Making Video Work

paidContent: You swear by video as the future of media sites. How exactly?

Brian Sugar: Video is the natural progression of content on the Internet. The Web has really come alive with video … It’s extremely important to make sure you have a great base of content already.

pC: What about the monetizing part of video? How do you ensure ads don’t cause you to lose viewers?

Sugar: We test different formats. One test we like is a mid-roll — the audience watches 10-20 seconds and then it cuts to an ad for 15 secs and then comes back.

We also integrate partners into video itself. We get advertisers integrated into the content. Branded content is an important part of making video work. (Here’s examples from Levi’s and Tampax).

We also have a big market in video and commerce — we have over 800 partners who are retailers. Technology helps us track when they make a sale through us.

Who ‘gets it’ and what to read

pC: Who is someone out there that you admire or like a lot?

Sugar: There are two brands that really impress me a lot. The first and foremost is ESPN. If we became ESPN for women, that would be fantastic .. From the early days, I’ve salivated at their execution. Also, Marvel. They create awesome content but they make most of their money around that content.

Small companies I admire are Kiwi Crate (which sends kids stuff to do in the mail) and Uncrate (‘gear for guys’).

pC: What do you read?

Sugar: Hacker News. A lot of stories brewing in the tech and business space, that’s where they start.

On getting by on ads alone

pC: A big part of Sugar’s success appears based on e-commerce. Can a media site make it just on advertising alone these days or does everyone need a second revenue stream?

Sugar: I look at advertising and commerce as one and the same. We refer to our partners as advertisers. It’s hard to think of someone who just does display advertising. It would be a shame to have just one revenue stream when you can layer on other streams. It makes sense as you build out your brands.

But display advertising is still important. We’re still innovating with things like Instagram and Pinterest units.

On not being a Gawker fan

pC: Who’s doing it wrong? Are they any media memes out there that you’re skeptical of?

Sugar: I’m so optimistic, it’s hard for me to be skeptical about anything. I want everyone to be successful. I can take the TMZ or Gawker view of life but that looks awfully miserable. Our company tries to keep upbeat.

What women really want

 pC: What do people not know about women’s media? What special things do you do for a women’s audience?

Sugar: I think it’s about being authentic, attractive, real and beautiful to look at. Make it aesthetically gorgeous.

Sugar Inc is a case in point.

Since launching in 2006 as a network of women’s interest blogs, Sugar has grown into a media powerhouse through organic expansion and a steady diet of acquisitions. But even though Sugar has multiple revenue streams, a swelling readership and claims it is profitable, it receives little notice.

“From the media landscape, we don’t get much attention,” says Chief Revenue Officer, Kristine Shine. “It’s interesting because from a brand and advertising perspective, there’s tremendous interest in women-only content sites.”

The Sugar sites themselves are targeted at “trendsetting Y women” and arranged in verticals that focus on topics like food, fitness, beauty and kids. Its flagship brand is celebrity site Pop Sugar.

From a business perspective, the most remarkable feature about the sites is the degree to which brands and advertising are baked into the content. In practice, this means everything from product placements in videos to slide shows in which readers can click through to buy the items they see.

Sugar also works with brands like Target and the Gap to create “branded content” videos, often in partnership with third party bloggers, that run on the sites as sponsored stories. Here’s an example in which Sugar worked with blogger Jessie Adore to promote Levi’s Curve ID program.

Shine wouldn’t disclose specific numbers but did say that half of Sugar’s revenues came from a “display” and content bucket while the other came from a commerce bucket (which presumably includes commissions from third party product sales).

Sugar’s multiple revenue streams aren’t unusual, of course. Scratch the surface on most digital content brands and you’ll find a variety of side ventures that help buttress the editorial operation.

The question here is whether there is something particular about Sugar’s female audience that makes the sites so amenable to commerce and branded content — or whether any other media site could borrow from Sugar’s playbook.

David Reibstein, a marketing professor at Penn’s Wharton School of Business, says that research suggests that women who use social media have a greater inclination to share and to listen than do men. This could mean that audiences on women’s sites like Sugar, which have a heavy social component, are more willing to consider purchase recommendations than general interest audiences.

But Reibstein says that tools to let consumers buy what they see are still evolving. This could mean, in turn, that Sugar is simply ahead of the curve among content sites in optimizing commerce potential.

Finally, there is the question of whether mixing media and commerce can work only for fluffy fare — or whether buy-through options will one day become a part of serious news media as well.