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Small Blogs Turn a Profit, Thanks to Big Advertisers

Lisa Sugar began blogging about celebrity gossip in her spare time four years ago. Now she and her husband, Brian, have a little media empire called, sensibly enough, Sugar Inc., with 12 blogs, 11 million readers a month and advertisers like Chanel and Sony .

The dream of quitting the day job and making a living from blog revenue has proved to be far-fetched for most bloggers. But a few entrepreneurs, like the Sugars, have found success in blog networks.

Close up of someone typing on a laptop.
Close up of someone typing on a laptop.

Such networks put blogs on various topics under some form of central control, like a digital-era Condé Nast. Though they do not command nearly the same ad rates that glossy magazines do, they are attracting ad dollars while magazines are losing them.

Sugar’s ad revenue increased 20 percent in the first half of the year, and the company is on track to double its revenue and turn a profit this year, said Mr. Sugar, the company’s chief executive. Gawker Media, one of the earliest and biggest blog networks, reported that ad revenue was up 45 percent in the first half of this year.

Both companies are private, and neither would disclose more specific figures, but by some estimates the larger networks have annual revenue in the low tens of millions of dollars.

Meanwhile, advertising revenue for magazines dropped 21 percent in the first half, and the number of ad pages sold dropped 28 percent, according to the Publishers Information Bureau.

The blog networks that have survived the downturn in advertising and the explosion of competing content on the Web credit their obsessive coverage of narrow topics, along with business models that reach beyond advertising. “It’s actually really hard creating compelling content that brings an audience,” Mr. Sugar said.

Hobbyist bloggers first got the idea that their online entries could be profitable in 2002 when Nick Denton, a former reporter for The Financial Times, started what would become Gawker Media. The catty network quickly grew into a powerhouse, and it now has eight blogs, 20 million monthly readers and more than 150 full- and part-time employees. When Jason Calacanis sold his blog network, Weblogs Inc., to AOL for a reported $25 million in 2005, the notion that blogging could be a business was cemented.

Today, blog networks range from big, like Gawker and Sugar, to smaller and more focused, like The Business Insider, VentureBeat and the GigaOm Network, which cover business and technology. There are also large networks of blogs that share ads but not editorial control, like BlogHer and Glam Media.

Sugar’s blogs — with names like PopSugar (celebrity gossip), BellaSugar (beauty) and LilSugar (mothering) — are all edited and designed with 28-year-old women in mind. The writers and sales staff are fanatical about going after that ideal visitor, Mr. Sugar said. The posts are short, light and sarcasm-free, with big photos and headlines like “The Jolie-Pitts Bring the Twins to the Golden Arches” and “10 Sexy Bedhead Hairstyles to Try Today.”

Other blog networks take a similarly narrow focus. Gawker Media’s business cards used to read “Unhealthily obsessed,” said Lockhart Steele, the company’s former managing editor. He follows the same motto at Curbed, a company he founded that publishes blogs on real estate, dining, shopping and travel in New York, Los Angeles and San Francisco. “We are completely obsessed with every square inch of the areas we cover,” Mr. Steele said. “It’s the classic blogger model: give people everything they could possibly want on a topic.” For the Curbed sites, that sometimes means two dozen posts a day just about New York real estate.

That all-encompassing coverage is meant to keep readers coming back many times a day, in turn attracting advertisers.

Blogs, with their unpredictable and sometimes edgy content, can be frightening to advertisers, but blog networks are less risky, said Shenan Reed, a founder of Morpheus Media, a digital marketing agency that represents brands like Louis Vuitton and L’Oréal. “When you’re dealing with a company where the editorial control is living under one roof, you feel like there’s a consistency in the message, which is what makes Sugar, Gawker and Curbed fantastically interesting to us,” Ms. Reed said.

Blog networks also make it easier for advertisers, who do not have time to sift through the millions of blogs on the Web, to reach a big blog audience. For example, Morpheus ran an ad campaign for Neiman Marcus on the Sugar network in which it dressed each of the Sugar blogs’ cartoon mascots in outfits from the store, and readers could click on the clothes to buy them.

Yet for Sugar, the dream of growing a large and profitable media business on advertising alone did not come true. “Outside of a few examples, I think people way overestimated the amount of ad revenue that was there for the taking for blogging as a business,” said Scott Rosenberg, author of the recent book “Say Everything: How Blogging Began, What It’s Becoming, and Why It Matters.”

In 2007, Sugar, which is backed by Sequoia Capital and has 105 employees, acquired ShopStyle, an e-commerce site. Today it brings in half of Sugar’s revenue. At ShopStyle, shoppers can browse online retailers’ selections, and Sugar gets paid when they click through to a retailer or make a purchase.

Sugar would not have been able to grow as it has without both sources of revenue, said Mr. Sugar, who was formerly vice president for e-commerce at J. Crew. The company plans to eventually make money selling virtual goods, too, like stilettos in a fashion game.

Blog networks have also had to change the type of content they publish. Though many started by publishing links to and commentary on other Web sites’ material, there is now so much material online that they need to offer original reporting to stand out, Mr. Steele said.

Each of Curbed’s sites has a full-time editor and a few freelancers, and they have started competing with local papers for scoops. Curbed often depends on readers’ tips and might publish 10 updates to an article in response to them.

When Gawker blogs get exclusive content, like leaked videos, they can get more than a hundred times their typical traffic. “Scoops pay,” Mr. Denton said.

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Sugar gets press passes to the Oscars and recently started producing videos about shopping and celebrities. It also developed blogging software called OnSugar. When bloggers use the software to showcase clothes and readers click to buy them, the bloggers and Sugar get a cut. Sugar plans to eventually sell ads on these blogs. “Perpetual movement is the essence of survival and prosperity online,” said Michael Moritz, the Sequoia investor who backed Google , Yahoo and Sugar. “If online media and entertainment companies don’t improve every day, they will just wind up as the newfangled version of Reader’s Digest — bankrupt.”

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