Photo by Alan Decker

Peggy Gartin’s “dream job,” coordinating a team of bloggers for Tree.com, did not last long.

n November 2010, Bernard Smith (not his real name) of Tree.com Inc. asked Peggy Gartin, leader of SD Tweetup — a local socialnetworking group with over 1100 members — to help him assemble what he called a “blogger army.” At the time, Smith worked for LendingTree, but he’d originally worked for an internet software and services company in Carlsbad called Morefocus Group Inc., whose assets and team LendingTree had contracted to acquire in 2009.

The reason for purchasing Morefocus was to “socialize Tree,” Smith says, thus reducing the costs of traffic acquisition through social and content marketing. While chief marketing officer of Morefocus, Smith wrote the plan that would provide the basis for Tree’s push into social media.

“The kinds of content that Tree was using to attract people to the site was both the opinionated kind you might find in a blog and the more objective kind you might find in an encyclopedia,” says Gartin. “I was brought in to work on the blog, which we advertised through social media like Facebook and Twitter posts.”

Tree.com Inc. is the parent of LendingTree.com, RealEstate.com, DegreeTree.com, LendingTreeAutos.com, InsuranceTree.com, and three other businesses. According to Smith, “This was a time when Tree was really committed to the idea of merging all the [company’s] different businesses under one roof. I’d written a plan, and they decided to fund it.”

Though he won’t give an exact number, Smith says his budget was “north of six figures,” and when prodded further, he adds, “It was closer to seven than six.”

Gartin, familiar with Smith through San Diego’s social media scene, says the job he offered her was “a dream job.”

“He said [he was] looking to fill up these 14 blog channels with 10 or 15 bloggers, each of whom would be experts on their subjects,” Gartin says. “The money people could write about money. The insurance people would write about insurance. That kind of thing.”

Smith hired Gartin on as the director of social media in December 2010, and she went about gathering the channel leaders. Although the project would have a national scope, Gartin believed that “for the ease of communication and management,” it would help to have the channel leaders in San Diego, near the Carlsbad office, which housed the rest of the project’s team. By February 2011, she had found 13 bloggers to fill 14 channels: automotive, education, entertainment, food and dining, home and garden, insurance, legal services, lifestyle and leisure, money and finance, real estate, small business, sports and recreation, and travel. Of those 13 bloggers, 11 live in the San Diego area.

“A typical corporate mind-set is very quarter-to-quarter,” Smith says, “but despite being run on a quarter-to-quarter basis, which was LendingTree’s business m.o., we were told that we could invest in the future on the Tree side. [They said] don’t worry about making money this quarter or immediately. It’s about building value, and a year from now, we’ll worry about that.”

During the month of February, Gartin trained the channel leaders. They, in turn, hired approximately 140 bloggers, some living in San Diego, others across the country and the world — as far away as New York and Prague. The launch date for the site was set for March 1. That date came and went without the launch. Meanwhile, the bloggers blogged at as much as $100 per post. Each of the 14 channels was putting up at least one post per day, though some as many as 15 per week. The tech people made tweaks on the tech side until, finally, three weeks late, Tree.com went live by way of a “soft launch,” advertised mainly by Twitter and Facebook. No press releases went out.

The site lasted three months.

On June 30, the same day monthly invoices were due, Gartin received a call from Tree’s vice president of product management. “[The vice president] said, ‘There’s been a change of plans. We’re changing our strategy with respect to Tree.com. We’re not going to pay for content anymore, so you need to contact your channel leaders and let them know their services aren’t going to be needed by the end of the day.”

Gartin was stunned. She’d heard the site was getting significant traffic, and from what she understood, feedback from Tree headquarters in Charlotte, North Carolina, had been nothing but positive.

The termination came as a shock to Steve Adler, too. Adler ran the project’s sports channel. “We had the lowest budget and the most traffic. But it just wasn’t enough,” he says.

A former salesman, Adler understands the need to meet performance goals. And although he has had positions terminated before, he’s disappointed with the way the company handled it this time.

“One thing that bothered me about it is that the people who knew that there were concerns never told anybody else,” he says. “If they’d come to us and said, ‘We need to see more of this’ or ‘We need to tweak that’ or ‘We need you guys to start implementing these kinds of things,’ then cool. But there was no indication.”

But Smith, who had left the company a month before Tree disbanded his blogger army, says that when he hired Gartin, he’d told her not to count on or promise anything more than month-to-month employment.

“When I brought her in on the project, I warned her,” Smith states. “I said, ‘You can’t promise anybody anything. This is a month-to-month relationship with these bloggers. At any moment, anything could happen. She heard me, but at the same time, to do her job effectively, she had to block that out. And then I don’t think she wanted to believe it, so she didn’t believe it.”

