Blog Ad Networks Just Can't Compete With Big Portals

Marketers Consolidate Ad Buys to Keep Track of Their Spending

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Many bloggers face a critical choice: Write for love or for money?

However, in the past few years, a crop of advertising networks, including BlogHer, Federated Media, FeedBurner, B5 Media and BlogAds, have helped a handful of the more active publishers find a magical nexus in between. These firms roll up high-quality blogs into verticals, which they sell to Madison
Steve Rubel
Photo: JC Bourcart
Steve Rubel is a marketing strategist and blogger. He is senior VP in Edelman's Me2Revolution practice.
Avenue.

Some of these companies, all of which are still small, have achieved a certain level of success as advertisers dabble in buying space on blogs. Federated Media, for example, had revenue of $4.6 million in 2006, according to a report on TechCrunch. Internal projections see this figure climbing to $30 million this year and predict the company will turn profitable.

But the dynamic online-advertising landscape is shifting once again and will force all of these companies to adapt their business models to meet the needs of brand marketers and media buyers. The reason is the democratization of content and the expanding media universe. The sheer abundance of choices makes it harder to track and manage ad buys.

As a result, advertisers are increasingly consolidating their online spending with the big portals and their networks of affiliate publishers. As Ad Age chronicled on April 8, most online ad revenue now flows to -- and through -- Google, Yahoo, AOL and Microsoft. Further, Google's share of the pie is set to jump should its purchase of DoubleClick go through.

This leaves the nascent blog ad networks in a tight spot. If they continue on their present path, they are going to continue to compete with the portals. Google, Yahoo and Microsoft all have platforms, such as AdSense, that stream ads to any publisher, not just a handful of influencers.

The likely outcome is that the blog networks will align with one or more of the big portals and turn themselves into value-added resellers. The portal sites are becoming the "operating system" brands use to place, manage and track their entire online advertising campaigns. Trying to fight them at "the bottom" of the food chain is a losing battle. Partnering and layering on the right mix of services is a viable alternative.
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