Most Bloggers Don’t Deserve Ad Revenue: What About Startups?
Louis Gray writes a good post concerning blogger’s desire to make a profit from their blog, calling this basic desire “shocking.” He points out the hard truth: most bloggers don’t make any money because they add nothing unique to the blogosphere. If they get “pennies” for all their hard work, that’s exactly what they deserve.
Personally, I have no delusions that blogging will ever make enough money to replace my “day job.” But it does make this hobby self-sustaining and then some. The amount isn’t “life-changing,” but I will say two things: while it did take a year to get up to the $100 mark, the next year it took six months, the next three, and since I’ve been blogging for nearly three years now, you can do the math. If that sounds surprising, well, I don’t concentrate on technology and have a lot of movie and TV show reviews that are slightly more targeted and “ad friendly.”
I don’t see anything pointless about that. And I wouldn’t discourage anyone else from having a go at it, as I’ve found it worthwhile. In that sense, I fall more in Mathew Ingram’s side of things: this is “micropublishing.” I find it pretty cool to be able to earn some spare change to buy a few toys and give stuff away to readers of this blog.
But there is a more interesting subject here that deserves further thought. While Louis considers many bloggers misguided for feeling they deserve ad revenue (do I come across that way? I hope not) — the exact same thing could be said for many Web 2.0 startups have “advertising” as their sole business model.
Reread Louis’s post, but replace the word “blogs” with “startups” as the subject matter. I feel many late-stage, Web 2.0 startups provide nothing unique to an advertiser, and are likewise misguided and in need of a serious reality adjustment regarding their chances of building a sustainable business in a ridiculously crowded space.
Frankly, us bloggers are inconsequential in the larger scheme of things. Say a blogger wants to earn some supplemental income, investing perhaps $200 or less to get started (hosting, domain name registration). If they go the free route via WordPress or Blogger, even less. Perhaps they get discouraged and quit. What have they invested, gained, and lost? Not much of anything, since usually it’s one individual toying around with some web pages to see if anyone cares what they think.
Meanwhile, on the startup end, millions of VC dollars can be borrowed, lost, and hundreds of lives affected when a company goes under. The pressure to earn money is greater. The risk / reward is larger. The stress may have people beliving they deserve success. But I’d daresay the amount of “silly” over-optimism regarding ad revenue is just as present.
If anyone also deserves the wagging finger of shame for reliance on ad revenue, it’s many of the same Web 2.0 sites the tech blogosphere (of which Louis, Mathew, and myself are a part) covers, since the effects of their rise and failure are so much greater. I’d say us bloggers are rather beside a much larger point about the over-reliance of ad revenue as an Internet business model.
I’d love to read a post about that subject, instead this light scolding of the blogosphere.
Jason, great job with this response. You know I agree here (again the caveat of most applies). One of the amusing points of leaving a headline that says “most” is that many bloggers can say that they are the exception.
Thanks. I hope I haven’t come across to you as a blogger that thinks they
“deserve” ad revenue.
Meanwhile, you may have inspired this week’s bitchmeme.
Excellent points as usual, Jason.
You’re certainly not in this category, Jason, but this brings to mind the countless “pro” bloggers I see on the various forums, all vying for every scrap the can get and being totally focused on income. It’s those guys that really make me sick — the bloggers who’ve gotten into this purely as a means of making money and have little or nothing to contribute. These guys will spend hours & hours tweaking on their SEO efforts, yet their content is typically poor at best and they can’t even be bothered to attempt decent spelling or grammar. By & large, those type of money-grubbing bloggers are really a disgraceful lot.
…and I’m continually dismayed at the number of these “pro” bloggers who’re like 13–15 years old! And these little snots are whipping the pants off of me in every metric measured — page rank, Alexa score, etc. Of course, I have to wonder how many of the clicks they get ever convert into loyal readers or subscribers. I don’t get (comparably) a bunch of traffic on my site, but it’s all for the content and it’s largely repeat visitors.
Yep I’m semi-aware of the whole SEO-Google PageRank-Monetize-Link nutty
bloggers. Which raises another related point — there must surely be some
money in blogging otherwise all these people wouldn’t exist.
Hey Jase, I think this is an interesting topic. As a startup that relies on advertising revenue I’ll throw a few considerations into the mix:
1. Advertising is a reasonable business model for certain businesses. It certainly won’t work for all web 2.0 startups. Any startup that doesn’t first research their space and try to understand what it will take to make an ad-based revenue model work is doomed.
