Advertising Age: What inspired Federated Media?
John Battelle: I've been the band manager for Boing Boing for a couple years now. I got the idea for Federated at the same time they approached me to make Boing Boing into a business. It was taking so much of their time and the cost of bandwidth alone was getting quite high. With Searchblog it's the same thing, I was putting a lot of effort into it and I was getting a significant and very influential audience. As publisher, when you see 50,000 or 60,000 or 70,000 visitors to your site on a monthly basis, you say "I've got a publication." For people who want to make a living or a partial living out of making great content, there wasn't an alternative to using massively scaled networks like AdSense, which are good but don't bring in high-CPM, site-specific deals.
The best advertising on blogs is going to be bought because companies like a site. The author and audience are in this really engaged conversation and the marketer has to join in a way that the author lets them. It struck me that there should be a platform where these matches should be made and that it shouldn't be the platform that wants to get it as big as it can. Every advertiser is going to have two or three blogs they want to be on because they or the agency reads them, but what if you wanted to do what media planners do and campaign across significant reach? In blogs, you'd have to negotiate deals with 50 different sites. With the friction of that system, I found that advertisers aren't going to do it. And there's a new media model emerging: Publishers don't have to own content, which is what everyone in traditional media does. In this model, we don't hire authors, authors hire us. As a publisher, we're providing a service and a partnership but we're not telling them what to write.
Advertising Age: How do you get paid?
Mr. Battelle: We get a split of ad revenue with the author. It's a better deal than almost every ad rep firm out there. The CPMs are higher and the split is better and the services are better. We're the proxy publisher for a subset of high-quality bloggers.
Advertising Age: Do you charge extra for those services?
Mr. Battelle: No. It's free to the author and part of what we do. I'm convinced there are two ways to approach a market like blogs. One is to get really big and have scale and just have a ton of inventory and make it up on volume. That's the AdSense approach. The other is to specialize in conversation, to be human beings. If you're really going to have the right advertising, on the right site, with the right tone for that audience, you need to understand the site -- it's just like when you're buying a magazine. We're already seeing marketers do interesting things. For instance, Microsoft is changing its creative to be specific to each site where it appears. You couldn't imagine Microsoft doing that even a year or two ago.
Advertising Age: How big do you want to get?
Mr. Battelle: Here we are at launch with 50 sites, not 5,000. A year from now we may be at 150, not 15,000. The key is filtering the sites that are the best and have the most robust conversations and are open to having marketing on their site. That doesn't mean we're not big. We're already 70 million or 75 million page views a month.
Advertising Age: Do you have a target, as far as scale goes?
Mr. Battelle: We don't have a number we're looking to hit. We feel there are probably five or 10 federations we should fill out over the next year or two and each of those should have a critical mass of 10 or 15 sites. So we'll probably have 150 or 200 sites if we stay on plan.
Advertising Age: So what happens if Boing Boing goes off the reservation and totally changes the content, such that advertisers could get frightened?
Mr. Battelle: We're not telling them how to execute their site. We have publishing and technical services that help them make their site better if they want to, but we work for them. Not the other way around. In the contract, it says that if an author starts acting in a way that is contrary to the general principles of what we're trying to do, we'll ask what's up. If the author says that's just what we're doing now, we'll just part ways. And that's OK. And it is OK because it's not like an editor's gone loopy and you have this entire infrastructure to replace. We lose a client and we'll just replace it. It's more of a record label or talent agency approach rather than a publishing company approach.