Blogs and ads

by John Quiggin on November 28, 2005

With the general resurgence in Internet-related commercial activity and speculation, it’s not surprising that a fair bit of attention has turned to the commercial and advertising possibilities of blogs. Blogging as a large-scale phenomenon came too late to cash in on the dotcom mania last time around, but plenty of people are keen on a bite at the cherry this time. The multi-million dollar purchase of Weblogs Inc got lots of people thinking about how much their site might be worth. High-profile launches like that of Pajamas Media (endorsed by Judy Miller!) have added to the buzz.

But just like last time around, there are plenty of reasons for scepticism. Looking at the prices being charged by leading bloggers on Blogads, it doesn’t seem as if many people are making a lot of money. Nic Duquette did the sums and concluded[1] that a site with 10 000 page views a day ought to be able to gross around $US4500 a year. Putting in 10 hours a week for this kind of return amounts to a wage of $US9 an hour, and that’s before you allow for any costs.

Against this, there’s an Australian blogger who claims to be making $100 000 a year with a bunch of blogs, getting a total of 10 000 to 15 000 visitors per day. That’s massively better than the rates implied above, and (if correct) suggests the benefits to be had from exploiting the workings of Google.

Darren Rowse operates a site called Problogger and a string of commercial blogs. The most notable seems to be this one, which deals with digital photography. It’s not quite a splog, but I can’t imagine anyone wanting to read it on a regular basis.

The articles are almost all of the form “Site X has a review of Camera Y and writes …” There’s little or no analysis, and hardly any comments are posted. The other sites seem to be much the same.

From Rowse’s discussion, it looks as if most of his readers come via Google searches, and presumably a fair number of them leave by clicking an ad. Nice work if you can get it, but it’s hard to see what value is being added by the blog content.

An obvious question is whether there’s any downside to running ads. I tend to avoid them in most contexts, and most of the sites I visit regularly are ad-free, but maybe I’m atypical, or maybe there’s a way of running them without annoying readers. Of course, Guinness ads are an exception.

fn1. It seems likely that this is an overestimate, since his starting point was the assumption that Daily Kos pulls in $600 000 a year, and Kos says this is far too high.

{ 14 comments }

1

Barry 11.28.05 at 8:01 am

“High-profile launches like that of Pajamas Media (endorsed by Judy Miller!) have added to the buzz.”

Remember that the endorsement of Judy Miller means something. This woman has undoubtedly earned more money in one year by lying to her readers and employer than any of us will earn in our lifetimes.

So she’s a role model.

2

Norman David Gerre 11.28.05 at 9:41 am

Ads can be a good thing for random searchers, I think. If (e.g.) Google’s ads get intelligent enough, it’s entirely possible that visitors to a web page will get ads that are more relevant than the content they’ve stumbled into. Most people can’t search to save their lives.

I’m not surprised that most of the sites you visit are ad-free if they’re anything like this one. It’s pretty obvious that visitors to Engadget will click on ads for tech toys, but what could you possibly advertise here?

Personally, I hope for more and better localization of ads. No more showing me links to overseas sites where the postage to Australia costs more than the advertised product, say.

3

Seth Finkelstein 11.28.05 at 9:46 am

I think it needs to be emphasized more than all pageviews are not equally profitable. Per above, those pageviews that bring in readers interested in an ad for a high-margin product (e.g. digital photography) are much more lucrative than, say, academic readers.

Calling it all “blogging” is another instance of the overused word leading to confusion. It’s like talking about “writing”. Being a “writer”, as in a writer of advertising copy, can be very profitable if in a hot industry and a good position. Being a “writer”, in terms of say a philosopher, not so much (with very rare popular exceptions). But both are doing “writing”!

4

Kieran Healy 11.28.05 at 10:26 am

Yeah, Seth is right I think. Sheer traffic is not going to make you rich. (In fact, it can make you poor: bandwidth costs money.) Advertisers want to advertise on sites visited by people who actually buy their products, and who ideally can buy them right then. So a niche site visited and read regularly by a few thousand high-end stereo or camera or mountain-bike enthusiasts who buy a new big-ticket toy every year is far more attractive than, say, an academic or political blog that gets ten or a hundred times as many visitors.

5

alice 11.28.05 at 2:55 pm

Of course there are downsides to running advertising. As you point out it can mean extra work for little money and a change in focus. The companies which provide the ads may not give you the power to refuse ones you don’t like (this along with exceedingly strict copyright is what made “open source media” er pajamas so open) and it is almost guaranteed they will encourage you to post in ways which encourage a larger number of readers and hits.

Profit and the net still fit together uneasily. While the anti capitalist battle of a decade ago is lost, the net does not make profits easy despite the success of some. For most it is fools gold driven by unrealistic assumption.

Indeed in a more conventional sense many failed to grasp that it’s tendency is a perfect market with easy entry to suppliers and increasingly perfect information to buyers. A very tough environment.

6

Alan 11.28.05 at 3:00 pm

The economics of blogging is a bit like the economics of photography or playing a musical instrument. Anyone who wants to make money at it has to stand out from a vast crowd of people who also have a camera/guitar/computer and who think they are good at it. If you want to make money, get into something that is regulated to limit the number of competitors, like medicine or plumbing.

