Condé Nast got only 3 percent of Flite, the digital advertising pioneer

Condé Nast, the giant high-end magazine publisher, has invested in Flite, a Silicon Valley advertising technology company. This much is true, as the New York Times reported on Monday.

Flite allows marketers to create innovative ads online much more efficiently than before, in part by bringing cloud technology to bear.

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But the Times’ article said that Condé Nast had gotten about an 11 percent stake in return for its investment, which is incorrect. Turns out that the stake was only 3 percent, Flite chief executive Will Price told me last night during an interview.

[Scores of press outlets followed the NYT, regurgitating the incorrect figure. Flite’s Price watched, somewhat amused, as one publication even wrote that Condé Nast has invested $11 million, further distorting the story. The Times Bits blog strangely still hasn’t updated with a correction.]

Flite was valued at less than $100 million in the deal, and Condé Nast invested low single-digit millions for its 3 percent stake, Price confirmed. The clarification is important, because at this level of investment, Condé Nast won’t have overbearing influence in Flite’s direction and decision-making.

Flite’s goal is use a Software-as-a-Service model  to wipe out some of the big inefficiencies in the publishing industry.

As Flite’s Price explains it, many marketers and publishers still must engage expensive outside agencies to help create innovative, differentiated ads. Let’s say a weather forecasting company wants to advertise its service by inserting live weather conditions in an stylish new ad unit. Typically, a publisher will need technology help to do this, often paying on the order of $1 CPM for this assistance. It pays this fee to agencies or other ad-technology vendors, who perform the work of pulling weather condition data from the weather company’s APIs, in order integrate into the ads on the publisher’s pages.

All this works grows costly. Publishers and advertisers engage in laborious back and forths, mostly with email attachments with spreadsheets. Multiply these one-off technology arrangements across a publisher’s hundreds of advertising relationships and the costs just keep adding up.

Price wants to erase all that by inserting Flite in the middle with a simple pay-as-you go model. Publishers pay Flite a set fee — in the single-digit thousands of dollars a month for medium-sized publishers — that helps them take care of those technology needs. Flite can manage integration of API data from any source and can distribute ads to any device format: mobile, tablet, or PC. Flite also offers metric tracking and reporting to help advertisers see which ad units — and individual images or videos playing inside of them — are performing better.

So far, Flite has worked well for Condé Nast, which started using Flite’s product earlier this year. (Condé Nast 27 different publishing properties, including Wired and Wired.com, with whom we compete in some areas). Condé Nast has also built a unit, called the Studio at Condé Nast, to centrally create high-quality ad products for its publishers. Condé Nast has pushed this by investing in a series of companies, now at a rate of one a quarter, according to Price. In addition to Flite, Condé has recently invested in Unified, a social advertising company (it enables you to manage campaigns on Facebook, Twitter, YouTube, StumbleUpon); Visible Measures, a video measurement company; Trigger Media; and Moda Operandi. It also acquired Ziplist.

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Flite’s Price sees himself on the vanguard of a huge SaaS movement about to sweep online marketing. He points to online automated marketing company Marketo as another example of this trend. Fite has raised $26.5 million in funding from investors including Sequoia Capital, General Catalyst, Hummer Winblad Venture Partners, and Northgate Capital.

See Conde’s original announcement here. Some brands and agencies already using Flite include L’Oreal, CBS, Charles Schwab, Forbes, General Mills, IDG, Microsoft, P&G, Salesforce, Starcom Mediavest, The Atlantic Universal McCann, Sony Music, AMC Entertainment, Federated Media, Fox News Digital, LinkedIn, Orbitz, Time Warner Cable, Estée Lauder, and Tribune Interactive.

(Flite’s Price is a speaker at DEMO, the launch conference we co-produce, held Oct. 1-3)