Thursday, January 29, 2004

Blogging for Money

Matt Welch discusses the economics of Blog Ads here. While it is true that blogging is no way to make a living, the numbers are improving.

He also makes a good point about the importance of scale and critical mass:

Two other points, before I stop proselytizing for my friend Henry Copeland ( 1) Network effects will work very well here. The more participating blogs from Los Angeles, the easier it is for advertisers to make a useful, targeted group buy (and therefore pay me more money!). This also works for subjects -- media, baseball analysis, DIY music, whatever.

This is in line with something i wrote back in May

Right now newspapers are aided by their unchallenged dominance as a local advertising channel-- nothing else can really do the job when it comes to promoting a sale at a local department store store or specials at the grocery and nothing else can match newspapers for classified ads.

This advantage is eroding. Technology, demographics, and business necessity will see to that.


Eventually, on-line news sources and communities focused on specific geographic localities may provide a realistic alternative to local newspapers. If so, then they become a potential advertising vehicle.

In addition to the spot model for advertising, there is the old sponsership model.

Radio and television programs used to have a single commercial sponsor who picked up the costs, often owned the program and whose products were the only ones advertised. (That's why it's the Hallmark Hall of Fame and why daytime dramas are called soap operas). Echoes of the practice live on in PBS's underwriters.

The old model isn't a perfect fit with blogs because it would threaten bloggers's independence and creditbility. If Mazda sponsered Instapundit many people would dismiss his views on CAFE, Kyoto and the RX-8 out of hand.

But blogs have buzz and advertisers desperately want buzz. A couple of dozen advertisers are going to drop $3 million or more trying to generate some at the Super Bowl.

Which scenario is more likely to succeed in making Pontiac (say) appear more innovative: a Super Bowl spot or sending 10 bloggers to the Final Four? Factor in the cost differential (90% cost savings using bloggers) and the heavy odds against a given SB spot catching fire. The bloggers don't have to say anything nice about the Grand Am-- Pontiac generates favorable PR via traditional media just by underwriting the effort.

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