Blog Business Models: the Roll

The release by the Washington Post of a blog aggregating system call the Sponsored Blogroll, has sparked some debate over blog business models.

Firstly, though, what is the WaPo Blogroll? Steve Rubel  explains:

…the way this works is that the WaPo is building a network of bloggers who want to participate in the program. Like BlogAds, advertisers can browse the network and find blogs to advertise on within their verticals. The bloggers and the Post split the ad dollars. The Post has put out a call for blogs that focus on technology, business, health, automotive and travel topics. Nevertheless, they are interested in all submissions.

However, there’s more. Where it really gets interesting is that the bloggers who opt into the program don’t just earn dollars but also a rotating link to their site in a special Sponsored Blogroll box that sits right on the Washington Post home page.

Jeff Jarvis runs this approach through the BuzzMachine and comes out feeling positive:

It is a win all around: The advertisers want someone to help them get into this strange world of blogs. The media organization wants to expand its reach and targeting (the Post — like every single newspaper, magazine, and online media company I know — needs more traffic and is thus seeking growth in technology, business, health, automotive and travel), establish a new relationship with the bloggeres, and make money along the way. The bloggers want to get money and promotion. A virtuous circle if there ever was one. Bravo to the Post.

Michael Arrington is lukewarm. His hope is that the growth of more ad networks like the one behind the WaPo blogroll will catalyse the inevitable treding down of margins. At present Michael’s Crunchpire pays its agent, John Battelle’s FM Publishing a wopping 40% of total CPM revenue.

While Techcrunch seems to have a positive diversified business model, ie the outsourced sale of targeted CPM ads (pocketing 60%) and the direct sale of on site sponsorships (pocketing 100%) one has to ask the question:

Why not cut out the middleman on CPM ads — this is relatively easily done with open source ad server tools like phpAdsNew. If your revenues are sufficient (which means you have enough attention and traffic and don’t need a network to bolster your position) and you have your own growing network of blogs then surely the cost to benefit ratio means it will be worth it to set up your own ad management system sooner rather than later?

In fact, I could see a morphing model – one very successful blog…leads to a network of your own blogs…followed by your own ad management system…and then a second tier of external blogs utilising your ad mgt system for a revenue share — all linked into one central site which rotates external blogs as per the WaPro blogroll …cool as. Anyone game??!!!

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