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Washington Post Gets Into Blog Ad Game

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The Washington post made an unexpected move today. They launched a product called blogroll where they will give certain blogs rotating space on the Washington Post home page, and push advertisers to those blogs.

Steve Rubel has good information on what Blogroll is offering. The advertising system seems most like Blogads, where blogs are grouped by topic and advertisers can purchase space on the blogs in bulk. The revenue split appears to be 50/50.

Whenever a new advertising platform is launched I check out Jeff Jarvis’ blog because he’s tried them all and is a good judge of whether of not something will work. In this case, he’s very bullish, saying the combination of promotion and sales creates a “virtuous circle”.

I’m more lukewarm on this. I think more ad networks are good things, but mostly because they will compete with the other networks and drive margins inevitably down. I consider the 40% I pay FM Publishing, my agent, way too high. But they are still a young service and I’m sticking with them. Eventually, though, they will have to fall to more sustainable levels or risk losing their bigger properties. As blogs get larger, hiring an in-house sales person becomes much more reasonable that paying ad networks 40-50% of total revenue.

I also think there is more room for business model innovation where blogs and other websites take much less risk than they currently do. At this point, if ads don’t sell, the blogs are out of luck. Something I’ve suggested to FM is that they simply negotiate with me every three months for a set fee to “own” the advertising spots on TechCrunch. We’d get guaranteed revenue, and FM would take the capital risk if they don’t sell the ads. They also get the upside if they sell more than they anticipate. When risks are properly allocated in this way things become more efficient. FM would have less incentive to focus on getting new blogs into the network and more incentive to sell lots of ads to the sites already in the network (something Newsvine commented on and then updated). So far FM hasn’t responded to this request, but my guess is that they or someone will eventually adopt this model.

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