This warning came from Smith’s experience with Tree. He says he had been on guard from the time of Tree’s acquisition agreement with Morefocus. (Because Morefocus shareholders have begun a lawsuit to enforce the purchase agreement, Smith does not want to speak to the specifics of the agreement.)

“It felt like a shell game from day one,” Smith says. “It was like being in an abusive relationship, where you know you’re going to get hit. I knew what I was getting myself into. And in this economy, you don’t do a double take at a job, even if it’s one that you don’t feel fantastic about.”

Gartin remembers when Smith told her to tell the channel leaders the work would be month-to-month. And she remembers her response as well.

“I said, ‘I can’t tell them it’s month-to-month. No one will be invested enough.’ So I didn’t tell them it was month-to-month, but that wasn’t my understanding anyway. They had a six-month contract, and as far as I knew, they were going to get it renewed. So, when it kind of ended abruptly, that really surprised me.”

And, yet, she also admits there were signs that Smith was right. As much as she enjoyed the work, “It was not without its headaches,” she says, “and things seemed shaky at times with the company.”

Gartin worked full time, on a salary she calls “comparable” to what she made at Qualcomm before she was laid off in early 2010, but on the books she remained a temporary, hourly employee. She didn’t discover this until she worked a holiday and didn’t get paid for it. When she asked why not, no one at the Carlsbad office knew. After calls were made to Charlotte on her behalf, she was told first that she was on temporary status “just to see if it would work out” and later that although it was working out, no change would be made.

There were other signals, too, such as simple technical issues that went unaddressed, things that Gartin says “didn’t match up with the expectation I’d been given that this [project] was the future of the company.”

For example, channel leaders were asked to generate polls once a week. In the poll box on the side of the web page, the questions appeared twice. And levels of permission needed to be tweaked so that bloggers could not, accidentally or otherwise, publish their content without it going through the channel leader.

“They had folks on the tech side in North Carolina,” she says, “and then suddenly they weren’t available. They had been retasked to do something else. So for 60 to 90 days, we weren’t going to have them. I thought, ‘Really? This is your flagship?’”

Payday, too, presented its own red flag. “When you pay somebody late three months in a row, they know something’s up,” Gartin says. “We’d turn in our invoices, and we wouldn’t always get paid on time.”

And, then, on May 27, Bernard Smith “resigned.”

The official story he tells is that he “saw that things were shaky. I saw that things were taking a lot longer to develop different aspects of the project and didn’t feel like my feet were on stable ground. Ultimately, I decided to explore other opportunities.”

That, of course, made Gartin nervous, too. But Smith says he had been led to believe “there wasn’t a great concern with anybody [else] because Peggy was doing such a great job and the bloggers were doing such a great job,” so he assured her that she didn’t need to worry.

And, yet, Smith also says, “I wouldn’t say I was shocked” that Tree pulled the plug on the project so soon. “In my gut, I was getting the sense that their tolerance to invest in the future was shrinking.”

In mid-May, just before Smith’s resignation, Tree sold its Home Loan Center, which operated as LendingTree Loans, for $55.9 million. The move, Smith says, was likely designed to free up cash. It made the company look “instantly healthy, which wasn’t a great long-term strategy, but if you want to make your shareholders happy in the short term, it’s a really good thing to do,” Smith adds. “And while they kind of spun it differently, I was getting the feeling that the company was willing to sacrifice anything in the short term to make their company look good now.”

Gartin admits that she, too, questioned how much financial sense the blog project made. On top of the thousands of dollars going to bloggers daily, there were also the hourly rates paid to channel leaders and salaries for the rest of the Carlsbad team who worked on the site’s evergreen content and search engine optimization (refining web pages so that people find them more easily in search engines such as Google or Bing).

“Obviously, this thing can’t continue if you’re just spending money and you’re not making any money,” Gartin says. “Maybe this was naive on my part, but I took it, like, you guys are the business people. You’ve given me the task. I can do the task, and we can make a great blog site, but you’re going to have to balance the books.”

On June 30, Gartin was told that the channel leaders would be paid only through the end of the day. But in their contracts Tree had promised them two weeks’ notice.

“It took a couple of days for [Tree] to come around to that,” Gartin says. But eventually they did. The channel leaders received an additional two weeks’ pay.

Those checks arrived on time.

As of July 15, everyone employed on the content side at the Carlsbad office was let go.

Elizabeth Salaam worked briefly for Tree.com, posting to the food and dining channel.