You Down with MSB? (Yeah You Know Me)

18 Comments

Business 2.0 covers blogging entrepreneurs in its latest cover story, calling the upstarts “Real businesses, with real revenue streams from real advertisers — not overhyped next big things with pick-a-number valuations based on selling out someday to some overenthusiastic big-media sugar daddy.” Writers Paul Sloan and Paul Kaihla herald the entrance of “mainstream blogdom” (the MSB?). Obviously, since B2.0 is Om’s former employer and he continues to write a column for them, there are a lot of conflicts of interest here, so we’re throwing the rookie into the ring! Yay.

The story keeps its eye on the money, pegging Gawker’s revenue at $3 million this year, Boing Boing and paidContent at more than $1 million per year, with TechCrunch making $60,000 per month (making an additional $50,000 from sponsors at that party last Friday) and Fark “soon” making $600,000 to $800,000 per month. Meanwhile, paidContent, GigaOM, and the Huffington Post have raised venture capital.

Sugar Publishing (which is raising VC money now) gets 12 million page views per month but “doesn’t expect to earn a dime until the end of next year,” though after that it’s purportedly going to make “$15 million in revenue in 2008 and $40 million in 2009.” The big exit so far is Jason Calacanis’ $25 million. For a note of skepticism, B2.0 notes Organic’s estimate of total blog ad spending at just $40 million, with bloggers selling most of their ads at discount rates.

New publishing technologies are thrusting media empire-building into warp speed. We all know how dude-with-a-blog can quickly turn to dude-with-a-brand, but it’s not clear how dude-as-a-company will work. Don’t blink!

18 Comments

Liz Gannes

Jordan –

Not sure which ads you were talking about, but it might be worth noting that a lot of these sites are tying up “sponsorship” deals rather than CPMs. Sponsors, it would seem, are going for a general feel-good alignment with the blogs’ highly devoted readers. I think it’d be fair to say that amplifies your point…product placement is not easy to measure.

Liz

Liz Gannes

Dave —

Interesting to hear I ripped off Niall, either unconsiously or by coincidence. Maybe I would have gotten more points for originality if I had better punctuated the headline…should have been “You Down with MSB? Yeah You Know, Me” or something like that. But this whole thing is too self-referential anyways…

Liz

Jordan Mitchell

Big brands will always have sizable ad budgets to focus on “brand advertising” — which means they’re looking for (and measuring) reach and not so much conversion. But so much of the growth in online advertising has been based on conversion, where tirelessly monitored ad metrics demonstrate that the $ benefit exceeds the $ cost. I get that. This is the art of contextually targeted advertising and it works. I go to Google or Yahoo, I see ads that are relevant and it makes sense.

What I don’t get, and what reminds me of the late 90’s, is why many struggling companies are blowing ad budget on non-targeted CPM advertising. It’s like deja vu all over again (as Shaggy would say). I go to the sites mentioned in this article and I see their non-targeted (“Hail Mary?”) advertising, which is likely generating the usual 5-6 clicks for each 1000 impressions. (Then of course, it’s the matter of whether they can convert those clicks into customers/sales.) This won’t last — it can’t. Sooner or later they’ll realize that they spent $5K to generate $1K of profit.

The old adage is “I know half my marketing efforts are working; I just don’t know which half”. I believe the future of online (and offline) advertising is one-to-one and knowing exactly what is working. It’s my honest-to-God hope that these blog advertisers are seeing a positive ROI on their marketing dollars. If so, THAT is incredible. If not, then here we go again.

PJ

That was a positive article. It kept going and going. Positive. Om Malik and Michael Arrington are my heroes, really. Seems like lately I hit TechCrunch the most though, via Techmeme.com of course.

Om. Love the new layout. You’re a sight for sore eyes.

G

Its funny to see this web 2.0 guys boasting that they are making real money in the internet considering some of us oldtimers are making 7 digits working from a spare bedroom for years with zero payroll & minimum overhead.

Rulepark

I really do not understand the impact of such blog like fark.com. This site is badly designed.

Cruncher

Few posts here mentioned there is hype and the numbers are not correct.

May be. But bottom line is they are actually getting real revenues,real readers,real advertisers. And this is just the beginning.

Anytime people do things diferrently against conventional way, is good.

It is not that easy to enter into unknown territory when you have comfortable job and established yourself. That is what exactly Om did. Kudos for taking brave step and making it successful.Just keep up the good work.

James Ashton

It’s nice to know that having multiple degrees and engaging in a professional career will eventually level your salary with “professional bloggers”. Very encouraging for those currently in the MBA/CFA program.

Drew Curtis

Oh and that per-month revenue projection is basically Fark selling 100% of inventory at $8-$10 CPMs at its current traffic level. That’s where the estimate comes from. I’m not holding my breath

Drew Curtis

I wouldn’t tell the interviewer any exact numbers so they extrapolated based on the other numbers people had given. Paul found it hard to believe Fark was making less than the guy saying he was making $60k a month, so the estimate started from there. Heck of a nice guy though.

I think it’ll be quite awhile before we’re all rolling in piles of cash, but it’s nice to get the publicity

Rafat

James
We’ve been around for more than four year…techcrunch is a year old.
also, paidcontent.org is the one site…our mobile content-related site MocoNews.net is another one which covers mobile content, and is doing very well in terms of growth.
rafat

Jeremy Pepper

Congratulations on what must be the first Naughty By Nature/OPP reference on GigaOm!

Oh, and it is interesting to see the natural progression of media empires into social media. It will be interesting to see who stays independent, who gets funding beyond the initial group, and who ends up acquiring different properties.

jamescoops

surprising Paidcontent is doing better than tech-crunch – its a great blog network but i wasn’t aware it was selling that much advertising.

way to go Rafat

Aly

Agreed, that BusinessWeek article could have given more numbers for the other sites mentioned, but I think the writers did a decent job of outlining the figures for Digg, the feature subject.

I find it increasingly amazing that blogs are grabbing so much attention lately. Weren’t they the first “social media” platforms years ago? I mean, I remember making a blog in an Internet class as an assignment in college years ago. Now all of a sudden their fame has come back with a vengence, above other venues of social media.

Don’t get me wrong, I’m a huge fan of blogs, but it seems like it’s their second coming out party.

Ashish

TC makes $60k a month? That’s almost $1 per reader per month…

Ted

Interesting article, but like the much-mocked Business Week Digg story, a lot of numbers hype with no real figures. Take this passage on Fark:

Curtis won’t disclose his current revenue but insists that he can soon log monthly ad sales of $600,000 to $800,000.

he “insists” he “can soon” “log monthly ad sales”. It implies that wold be $600k per month (not logged in the month and sold over 3,6,or 12 mos). Earlier it says he only employs two people, and is based in Kentucky so let’s say if each was making $60k per year, plus average hosting costs for 40m page views, he’s probably looking at $20k per month (on the high side!) in costs.

But then, the next sentence is:

Battelle expects Fark to become the first indie blog to earn a million dollars a year in profit.

With roughly $240k in expenses, this would mean about $1.2m in yearly ad revenue. Sounds a lot more realistic then $600k per month!

Unlike the BusinessWeek article, some realistic numbers are in there, you just have to tease them out a bit.

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