Maybe Blogging Is Just a Loss-Leader?

But I doubt most bloggers are trying to be the next Arrington. Most of them just want to support themselves blogging, right? This post reminds me of the phenomenon a few years back as the open source movement was taking off.

[From Maybe Blogging Is Just a Loss-Leader?]

I get asked a lot why I don’t run ads on my blog. The simple and honest answer is that I while I have a desirable audience with a tightly banded demographic, the fact remains that I don’t have enough of an audience to generate the level of display ad impressions that an ad network wants to serve. I could go out and sell house ads and sponsorships but then I’m in the business of blogging and the economic model starts to matter.

Let’s say I quit my day job and started going to all the conferences, focusing on the breaking news style of blogging, and throwing up some detailed and well researched analysis. I’m basically a hybrid journalist analyst, something that blogs actually are well suited for.

For the sake of easy math, let’s say that I can get up to 50k pageviews a day on average, and because of my audience I can generate a relatively conservative $8 CPM. That’s a paltry $12k a month in display ad revenue.

So I’m a year into this and I realize that blogs are actually ill-equipped to generate meaningful display ad revenue because the format does not lend itself to driving leveraged pageviews that way that traditional media sites do. What I mean by that is with a blog you get relatively few pageviews per site visitor because they are either coming in through a search engine to a specific page or hitting the front page and not clicking through because all the content is front and center.

Then there is that issue about RSS not being easily monetizable. I could use Feedburner to drop Adsense into my feed, but experience suggests that there is not a lot of cash to soak up with that route. With that in mind, RSS becomes leakage in my business model, something I have to deal with but don’t profit from.

At this point I have in inflection moment. I can degrade the readability of my site by putting full content behind a “click here to read more” link, in which case I am theoretically doubling my page inventory but because not everyone will click through I am really more likely to grow it incrementally by some factor less than 1, let’s say 1/3. I also decide to put out partial text RSS with the objective being to draw feed subscribers back to the main site, thereby increasing my pageview count.

I also decide to add a few writers but because I don’t have the traffic to support dedicated staff I decide that syndicated content is a better path to follow. I also expand my blog, adding additional sections and feature areas, in effect becoming more and more like a media site than simply a blog. After all that work I manage to triple my pageviews and because I have better analytics on my demographic data I am getting a few dollars more on a CPM basis, resulting in a nice revenue ramp.

So now I’m making real money on my top line and my wife compliments me on my decision to jump in with both feet, but as I put on my green visor and crunch the numbers what I learn is that because I’m paying for a SEO consultant on retainer, a graphic artist/coder, an ad sales person, syndicated content, my own benefits and expenses, a small increase in hosting costs, and most likely hiring some offshore research assistants, well now my bottom line is looking a lot less impressive. In fact, I may be supporting myself but not nearly as well as I could by doing something else…

I may still run some ads or sponsorships in the sidebar but before I do that I really need to refresh the design templates and probably focus in my content as well and quite honestly I’m not sure I want to be in a position where I can’t write about some of the things I care about. Adsense is an easy choice but it’s really just loose change for a site like this so that’s why I haven’t made the effort to run ads.

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2 thoughts on Maybe Blogging Is Just a Loss-Leader?

  1. Pingback WinExtra » From the Pipeline – 7.24.08
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