2. Regardless of the business model, I’m a big proponent of “testing” and “iterating” the business model early and often. Too many startups create a product, launch it and figure they’ll worry about the revenue later. Sure this works for the companies hit the grand slam (like Youtube). But there’s only one Youtube. It makes a lot more sense to also start working on and refining your revenue model when launch your beta. I’ve been amazed at how much we’ve learned at Fanpop from 2 years of advertising on our site. Our site’s advertising “evolution” has run parallel with the site’s product/feature-set evolution.
3. Figure out the inflow/outflow equation. If you make low revenues, you can still survive if your costs are low. It’s obvious but we’ve all seen a LOT of companies that have huge burn rates and are unable to get revenues high enough to sustain their overhead. You’ve got a tough choice to make here, go with the high burn rate and hope you don’t go supernova, or shoot for slower, sustainable growth (it won’t take you from 0–10,000 employees in a year, but it’s more realistic).
4. Understand the CPC, CPM, CPA models and determine the scale necessary to achieve sustainable revenue with the traffic you have (or project you’ll have). This is an important one. I see a lot of companies thinking they’ll be getting the $50+ cpms that premium sites like the Wall Street Journal can charge. Remember that if you’re going with AdSense you can probably expect a much lower effective CPM on your CPC ads (sub $1).
5. AdSense is not the end all be all. I think there are a lot of folks who think that AdSense is all they need. It might be for the “melisthemeoma” bloggers, but for the rest of us you’ll need to look to some of the higher tier branded/display ad network and even some of the rep firms to start garnering those higher cpms and big ad spends.
6. Invest in advertising. You can’t run an ad-dependent website without investing time, energy and money on advertising services and technology. If you’re large enough, hire a sales person. People within the company should work on refining different programs and pitches and should target advertisers within their space. If you can lock in a specific advertiser or agency and provide them with a great campaign you may be in store for repeat business. Direct ad deals = higher cpms and potential repeat spends.
So in the end, I’d say I agree with you. A reality check is definitely needed. A lot of hard work, research, and failures are needed before a site can hit on that formula that will generate some revenue profitability. It’s possible, but it’s not a given and all the pieces have to come together.
Bloggers — Are you making money?…
Ever heard of Louise Gray? Well he just told 40–50% of my readers they should focus on their day job and forget about the blogging
I had not even noticed his existence and until recently but today on Techmeme I saw his post “Most Bloggers Don.…..
Sounds good to me. Thanks for the input. I think a big thing that stands out
from your comment is “if your costs are low.” Definitely more difficult to
do once you take a ton of funding and the VCs expect big bucks in return -
which I know Fanpop has eschewed — unless something is different since last
we talked
In that situation — when the startup has borrowed millions and is relying on
ads — that’s the sort of stressful situation I had in mind.
As for the blogger’s end, most of us are just one person with ridiculously
low costs to keep the site running. So I nearly think it’s a no brainer to
put a few ads up. The barrier to profitabiliy is so very low.
I think the danger though with the funding approach is that with a lot of cash in the bank, the well-funded startup might be a little complacent on attending to the revenue model (while they ramp up traffic/usage and the product). And it’s never to early to start planning for what to do once those funds run out
I think for these companies the same rule holds true: test and refine that revenue model!
Bloggers — Are you making money?…
Ever heard of Louise Gray? Well he just told 40–50% of my readers they should focus on their day job and forget about the blogging
I had not even noticed his existence and until recently but today on Techmeme I saw his post “Most Bloggers Don.…..
In a way, one should think of a blog in financial terms as a nano-startup (pre-IPO). A very small number of people may be lucky and make it big right away, but I think being patient and doing it “the right way” increases the chances of succe$$ for the majority of bloggers.
Obviously with blogging the range of profits/losses is nowhere near as wild as with a start-up, thus the term “nano”
But as pointed out above in detail, the financial risk with frugal blogging can be minimized, while the potential has no theoretical limit, but it certainly has a reality-check limit!
[…] Most Bloggers Don’t Deserve Ad Revenue: What About Startups? :: webomatica — Jason suggests that rather than bloggers not deserving to earn ad revenues it is the majority of start-up that better fit the idea. […]
[…] SMB Big Picture wrote an interesting post today on Most Bloggers Donâ??t Deserve Ad Revenue: What About Startups?Here’s a quick excerpt Louis Gray writes a good post concerning blogger’s desire to make a profit from their blog, calling this basic desire “shocking.” He points out the hard truth: most bloggers don’t make any money because they add nothing unique to the blogosphere. If they get “pennies” for all their hard work, that’s exactly what they deserve. Personally, I have no delusions that blogging will ever make enough money to replace my “day job.” But it does make this hobby self-sustaining and then some. The amount i […]
[…] Most Bloggers Don’t Deserve Ad Revenue: What About Startups? :: webomatica — Jason suggests that rather than bloggers not deserving to earn ad revenues it is the majority of start-up that better fit the idea. […]