Feedburner and Feedster Eye New Revenue Stream

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NEW YORK ( -- In a development that demonstrates how RSS feeds are evolving into a mainstream online media delivery service, two of the major RSS feed companies have launched ad networks.
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Millions of subscribers
The networks have the potential to sell text ads into RSS feeds delivered daily to millions of Web browsers.

The two, Chicago-based Feedburner, an RSS search and syndication company, and Feedster, a feed-search outfit in San Francisco, say RSS has become so popular with consumers that ads can now be targeted to tightly segmented groups.

While other companies from Pheedo and Google to The Washington Post have created RSS ad insertion programs, Feedburner and Feedster are believed to be the largest stand-alone ad networks exclusively focused on the medium.

Targeted and measurable
"It's very targeted and it's very measurable -- but what it doesn't have is scale," said Jeff Marshall, VP-managing director, Starcom IP. But scale -- a mass audience that request and reads RSS feeds -- is what Feedster and FeedBurner have.

RSS was originally created by Netscape as a "Rich Site Summary" technology but is now best known as "Really Simple Syndication" for online readers. It is an increasingly popular way to automatically gather information from the Internet and deliver it to a computer’s browser. In some ways, it’s like a search engine, enabling an individual to define the kind of information he or she wants to receive as it is published across the Internet each day. By using RSS feeds, an consumer can, in effect, assemble their own daily news or entertainment publication that will automatically include each day's latest online material about a particular subject.

Text content, text ads
RSS is most frequently a stream of text information -- headline links, short synopses and excerpts from blogs -- to which other kinds of files can also be attached. RSS feeds function something like a private wire service, bringing subscribers daily updates about a particular topic. Similarly, the ads being sold by the new networks are text messages and links, much like those used on search engines.

In addition to Feedburner and Feedster, other companies offering daily aggregation services are Yahoo, MSN and AOL. For instance, anyone with a My Yahoo page can use RSS to turn that page into an online magazine about a specific topic.

RSS has only begun to attract consumers’ attention in the last year or so, industry insiders say. According to research recently released by Yahoo, about 12% of Internet users are aware of RSS and 4% have knowingly used it, but 27% use RSS through a personalized start page through a service such as My Yahoo or My MSN without being aware of it. But they are an audience worth reaching -- they are more affluent and better educated than Internet users in general, and about half are between 18 and 34, according to the research. And, on average, they subscribe to more than six feeds.

Major media companies
RSS services have become standard on major media sites, such as the Washington Post, The New York Times and “Major news services are afraid of people not coming to their Web site,” said Chris Redlitz, president, Feedster, which launched its network in April as a test, and is now rolling it out to 20 different interest categories.

Advertisers such as Sun and Microsoft target messages to reach consumers who subscribe to a certain category of information. The categories include technology and computers, arts and entertainment, automotive, careers and education, games, business, dating, news and shopping.

The ad deal is a cost-per-click arrangement, ranging from 90 cents to $1.50 per click. “If something becomes a very viable and targeted category, we may see pricing increase,” Mr. Redlitz said. Feedster offers a revenue-sharing agreement in which the “feed owner” (that is, the publisher or the Web site accepting the ad) takes 70% and Feedster pockets the remaining 30%.

FeedBurner's channels
FeedBurner, which reaches more than 1 million subscribers, has rolled out nine interest channels, in categories including technology, communications and wireless, consumer products, financial services, retail, automotive and media and entertainment. FeedBurner serves about 90,000 publishers, said Brent Hill, VP of business development, but only about 200 publishers, and 1,000 feeds will be part of the network.

Publishers include online properties of SmartMoney, IDG publication PC World, and blogs produced by Gawker Media and Jeff Jarvis’ BuzzMachine.

FeedBurner’s rates are on a cost-per-thousand-consumers basis, ranging from $4 CPM to $7 CPM. The most expensive tend to be those in the computing, technology and consumer electronics areas.

Standards for frequency have not yet been worked out in this emerging technology. “Ads rotate in a feed --multiple advertisers can advertise in rotation,” Mr. Hill said. Ads can support branding campaigns as well as direct marketing. Response rates are about 0.5%, he said.

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