December 4, 2005
John Batelle and his Federated Media Oublishing Group as well as Jason Calacanis and Nick Denton plan on creating their own respective ad networks that target blogs. Here is my break-down of how a blog ad network would work, and why it could be a bad idea. Some of the listed below are pretty obvious.
1) First of all there are too many blogs out there and an ad network would need to garner some sort of control over how the ads are shown. Blogs would need to be bundled into categories, and the ads would have to be served accordingly - obvious.
2) The ads should be contextual if at all possible, that would actually help erase the need for blog categories all-together.
3) Text based ads are out of the picture - Google has that covered. Obvious
4) There would need to be enough advertisers to fill their inventory. The whole idea of a blog ad network fails when the owners get lazy and start running 3rd party ads from the likes of Burst Media, Tribal Fusion, Advertising.com etc. Any blog owner can do that - or should be able to figure that out.
5) Ad rates would need to be low enough to attract advertisers. I am talking $3/CPM or lower… a lot lower.
6) Revshare with the blog owners would need to be in favor of the blog owners. Think 60/40 or 70/30 and you get the picture.
7) With revshare so low, you would need a TON of blogs in order to generate some real revenue. Obvious
8) Offer blog owners some more products. Do a deal with Shopping.com for example and offer blog owners their own custom merchant links on their sites. (this process is super easy to implement btw) Maybe emulate the mini-malls concept already out there?
In my opinion, this is a dead-end and these owners are simply behind the game. The tools to make money from a blog are already out there, will putting them all under one umbrella and presenting it to a blog owner work? Maybe. I just really think that a blog ad network would be hard pressed to beat Google this late in the game. Either own the blogs like Weblogs Inc. or think of another business venture.
I will give you all a big hint: Think video ads…it’s a new frontier there.
I am in love with eMusic. Sure they do not have Britney Spears and all of the other big names out there (hehe), but they have a great selection of music from a lot of well known artists. Plus when you download the music in MP3 form, you OWN them and can do whatever you want with them. The bit rate is pretty good (192kbps) too. If you are an audiophile, you might want to try out Audio Lunch Box which last time I checked gave you the option to download in MP3 or Ogg Vorbis format. The only problem is that Audio Lunch Box does not have a very large selection.
Anyways, back to eMusic, $20/mo buys you 90 song downloads per month. Do the math and you will see why they are so special. Cheaper than iTunes and the others, plus you own the music. Try it out, maybe they have enough artists in your genre to keep you happy - maybe not, but at $20 bucks there isn’t much to lose.
In an effort to stay alive, TiVo has announced a new offering for their subscribers - on demand advertisements. Initially the offering will be in an opt-in basis that lets TiVo subscribers control which type of advertisements they see. I fail to see where this is going for a couple of reasons:
1) The clear reason - most people buy a TiVo to record their shows and skip the commercials, they are paying a monthly fee after all for this product and there has to be a reason to choose TiVo over the others provided by Comcast, DISH, DirecTV etc, you get the picture. People do not want to see advertisements.
2) You should not be able to control content which is not yours, so why it TiVo trying to? I would not be surprised to see the big networks like NBC, CBS, ABC take a stance that is in line with Hollywood, and that is to protect their content. Why would an advertiser spend money on a network buy, cable company, and now TiVo? Is there a grove of money trees hidden somewhere on the moon that I am missing? This is borderline ridiculous. TiVo is not a content provider despite their best efforts to be. They need to understand the industry and how it works before they get sued and lose everything they have worked hard for. NBC is thinking about it already.
3) People will eventually get tired of paying for something that they can get for free. DirecTV is already making moves to drop TiVo, DISH has never used TiVo and Comcast is giving their customers an HDTV PVR.
TiVo is a sunken ship. They have created a commodity product and have done a very poor job of protecting their business. They are not a content provider, they will have trouble controlling content that is not theirs, and the TiVo is not a full-blown Media Center product. They have lost their identity.
Expect to see TiVo in college business courses in a few years as a case study of what not to do with your business.