.

Rival Networks said the decision to shutter the four regional ad sales offices was based on economics. “[Our partnership] with Phase2Media enables us to better serve the growing needs of our advertisers while maximizing the financial success of our company,” said Saul Gamoran, chief executive officer of Rival Networks.

“With our recent $10 million funding round, we are in a strong position to meet our long term objectives. We are taking strategic steps to maximize our resources and work as efficiently as possible to meet those goals,” he added.

The move to outsource ad sales after having established an internal sales force may be a harbinger of things to come in the Internet advertising industry. As Internet publishers’ growth curves were heading steadily upward, industry-watchers questioned whether rep firms like Phase2Media, DoubleClick and 24/7 Media might lose clients as publishers brought sales in-house. Now, the tide may be turning in the other direction, as ad dollars dip and publishers seek to focus on their core competencies.

Phase2Media has already made inroads in the sports content space, counting clients such as the Olympic Committee and the National Hockey League (NHL) as clients for Internet ad sales. Other clients include the Elle Interactive Network and Maxim Magazine Online.

Rivals.com is funded by VC firm Hummer Winblad Venture Partners, Intel Corporation, News Corp.s News Digital Media, The Phoenix Partners and Softbank Capital Partners. Its network consists of more than 500 sports-related team and channels.