CNET reports today that online ads hit $2.8 billion in the first quarter. And they had a story yesterday about how Craigslist is siphoning newspaper ad dollars and growing at a clip that eBay can no longer match. The online ad world is bubble-ing again. You can bet that a lot of people will look to hype and exploit the opportunity, and that later-comers will start throwing bad dollars after good.
As an example, we have ads starting to appear in blog feeds, a topic that has already raised some ire.
Personally, I have a very simple reaction. If I see ads in a feed, I simply unsubscribe. I've unsubscribed from two feeds so far. I'm looking for condensed information in feeds, not advertising. Some people might say I want something for nothing, and ask how I expect bloggers to get paid. I don't. Earn a living some other way, like the rest of us. Or advertise in your feeds if you want to, I just won't read it ... there's plenty of useful free information and most of it is redundant anyway.
The amazing thing to me is that any bloggers would think there is any significant sustainable revenue that will come from advertising in a blog that has maybe 1,000 subscribers. I use Bloglines, and I read about 25 blogs, and (aside from Dilbert which has a healthy 18,000 subscribers) of those one blog has about 4,000 subscribers, one has 3,000, two have 2,000 and the rest have at most a few hundred each.
Let's do the math. Say you have 1,000 subscribers (way generous for most), and let's say that only 10% unsubscribe if you start putting ads in your feed. That's 900 people looking at your feed once a day (again, probably way generous). Typical return on this sort of advertising (I know, I'm in the business) would be about 1 or 2%, so that means maybe 20 people click through on an ad from your site each day. How much do you get paid for each click-through? Let's be generous again and say you get $0.25 for each one (Google might pay you a nickel). You just made $5 for the day.
And that's if only 10% drop and 2% click through. If 50% drop and less than 1% click through (a more likely scenario in my mind) then you'll barely be able to buy a soft drink, and you just killed half your audience.
Bloggers who are famous (like Oprah or Rush) or good enough to generate an audience large enough to make advertising profitable (50,000+) wouldn't need the money from ads in feeds, or they'd be smart enough to know that there are better ways to capitalize (for example, get subscribers to opt in to specific kinds of offers where a much higher return is possible, or arrange sponsorships that don't require annoying embedded ads).
But will advertisers pay to push ads to a few thousand people who don't really want to see them there? Yeah, I suppose a few will, and anybody can try to embed AdSense or something like it, but I promise it won't make the blogger enough money to exist on, and won't come near paying for their time. And they'll lose readers (like me) too.
Feeds and aggregators may yet prove to be an effective way to distribute ads or offers and gather them. For instance, I might want to get travel offers from my airline or an online service. But bloggers better have some pretty damn compelling content and some pretty darn relevant ads if they think they can attach ads inside their feeds and make it pay off.
