The Dodo Is Getting Into Pet Insurance

The deal includes an equity stake, as well as a brand-licensing and marketing-services arrangement through which Group Nine and The Dodo will be paid to promote Petplan’s offerings.

The pet insurer will be renamed “Fetch by The Dodo” in May 2021.

The acquisition is the latest effort by Group Nine, which was valued at about $1 billion last year, to create new revenue streams at a time when many digital media companies, big and small, are trying to diversify beyond advertising.

“For digital media, I think we all have the challenge of needing to be good at multiple things at once,” said Mr. Lerer. “My belief is that the best way to reinforce multiple business lines is to build great brands, because a great brand can be leveraged in a bunch of different ways.”

In buying into Petplan, Group Nine and The Dodo won’t be starting from scratch, he said. Petplan has more than 250,000 paying subscribers, the companies said. People familiar with the business said that number includes around 50,000 net new members since May 2019.

Petplan is approaching $150 million in gross revenue this year and is profitable, according to those people. By comparison, Trupanion Inc., a rival pet-insurance provider, generated $383.9 million in total revenue last year, of which $321.2 million came from its subscription business.

And the pet-insurance market has room to grow, the chief executives of both Group Nine and Petplan said, offering an opportunity to build a business that could double in size over the next few years. They cited a report from the North American Pet Health Insurance Association, which earlier this year said there were close to 2.82 million insured pets at the end of the 2019. Other industry figures peg U.S. ownership of dogs and cats alone at well above 100 million, a huge market that might have grown as people adopt more pets during the pandemic.

Group Nine will hire up to 10 staffers to support content production and other marketing services for Fetch by The Dodo, working with Petplan’s existing organization.

“Petplan, as it currently is, is a solid, high-growth business, growing at double-digits now for many years,” said Paul Guyardo, chief executive of Petplan. “But candidly, we lack the mainstream brand awareness and credibility—a partnership with Dodo is the most effective and efficient way to attain that awareness.”

Since its acquisition by Warburg Pincus, Petplan has invested tens of millions of dollars in building its product and technology offerings, Mr. Guyardo said. A mobile app coming soon will give users access to their insurance plans, the ability to communicate with other pet owners and targeted information relevant to a pet’s health and breed using Petplan’s proprietary data.

Group Nine’s non-advertising ventures include producing and selling TV shows for streaming services and traditional TV; licensing its intellectual property for children’s books, and in-person events, suspended for now due to the pandemic.

Mr. Lerer declined to comment on revenues at Group Nine and The Dodo.

Before the advent of the coronavirus, Group Nine had said it was on track for overall profitability this year. In April, however, the company was forced to cut and furlough staffers as the pandemic squeezed its advertising business. Ad revenue began to rebound over the summer, Mr. Lerer said.

“While we had to make some painful adjustments earlier this year, all things considered, we are weathering this storm gracefully,” he said.

Write to Sahil Patel at [email protected]