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BlogKits: Are Affiliate Marketing Programs Better Than AdSense?

Nope! Not for publishers, anyway.

Natali at TechCrunch profiled BlogKits, a start-up “with the goal of helping to monetize the blogosphere. The company matches smaller-potato blogs to advertisers and provides a risk-free way for both to work together.”

As expressed by several readers in comments to the post, BlogKits sounds like a fresh coat of paint on the affiliate marketing programs from the late 1990s. Risk-free to advertisers, certainly. In the affiliate model, advertising exposure on 3rd party sites is free and clicks to the advertiser’s website are free. The advertiser only pays if a customer from that 3rd party site clicks AND buys something from that advertiser, all in a short span of time. (Usually 3rd party sites don’t get credit for customers who click and browse, but come back later the the advertiser’s site to buy.)

Affiliate programs are risk-free to a website publisher only if that publisher doesn’t have other options to monetize that traffic to his or her site. Some ad networks (Tacoda, Tribal Fusion, Advertising.com, ContextWeb, etc.) will pay even “small potato” sites on a cost-per-thousand-impressions (CPM) basis — a guaranteed fee for every thousand times the publisher displays an ad, whether or not visitors click on the ad. In this model, the publisher gets paid by advertisers who want exposure to a particular audience, even if members of that audience who aren’t in “impulse buy” mode. For other sites, Google’s AdSense program is more lucrative. While Google pays publishers based for clicks (not impressions), the effect of their context-matching algorithms and pool of hundreds of thousands of advertisers is some amount of money for every thousand impressions of their text ads. Google demands that advertisers pay them for every click over to the advertisers’ site, whether or not that visitor buys something on the spot.

In either case, publishers of all sizes can make money through CPM advertising networks or Google’s CPC network. Swapping in BlogKits ad units means giving up revenue from other channels; if it doesn’t work, nothing lost by the advertiser, but the publisher may have left money on the table.

Battelle's Packaged Goods Media v. Conversational Media: Part Two

Battelle’s second installment of his theory of media’s evolution from the traditional “packaged goods” approach to the “conversational media” approach of blogs, social media, and community-generated content platforms: Searchblog. This installment explores why it’s so difficult for the leaders in traditional media to lead in the new approach — another case of what Clay Christensen calls the Innovator’s Dilemma:

“The reason media companies must own or control their content, distribution and advertising relationships comes down to simple economics – it’s extremely expensive to build or buy access to audiences in the PGM world. When you spend tons of capital to create and distribute intellectual property, you must control that property in order to justify your capital expenses.

“Take a look at the economics of nearly every traditional media business, and you will see that the majority of its operating costs have to do with either consumer marketing (acquiring audience), or manufacturing and distribution (creating the package – not the content, mind you, but the package the content is in – and delivering that package to the audience). Content creation – the actual product – represents a minority of operating costs.

“In the publishing business, for example, editorial costs are rarely more than 15-20% of operating expenses. Consumer marketing costs – the expense of acquiring and maintaining an audience – can run from 20% to 75% of operating expenses, depending on the life cycle of the product (circulation costs are highest in the first few years of a product’s lifecycle). Manufacturing and distribution costs run another 20% to 35% of total expenses.

“In other words, marketing, manufacturing and distribution of Packaged Goods Media usually swallows around 70 to 85% of total expenses. And those expenses are large – at Wired and the Industry Standard, for example, our budgets for these line items were in the tens of millions each. For traditional newspapers like The New York Times, it’s in the hundreds of millions of dollars. With those kinds of investments, one needs necessarily to control the intellectual property at the heart of it all.”

NYT Wants To Be Dugg

I’m a week late in posting this news, that the NY Times website will now attach widgets to each story that allow readers to submit the story to Digg, Newsvine or Facebook (SeattlePI). CNET’s News.com does the same — a “Digg This” icon under the headline of every story. While the pundits argue whether to believe Digg’s (or Boing Boing’s) Comscore numbers or AWstats reports or Alexa rankings (see ValleyWag, featuring yours truly jumping into the fray AND a picture of my boss flipping the bird!), the traditional online media giants are placing their bets: Whatever the exact numbers, landing exposure on Digg, Facebook, Newsvine or Boing Boing is the fastest path to growing their own audiences.

Glam Raises Another $18,500,000

Taking the total money raised by the online advertising network to $30 million, according to VentureBeat. The young company’s valuation is set, by this round of investors, at $150 million. In the comments, Mike Rundle makes this insightful observation:

“Media networks are some of the easiest web-based companies to start because they generate revenues immediately. Great writers publishing great content attracts lots of readers, which generate traffic and instant advertising revenue.

“I think a media company that raises $30 million shows that there is something fundamentally wrong with what they are doing, since their popularity is not showing a rapid organic growth in revenues without the huge influx of VC cash.

“They’re not building factories, they’re not fabricating microchips, they’re not producing plastic widgets or dealing with overseas suppliers, they’re just writing content and writers don’t cost $30 million last time I checked.”

