Internet Brands Inc., which pioneered online auto buying with CarsDirect.com, is becoming a powerhouse in all manner of content.
The company went public late last year and has since acquired a dozen Web sites. During all of 2007, it swooped up 45.
This year, Internet Brands will look to continue this pace by spending $20 million per quarter on similar acquisitions.
"We want to keep growing," said Lisa Morita, chief operating officer. "Our only constraints are keeping up with the growth."
The company buys up online communities with user-generated content that draws high traffic in consumer categories such as cars, home and travel. A key distinction of the sites is development of loyal communities that result in frequent visitors. Examples include
Mercedes-Benz community MBWorld.org, cycling site BikeForums.net, and home improvement site DoItYourself.com.
Each enjoys traffic of up to 1 million unique visitors every month, providing advertisers with an engaged, passionate audience willing to spend money on specialty interests.
"Internet Brands goes deep into very specific areas that are highly lucrative," said Charlene Li, analyst at Forrester Research. She said this allows the company to sell ad space to American Airlines, for example, in one package, and the ads would run across strategically selected Internet Brands sites.
The company is an example of how Web 2.0 companies are making money: They aggregate content in a way that appeals to advertisers. With this goal, Santa Monica-based upstart Demand Media, for example, was able to raise $350 million in 18 months. Demand has so far bought 60 niche sites.
But simply acquiring Web sites isn't enough to maintain growth, said Richard Rosenblatt, chief executive of Demand.
"What Internet Brands is going to have trouble doing is growing its inventory while trying to own and manage the Web sites," Rosenblatt said. "At our size, for example, the next incremental one you add takes a lot of work to maintain."
That's why Rosenblatt's most recent acquisition was an Internet software company with a platform that allows Demand's content to be spread around as widgets such as question-and-answer tools on 200 media Web sites, including ones for the Washington Post and Fox.
Internet Brands also made a software acquisition last year to scale its operations. It bought V-Bulletin, with a platform that automates creation of online discussion forums on dozens of Web sites at a time, providing tools to enable social networking or streaming video.
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