Kara Swisher

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Sugar Inc. Goes Local With FreshGuide Acquisition

San Francisco-based women-focused online media site Sugar Inc. has made it first significant move into the local market, by announcing its purchase of FreshGuide.

The locally focused FreshGuide makes women-aimed city guides that show off daily offers in a wide range of arenas, such as beauty, health and fitness. Another FreshGuide offering, BookFresh, does online booking for spas and salons.

FreshGuide is in four markets now: San Francisco, Silicon Valley, Los Angeles and Seattle. It will continue to operate as separate brand from Sugar.

Terms of the deal were not released.

Sugar, which runs the flagship PopSugar.com site, is at an interesting juncture right now, in a space that is both competitive and fast-growing.

According to sources, in search of a cogent women’s strategy, Yahoo (YHOO) has given the start-up the once-over several times, including recently.

And a year ago, the company broke off ties with NBC Universal by buying back its shares and got a Series C funding of $16 million from Sequoia Capital.

Sequoia was an earlier venture investor, having put $5 million into the start-up in late 2006.

NBC invested $10 million in 2007. The media giant had been selling online advertising for the site, an arrangement that had previously ended.

Here’s the official press release from Sugar on the purchase:

Sugar Inc. Enters Local Editorial and Advertising Market With Acquisition of FreshGuide

Sugar Inc. Will Rapidly Accelerate FreshGuide’s Growth and Expansion with Its Large Passionate Audience of Women

San Francisco, CA (June 8, 2010)–In its first foray into providing local editorial and advertising, Sugar Inc. (SugarInc.com) today announced it has signed a definitive agreement to acquire FreshGuide Inc., which operates FreshGuide.com and BookFresh (BookFresh.com). FreshGuide.com is an online women-focused city guide that provides access to exclusive daily offers from a well-edited selection of local businesses in beauty, health and fitness, dining, travel getaways and other relevant categories. BookFresh provides an online booking service for local businesses, such as spas and salons.

Sugar Inc. is a leading diversified women’s media company that includes PopSugar Network and PopSugar TV, producing original content and social community for women, and ShopStyle, a social shopping service that brings together the most fashionable stores and the best brands. Sugar has had rapid organic audience growth since inception four years ago and today reaches over 16M monthly unique visitors globally.

“We are constantly striving to add innovative offerings that entertain and delight our audience,” said Brian Sugar, founder and CEO of Sugar Inc. “We felt there were tremendous synergies between Sugar and FreshGuide that could be achieved by combining our large audience with their local service. We are very excited to be able to bring to our readers exclusive daily offers at the best places to eat, exercise, shop and
relax in their local areas.”

FreshGuide was founded in 2008 by Ryan Donahue, a veteran of Pay Pal, and launched its first service, BookFresh, later that year. In January 2010, the company launched Freshguide.com to provide local offers by city. Currently, FreshGuide operates in four markets: San Francisco, Silicon Valley, Los Angeles and Seattle. FreshGuide will continue to operate under Sugar Inc. as a separate brand.

“FreshGuide is focused on providing exclusive, local offers for women. By integrating our service with the PopSugar Network’s addictive editorial content, we are creating a city-based editorial and offers of unmatched quality in the market,” said Donahue. “This acquisition will also allow us to dramatically expand our reach and accelerate our growth. We plan to launch FreshGuide in 30 additional cities over the next 18 months in the U.S. and internationally in the UK, France, Germany and Australia where Sugar Inc. has operations.”

Online local advertising is forecast to grow at a 19 percent annual rate over the next four years and is expected to be a $19 billion market in 2010, according to BIA Kelsey Group. Most of that growth is coming from the decline of the $120 billion traditional local advertising market.

“We believe the winning business model for next generation media companies must include diverse revenue streams. This conviction led to our acquisition of ShopStyle in 2007, which provided Sugar with a new marketing channel for retailers and brands to acquire visitors that met their ROI goals. The acquisition of ShopFlick, now PopSugar Studios, in 2009, enabled Sugar to launch PopSugar TV and provide advertisers a compelling video environment for branded entertainment. Similarly, we believe that FreshGuide will provide local advertisers the ability to advertise to Sugar;s large audience in a high-quality and cost-effective manner.

The FreshGuide service will also provide Sugar’s national advertisers and retailers with a new way to extend their brands into local markets as we develop our local city guides,” added Sugar.