But maybe that’s just my own envy talking.  FM, a media network of sorts, has raised a mere fraction of that amount, and has no M&A department to speak of!

Comscore's Math on Influence by “Brand Advocates”

From AdAge:

“Research from Yahoo and ComScore underscores how valuable doing so can be. Brand advocates of auto marketers, for example, influence 52% more people than [non] advocates. The reason why they should is simple math, said James Lamberti, VP-search solutions at ComScore, which worked with Yahoo to reveal a piece of research on the subject. Of about 144 million internet adults, about 13.5 million purchased a vehicle in the last six months. About 5.1 million of those were advocates who, on average, talked to about 20 people each about the purchase, for a total of 105 million people. About 8.3 million of those car buyers were nonadvocates, who talked to eight people about the purchase, for a total of 69 million people who heard about it.”

Flat Revenues for Trade Magazines Seen As Good News

American Business Media is out with a report on the state of the US print advertising business (Center for Media Research). Ad pages and ad revenues for the year (through Septebmer) are both up about one percent, though the month of September itself is down a bit from September 2005. Good news in categories such as architecture, design, auto, aviation and construction (all up in the mid single digits) was offset by down years for computer, software, telecom and science publications (all down by 5-6% in revenues and pages).

“Gordon T. Hughes II, president and CEO of American Business Media, said ‘The consistency in ad revenue for year-to-date highlights the leveling of business media’s magazine business… we will see a steady line with promising spurts coming from our strong performers, such as the Resources, Environment, Utilities category.’”

For a sector of the media business that’s seen such tough times in recent years, data showing the industry isn’t collapsing is seen as pretty good news.

Yahoo Study Finds “Brand Advocates”

Mediapost reports on a Yahoo study of “brand advocates.” The research suggests heavy users of blog sites, social networking site, search and video are much more likely to spread the news about your brand:

“Among other traits, so-called brand advocates were more likely to use social media than were the non-advocates, according to Yahoo. Eighty-seven percent reported using search engines several times a week, compared to 74% of the non-advocates. Likewise, 45% said they watched online video several times a week, compared to 19% of non-advocates, while 32% either wrote blog posts or message board entries, compared to just 8% of the non-advocates.

“Brand advocates who had just taken out home loans were especially likely to discuss the transaction online, with 59% of that group saying they had written about their purchase, compared to 30% of the non-advocates. Fifty-six percent of consumer electronics purchasers who were also brand advocates wrote about their purchase online, compared to 27% of the non-advocates; among automobile purchasers, 52% of the brand advocates wrote about their buy, compared to 20% of the non-advocates; and for hotel travelers, 44% of advocates wrote about the hotel, compared to 15% of the non-advocates.”

Word of Mouth Campaigns and Deceptive Advertising

Mike at Techdirt has a great POV on word of mouth advertising, under the headline, “Just Because You Get Others To Do Your Deceptive Advertising For You, It Doesn’t Change That It’s Deceptive.”:

“The FTC came out with a report noting that word of mouth marketing efforts could represent deceptive advertising if the person doing the advertising doesn’t make it clear that they’ve been paid to endorse a product. As they note, this isn’t really new: deceptive advertising is deceptive advertising — but they wanted to make it more clear in these circumstances. This is especially important, given that too many companies seem to think that official word of mouth marketing campaigns give them some sort of free reign to pull all sorts of stunts on people.

“Much of the discussion around this statement from the FTC has bloggers pointing to controversial advertising firm PayPerPost, who pays people to post reviews of products — but doesn’t require disclosure and often requires only positive things being said about it. PayPerPost doesn’t really care about the actual reviews, as they’re simply an elaborate search engine spamming system, designed to drive up the search engine rankings for their customers, but it’s actually not at all clear that they’re really the ones at risk here. The question, really, is whether it should be the person doing the word of mouth marketing who’s being considered deceptive, or the firm that has given them the incentives to be deceptive.”

At the end of the day, legal liability may be less significant than brand liability among your prospective customers. Clearly, when the word gets out that you pay authors to write nice reviews about your product, you raise questions about the actual quality of that product. And if, in fact, PayPerPost (and other scams like it) attracts influential journalists and authors — which is highly, highly unlikely — you’ve just admitted to a bunch of vocal influencers that your product isn’t good enough to garner legitimate positive press.

SMG's Curt Hecht Says No to Pre-Rolls

From Mediapost:

“THE FUTURE OF ONLINE ADVERTISING is still taking shape, but at least one type of ad may not be around long: the 30-second pre-roll spot. That’s according to Curt Hecht, chief digital officer at GM Planworks, Starcom MediaVest Group’s dedicated media unit for General Motors.”

Comscore: My Space Does More Pageviews Than Yahoo

As reported at TechCrunch, November Comscore numbers list Fox Interactive (where the traffic is mostly at My Space) as the most-trafficked destination online — ahead of Yahoo for the first time. Yahoo, though, still has twice the number of unique visitors. Adding insult to this and other bad news at Yahoo this month, the reason My Space stepped into the #1 position: Yahoo’s pageviews dropped 9% from October, and around 18% since December 2005.