The Short Tail of Advertising

Do you publish for love or money? You can do both successfully if you run ads on your blog. However, selling ad space on your own is hard work. Ad networks like BlogHer, Federated Media,FeedBurner, B5 and BlogAds have done a great job to rush in to fill the void, but the shifting landscape will require them to adapt. I believe they all can.

The reason they need to change is that online advertising is clearly consolidating with the portals. eMarketer has a great round-up on the state of the biz. Some 55% of all ad revenues now flow to one or more of the major portals. Their share was growing even before Google bought Doubleclick. A separate article on WSJ.com notes that newspapers saw their online advertising dip. Again, the portals are a factor here.

So where does that leave the Long Tail? Bloggers, podcasters and social networks serve niche markets. This makes them relatively cost effective and attractive to advertisers. However, managing a media buy across a constellation of small sites is a big job. And while there are networks are doing a nice job aggregating these sites, it's still far easier to just consolidate all your ads through one or more of the big portals.

Blog ad networks would be wise to find a way to partner with one or more of these players. For a viable model, look to the PC industry. Even though the hardware and software markets consolidated there are a lots of value added resellers thriving. That's because they provided services on top of the technologies that were built by big iron vendors like Sun, Oracle, SAP And Microsoft. A similar model could prevail in a world where the portals are the Web OS.

Comments

[Rex Hammock]

I think I agree with you Steve, but it's more of a "long tail" than "short tail" of advertising thing that's taking place. As I've been saying for years, Google (and Yahoo and MSN) are -- when it comes to this specific role you are alluding to -- advertising sales brokers who take a 20-30% (or less) commission for ads they sell that apppear on other publisher's sites -- Adsense Publishers. They call the 70-80+% portion of the revenue that publishers get something like "traffic acquisition cost," but for non-financial-reporting purposes it sure looks like their business (this portion, at least) is a "commission" slice of the revenue of the companies they are representing -- much like a real estate agent's commission is their revenue, not the full price of all the houses he or she sells. That's beside the point, I guess. What you note is correct. It's perhaps better to get into this flow -- this eruption -- for most publishers. However, depending on the situation, it may ocassionally make sense to be an owner-seller.
For more on the percentage of Google revenues going to Adsense partners, see: http://www.webmasterworld.com/google_adsense/3317092.htm

[B.L. Ochman]

I've been using blog advertising to drive traffic to contests and sites for the last few years. IMO Google et al are so saturated that it is hard for an advertiser to stand out or keep up.

Blog advertising offers incredibly focused and often remarkably inexpensive opportunity to marketers. But I never simply make a network buy. I think it's important to know the lay of the land in the blogosphere and buy across as well as inside the networks.

The most important point is that you cannot put the same ad on The Daily Puppy or Cute Overload that you put on Perez Hilton. Bloggers are very vocal about what they want to allow on their sites.

[Ty Graham]

Great comment on the OS idea. Not many people get that. It's pretty obvious to though, because soon, everyone will be blipd!