Blogonomics: How Big Media Will Sell Ads on Blogs

Blogger Barry Ritholtz has looked at the existing mechanisms for monetizing blog readers, and he's not impressed. Here's the problem: blogs get a lot of readers in aggregate, and advertisers are, in principle, very interested in advertising on blogs. But any given blog is going to be too small to be able to hire a very expensive ad-sales team. So blog aggregators have emerged, like Blogads and Federated Media, which try to use a single sales team to sell ads across a wide spectrum of blogs. When Ritholtz, however, gave them a once-over, he didn't want to go down that route:

Many of the players are poorly organized, underfunded. They are trying to build from the ground up the structures that already exist in the advertising universe -- only without the experience, capital and expertise needed to perform adequately. Even the best indie ad firms had abysmal customer service -- at least from the blogger perspective.

Ritholtz's idea was different. Instead of hiring a brand-new sales team dedicated to blogs, he could piggyback on the existing salesforce of a big-media giant. When the giant sold online ads, it would place those ads on its own website and also on certain carefully-chosen blogs, such as Ritholtz's. The revenue from the blog ads would be split (50-50, I think) between the giant and the blogger.

When Ritholtz took this idea to one big-media giant, he got a brush-off. Giants don't like to respond to the ideas of bloggers: they like to have the ideas themselves. But interestingly, a giant then approached him – and Howard Lindzon, too – with much the same pitch. The giant in question is Reuters, which has historically been very bad at generating traffic to its own website: you're much more likely to read a Reuters story at Yahoo News or Forbes.com than you are at reuters.com. Reuters now, however, wants to embrace the blogosphere, with a similar plan to what Ritholtz had in mind (but with the bloggers getting only 30%, not 50%, of the ad revenue).

Oh, and there was another catch, too: the bloggers would have to sign a piece of paper which told comScore and Nielsen that their traffic should be counted as part of the total traffic to reuters.com.

Ritholtz and Lindzon didn't exacty jump at this opportunity. But it's clear that sooner or later, Big Media's online salesforces are going to be selling ad inventory on third-party blogs.