• by Gavin O'Malley  @mp_gavin, August 1, 2008

The online ad market is increasingly being divided between publishers that rely on ad networks and those that control the ad development and sales process internally.

That theory belongs to Brian Sugar, publisher and CEO of online publisher Sugar Inc., which--on those grounds--ended its exclusive ad-serving partnership with NBC Universal two weeks ago.

"What we realized is that you can't offer advertisers and agencies the level of integration and personalization they're after when an independent ad rep is handing things," Sugar explained to Online Media Daily. "As people get smarter about ad networks, they're going to realize their limitations, and that if you want to really make brands shine you have to do it yourself."

Sugar, Inc. officially launched in April 2006, a year after Lisa Sugar, editor in chief and Brian Sugar's wife, began a celebrity gossip blog named PopSugar.

In June of last year, NBC began selling ads across Sugar's 17 female-targeted blogs--covering celebrity gossip, fashion, and cooking, among other topics--and led a $10 million investment round in Sugar Inc.

"It was multiyear deal, but it had clauses which we triggered," Sugar said. "We knew we'd do this one day, but definitely not this early."

The Sugar Network has grown to 4.6 million unique visitors worldwide--up 121% from 2.1 million year-over-year, according to comScore. Rather than the numbers, what really led the Sugars to their decision was the cajoling from their internal sales team.

"Our sales team saw how limited we were by the partnership, and they were all over me to sell on our own," Sugar said. "They've been chomping at the bit."

NBC had been taking a 50% cut of ad revenue. According to Sugar, that amounted to the cost of employing a full sales team last year. Now, Sugar plans to hire an additional 20 ad salespeople.

Presently, two-thirds of Sugar's revenue comes from advertising and the rest from commissions and revenue-sharing from ShopStyle, the e-commerce site it acquired late last year.

According to Sugar, the newly independent company is poised for record growth. "The response we've been getting from agencies over the last two weeks has been amazing," Sugar said. "The level of integration we're pursing is really in line with what agencies are pitching to clients."

In addition, the company's relationship with NBC might have a future. Lauren Zalaznick, president of NBC Universal Women and Lifestyle Entertainment Networks, is expected to remain on the Sugar board.

"They've actually been very supportive of our decision," Sugar said.