7

pdf23ds 11.28.05 at 7:27 pm

Ideally, the user would pay directly for the content of the blog, as they do for magazines and books and such. I think part of why blogging is so unsuccessful as a moneymaker while writing books is (relatively) successful is that there’s no good way to limit the amount of product that an individual can consume for free before they’re convinced to pay for more. Bookstores do this by being an inconvenient place to read long books (but not so inconvenient that customers won’t want to browse!). Blogs could do the same thing by being free until the reader has reached a certain number of pageviews (per month, perhaps), and then putting things behind a paywall. That is, if it were possible to reliably identify users. Because of proxies and anonymizers, though, this is impossible. (It’s true that for the most part, today, the IP address is good enough, but if blogs were to adopt this at a large scale, users would begin to adopt circumventive measures.) A registration system would, technically, accomplish the same thing, but since that isn’t transparent, and since it’s so very distasteful to so many users, it would effectively doom a blog, just as it does the online news sites that use it. (Bugmenot couldn’t defeat this, since each user registration would have a small number of pageviews before the registration becomes useless.)

And then there’s the problem of convenience of payment. While services like Bitpass are promising, there’s still quite a bit of user resistence to overcome if any new regsitration is required of them, (and even if there isn’t,) and if your readers have a sizable blogroll and your site goes pay, they may delist you long before paying unless many of their other sites also go pay.

8

Eszter 11.28.05 at 8:25 pm

Ads on blogs are not the only way that blogs and blogging can be lucrative (even just from a financial perspective). Of course, you weren’t suggesting this, but I thought I’d mention it.

Blogging may be a way for writers to get recognized in an incredibly saturated market. After all, books (some books) may be profitable, but it’s not as though anyone who wants to publish a book will find an interested and successful editor and publisher to back their project.

The author of the Anonymous Lawyer blog has a book contract, I’m assuming mostly thanks to the popularity of his blog. Who knows how long it would have taken Jeremy to find a publisher otherwise.

Bloggers may end up with writing opportunities that pay well thanks to their blogging even if the blogs themselves don’t bring in any money directly.

9

pdf23ds 11.28.05 at 8:30 pm

That’s true, eszter, but I think we ought to be concerned about the long-term viability of print media. To some degree, I can fathom e-books as filling more or less the same market space as regular books, especially when mobile technolgy improves to the point where they’re more convenient than actual books. But I wonder whether, long term, short pieces of writing will win out over longer pieces.

10

Stacy Rosenbaum 11.28.05 at 9:09 pm

I guess I’ll never get rich by blogging :(

11

Tom Lynch 11.28.05 at 10:35 pm

Any service that requires seller and buyer to be geographically collocated is probably easier to turn into a success (of sorts) on the net. Although the market is smaller, the bar is much lower. I am unaware of a decent alternative online resource for news in my home city, for example.

Topical blogs that need to be roughly the best-of-breed to succeed are going to have huge problems generating hits, and ad revenue, unless they are actually in that category.

As far as print media are concerned, the availability of free material, on any topic you care to name, of a higher quality than the op-ed pages of The Australian tends to limit my newspaper buying to Saturdays for the TV guide or occasionally weekdays for sitting in a café at lunch. Actual books are a different matter, but e-books will eventually oust them to a significant extent. If I had a decent e-book reader I think the classics out of copyright at the Gutenberg Project would look very, very attractive as a source of reading for the train home, which would at least put a dent in my other reading purchases.

12

Seth Finkelstein 11.28.05 at 11:25 pm

Eszter, regarding “Blogging may be a way for writers to get recognized in an incredibly saturated market”, the problem is that simply pushes back the saturation one level. That is, if the book market is saturated, then blogs as a means of entry will quickly get saturated too. So now instead of pitching their book proposals, they’re expected to write for free as another way of pitching. It seems this is worse, because the end result is more people have to do more work overall. That is, the fighting over the same pie becomes more extensive. Of course a few people who get in early, or are very lucky, will be big successes – but the vast majority are going to be left with pitches (or blogs) which yielded nothing.

And don’t forget, it’s entirely possible that a blog can be negative to one’s career. Some people make a fortune in the stock market – and some lose their life’s savings.

The problem with the blog-as-personal-advertising argument is that it has to be viewed in the context of whether it’s a COST-EFFECTIVE method of advertising.

13

Danny Yee 11.28.05 at 11:36 pm

I’m with Seth on this one. Not all websites are equal.

Income from affiliate sales – books, t-shirts, posters, etc. – an compare with, or greatly exceed, advertising income, but varies greatly from site to site. If you have a web site about electronic circuits, you may be able to sell electronics kits, but if your site is about Iraq then you may have to settle for selling “most wanted” packs of cards (until you can bid for reconstruction contracts on ebay :-).

14

Tim Worstall 11.29.05 at 1:58 pm

One oddity about Adsense is that hits via the search engines actually produce a higher return than hits coming from regular readers or links from other blogs. Not sure quite why but it does seem to be working that way on the rare occasions I actually go through logs and so on. Get hit with a link from one of the big blogs and traffic zooms, of course, but the number of click throughs on Adsense stays virtually static and thus the conversion rate drops.

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