Blog Profitability in the Age of Market Saturation

Mar 23

AndrewBusiness, Life in Digital , , 1 Comment

Every fine, computer-savvy individual has a blog these days. Many of them exist (however overtly or not) to make income, to host ads, or to sell a product. For the record, I myself am hocking a book called What Do You Say to the DJ? but I don’t make any money from ad service on this site particularly.

When smartremarx.com was first published as a blog, the ad service was intended as much for an experiment to see if I could make money as to give the site a “professional” vibe. At the time, ads distinguished the site from a livejournal environment which for years was the blog standard. The numbers in the beginning (both subscribership and impressions) weren’t large enough to generate any useful income; we are talking pennies a day. Though both subscribership and impressions have increased, the income has never materialized, largely because I refuse to follow the gold standard for blog success.

The blogs with the most success have found a profitable niche, one central theme that dominates every post. As the market has become saturated with blogs, a few have managed to rise above as leaders even within an oversaturated market place, by tenacity, volume or ingenuity.

Now imagine writing about every possible topic depending on the whim of the day and the way the wind blows, and you have yourself a corner store of blogs. That is the paradigm that smartremarx has followed since the first day. As a model for profitability, I don’t recommend it. As the blogosphere has become a crowded place, there is nothing that distinguishes my writing from anybody else’s except…me. So no longer am I looking to advertise a niche expertise, but I’m essentially selling myself as the main attraction. In fact, at some point, it could easily become a sort of Seinfeld model, about nothing at all whatsoever.

To make profitability even less likely, just about every website out there, whether it’s a fan page, a news service or entertainment site is running ads across its flanks. The saturation of ads has made readers virtually immune to them. No amount of placement or design is going to make earning ad revenue any easier in the future.

I have thought trying to follow the model that generates income. I know from experience, that I get the most hits when I write about Dunkin Donuts. Believe it or not, that single topic has probably made 40% of the revenue I have generated from this site since its inception, even though the number of posts on Dunkin Donuts has been about 4% of the total. It illuminates to me that model can work. The secret isn’t that much of a secret. It starts with writing about what people want to read about; and if you do it well, you create search hits and increase traffic to your site. Increase the frequency of your content without decreasing the quality, and all of the sudden, you have a model for profitability. (Of course, the dirty secret of any blog is that most of the information is stolen and tweaked from somewhere else on the web, but if that is the only way you can generate content, that’s between you and your readers).

There are many ways to refine the model from that point, but the essence of how to make it work requires a niche focus, reliable content and readership loyalty. Of course, if you really want to be an income generating site, you also need scalability, search engine website site optimization and other tools.

Ironically, I am afraid that if I stick to the model too closely, it will degrade the product itself. On this website at least. After all, if I can’t stick to a topic from one week to the next, forcing myself to do so may eventually reflect negatively in my writing. That leaves me, for better or for worse, writing on whatever hits my fancy on any particular day. It won’t make me money; I think I’ve known that for a long time. In the absence of a profitable strategy, I would need a phenomenal boost in traffic to see revenue gains. A long term goal, maybe.

But hey, in the meantime, there is always that book to promote.

Google Takes Over the Free World

Aug 23

AndrewBusiness, Life in Digital , , , Comments Off

You may not have seen ads that Google is running on your YouTube screen, but chances are, you will soon. Google Inc., which recently acquired YouTube, started testing overlay advertisements this week. The ads will appear after a 15 second interval across the bottom fifth of the video screen as you watch the clip. The ad space, which is partially transparent so it does not completely obstruct the view of the video showing underneath it, disappears after being displayed for 10 seconds.

Reaction from YouTube users is mixed. YouTube has been providing a service that users tend to think of as free, but it is not, and never has been, free of advertising. This is simply more blatant because it sits on the screen along with the video you are watching.

Since acquiring YouTube, Google has sought an alternative to the standard ad format for web videos, that is advertising at the beginning or advertising at the end of a clip. The company selected this ad format as the least intrusive to the viewer. In-video ads tested better than pre-rolls -- commercials tacked on to the beginning of the clip -- according to Google. When a viewer clicks on an ad, the clip itself pauses until the viewer returns to it.

The new ad format will seem familiar at least. It mimics what we see on television, secondary events which cover the bottom fifth of the television screen promoting other shows during the one you are watching. That will likely make the introduction of the new ad format a lot easier to accept for most users. And on second viewing of the same clip, the ad won’t appear again.

YouTube is taking care not to unnecessarily alienate its 130 million subscribers, at least not right away. The ads can currently only be viewed on a limited number of content-appropriate clips, and currently the advertisements only represent a select handful of elite advertisers.

The company has to walk a fine line with them as well. Because so much of YouTube’s content is user generated, even clips that are free of copyright violations could still be questionable content, inappropriate for or unacceptable to certain advertisers to suddenly find their brand names associated with it. The company will have to find a way to guarantee to advertisers that ads will only run on completely content-appropriate videos.

During the test launch, YouTube identified a select group of content owners who were willing to host the ads on their videos. Google announced that it will share ad revenue with these partners. Google will charge advertisers for every 1,000 times the ad appears, and has tantalizingly offered a cut of that revenue to content owners who want to cash in. Though to this point, there’s no guarantee that the offer to host advertising will be extended to just anyone.

In the short term, Google has to gauge reaction from YouTube’s hardcore fans, but more importantly, the company has to determined whether the model can be profitable. Preliminary results, according to Google, suggest that the overlays are in fact generating a higher click-thru percentage than traditional advertising. But how much of that is the novelty of the format is unknown. And how quickly will YouTube users become blind to that form of advertising if it starts showing up in every single video?

No matter how the YouTube fandom reacts, the new ads are hardly the end of the world. If anything, users need to be prepared for a much wider launch of the ad format coming soon. So far, Google has said it will stay away from ads on the iPhone or AppleTV, and the YouTube ads currently only appear to users in the United States. But Google has to justify its $1.65 billion investment in YouTube, and has made it clear that some form of advertising on its videos would be the inevitable result. If the last five years have proven anything, where there is a market, Google ads are sure to follow.