Daily Candy Tempts Local Media Companies

Daily Candy, the fashion-and-trends newsletter with local editions in eight markets and copy right out of “Sex and The City,” is on the block for $100 million. The value seems high, but its young, trendy, female readership could be a good fit with media companies like Fox or IAC that want to hit the local marketplace in non-traditional, non-journalistic formats.

Our guess is that it would be less of a fit with strait-laced, sales-oriented sites like ShopLocal; online Yellow Pages like Verizon SuperPages that are trying to create a retail connection; or the increasing number of newspapers that have developed online shopping verticals. But that’s ok. The latter, especially, would balk at the price, and the journalism.

Daily Candy was started in New York in 2000. After receiving a $3.5 million cash infusion from former AOL President Bob Pittman in 2003, the site has now expanded to Boston, Chicago, Dallas, Washington D.C., Los Angeles, San Francisco, London and starting in March, Atlanta.

It is apparent, however, that many of the cities have been rushed into the marketplace to prepare for the sale. The hunch here is based on the light amount of copy, and also the recruitment ads for “home based” sales reps in five of the markets (Consultant trick: learn how a company is doing by looking at their recruitment ads).

What I don’t know is how many users Daily Candy has in any of the markets – the rate card is in the mail. But it is conceivable that the newsletters are received in the inboxes of 150,000 New York residents, and more than 75,000 in LA and London, with much smaller readership counts in the other markets. That might add up to 400,000 or so.

Whatever the actual count, advertisers are eager enough to reach them that the company grosses just below $20 million, and enjoys profit margins over 60 percent, according to The Wall Street Journal. That’s not bad.

To me, the email channel staked out by Daily Candy is a very legitimate one – despite the plague of email spams that have cut usage across the board. I’ve seen that it adds 10 percent to the bottom line of local media firms. Themed newsletters for football, local arts and other subjects have done especially well. In some ways, the fashion scene makes even more sense – especially on alternative platforms, like cell phones and PDAs.

The question vis a vis Daily Candy is whether it is easily copied and improved on. Urban Junkies.com, for instance, seems to be hitting the same audience in London. In the U.S., former LA. com leader Lynda Keeler has started Delight.com in the same mode—although delight.com is “more interactive,” focused exclusively on online commerce, and also reaches out beyond women in their 20s, she told The LocalOnliner. But delight.com is also not specifically local.

Keeler said Delight started out writing about L.A. events, given its roots. But it decided to really focus on the “cult of shopping.” That is not necessarily focused on a single market, she noted.

One thought on “Daily Candy Tempts Local Media Companies

Leave a Reply

Your email address will not be published. Required fields are marked *