For digital native PopSugar, an old-school advertising strategy

January 30, 2014: 11:16 AM ET

A young media business that makes all of its money online looks offline to grow its customer base.

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FORTUNE -- I recently stopped by the hip downtown San Francisco offices of PopSugar to meet chief executive Brian Sugar, a former high-tech exec who has refashioned himself as a digital media mogul. The female- and fashion-oriented publishing company that he launched with his wife Lisa is the very model of the modern, digital-native media concern, which I'd last written admiringly about four years ago.

PopSugar, which has 325 employees, has grown impressively since then. Still privately held, Brian Sugar doesn't disclose revenues, but others believe annual sales are around $100 million. Display advertising on its 12 content sites make up about 45% of revenues, and a roughly equal amount comes from its fashion search engine, ShopStyle. (A search for "red dress" on ShopStyle leads a consumer to established retailers like Bloomingdale's and Nordstrom as well as e-commerce sites like theOutnet.com and Farfetch.) A growing business in "must-have" subscription boxes -- lifestyle products like scarves, books, and perfume, curated by Lisa Sugar -- makes up the balance.

What jumped out at me most about PopSugar's business is the $25 million, three-month-long traditional advertising campaign the company is just wrapping up to promote ShopStyle. In short, a company that has mastered digital publishing and marketing concluded that old-fashioned media -- television, magazines, and even downright Neanderthal exterior ads on the sides of buses, taxis, and phone booths -- was the best place to boost awareness for its search-engine business.

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The reason for going the traditional route was straightforward: Too much of ShopStyle's traffic was coming from other search engines, namely Google (GOOG). PopSugar needed to build up what the advertising industry calls "unaided brand awareness." In English, that means convincing consumers to go to your site just because, rather than because you spent money on Google keywords to lure them there. "Our object was simple," Sugar says. "When someone was going shopping, and they knew what they wanted to buy, we wanted them to know ShopStyle was there and waiting."

He draws a direct line between PopSugar's analysis and the experience of the travel search site Kayak. Michael Moritz of Sequoia Capital invested in both companies and encouraged Sugar to consult with Kayak's executives. "They said, if you look at it in the short term it's not going to succeed," Sugar says. "You have to do it over a long period of time to get people to change their behavior."

PopSugar's initial approach to a long time was three months. It hired the ad agency Sub Rosa to create a campaign that centers cleverly on the supermodel Miranda Kerr pulling fashion products like purses and clothes out of her computer screen. "She has the girl-next-door, high-style, and sexiness qualities that complemented what ShopStyle represents," Sugar says, "Everyone said, 'I wish real life were like that,'" referring to being able to pull gorgeous accessories from your monitor. "We wanted our brand to come to life and be aspirational."

The ad agency MediaStorm handled media buying, conducting what Sugar calls a "full-on shock-and-awe" campaign that targeted ShopStyle's demographic of young women. It bought ads in People, Entertainment Weekly, and InStyle (all magazines owned by Fortune's parent company Time Inc.) as well as Glamour. Billboards ran on buses in San Francisco, phone booths in New York, and taxis in Los Angeles. TV spots appeared during must-watch live and other appointment-viewing events like the Golden Globe awards and the finale of Survivor.

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So did it work? Sugar says the final results aren't yet in, but that direct traffic to ShopStyle's home page doubled during the campaign. He says the company already is evaluating its spending plans for the latter half of 2014 and is likely to repeat the experience.

Beyond the realization of the continued value of "old" media for a new business like PopSugar, there's another epiphany to be learned from its current focus. The PopSugar network is a good business and a leader in online "service journalism," the category of articles that offers guidance on how to live one's life. ("V-Day Looks to Wow the Guy Who's Seen Everything You Own.") In that sense, PopSugar has much in common with women's interest magazines -- minus the glossy paper and hundreds of millions of dollars in revenues.

Yet the business Sugar is truly excited about -- so excited that he's willing to plunk down $25 million for one fiscal quarter's worth of tougher-to-measure traditional advertising -- is his search engine. "The amount of money we make for every thousand pages served on ShopStyle is so much higher than our display advertising-supported web pages," he says. And thus a fascinating conundrum: Women deeply desire to read articles about how to dress and live well, and do so in great numbers. But retailers are far more willing to advertise on a website that exists solely to drive traffic to their stores, even if its audience is a fraction of the one enjoyed by an editorial site.

It's still a brave new world in digital media.

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About This Author
Adam Lashinsky
Adam Lashinsky
Senior Editor at Large, Fortune

Adam Lashinsky is a San Francisco-based editor-at-large for FORTUNE, covering Wall Street and Silicon Valley. Lashinsky joined FORTUNE in 2001, after two years as a contributing columnist. Prior to joining FORTUNE, Lashinsky covered Silicon Valley for TheStreet.com and The San Jose Mercury News. A Chicago native, Lashinsky holds a B.A. in history and political science from the University of Illinois at Urbana-Champaign.

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