It’s not just a hobby — some small sites are making big money. Here’s how to turn your passion into an online empire.

At the same time, advertisers–shunning old-line media in favor of the Web–are discovering the unique power of blogs. Blogs offer a personal touch in the mediascape; small sites have become our guides to a content-saturated world. As such, their recommendations are highly valued by readers–which naturally has made advertisers take notice. In recent months, big-name companies like Banana Republic and Coca-Cola  have for the first time run campaigns on blogs, in the belief that blog communities often consist of concentrated numbers of the passionate and influential people all marketers want to reach. Intel bought its first blog ad in March; now all its ads run on blogs as well as traditional outlets. Says Thom Campbell, head of media strategy for Intel, “The audience on blogs is the cream of the crop.”

But before you quit your day job, consider that this isn’t easy money, nor is it guaranteed to last. For one thing, the market is small right now: Web ad agency Organic puts ad spending on blogs at $40 million this year. Bloggers are typically selling only about a third of their available ad space at top rates. (The rest goes at heavily discounted prices.) And as with any business dependent on the mercurial ad market, prone as it is to sudden skids, the threat of crashing and burning always looms.

Still, the blogging-for-dollars phenomenon is only in its infancy, and already blog ad spending is roughly twice what it was last year. With overall Web advertising expected to grow by 50 percent to $23.6 billion in 2010, it’s certain that more and more ad dollars will land on blogs. For a growing cadre of bloggers, the opportunities to score fat profits from pumping out posts on whatever their particular passions might be are widening–and one consequence could be a radical reshaping of our notions of how to build a successful media company.