Friday, April 29, 2005

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Some changes are coming on Internet ads

The Economist has an interesting story on how the evolution of Internet advertising. Here's how it opens:

This year the combined advertising revenues of Google and Yahoo! will rival the combined prime-time ad revenues of America’s three big television networks, ABC, CBS and NBC, predicts Advertising Age. It will, says the trade magazine, represent a “watershed moment” in the evolution of the internet as an advertising medium. A 30-second prime-time TV ad was once considered the most effective—and the most expensive—form of advertising. But that was before the internet got going. And this week online advertising made another leap forward.

This latest innovation comes from Google, which has begun testing a new auction-based service for display advertising. Both Google and Yahoo! make most of their money from advertising. Auctioning keyword search-terms, which deliver sponsored links to advertisers’ websites, has proved to be particularly lucrative. And advertisers like paid-search because, unlike TV, they only pay for results: they are charged when someone clicks on one of their links.

Read the whole thing to see how Google is revamping its AdSense feature.

This segues nicely into a Mickey Kaus report on a potential change in how ads will be gathered on the blogosphere:

Roger L. Simon and Marc Danziger announced the formation of a new network of bloggers, including some big ones (e.g. Instapundit). They want Lexus ads! And they claim to have the unique eyeballs and high-end demographics necessary to get them. ... This is a potentially big deal....

L.A. Voice provides more details:

Simon and Danziger have formed "Pajamas Media," an effort to lay some serious pipe to help the blogging community sell ads en masse to big clients like GM and Amex and ultimately, help the partnership earn enough money to fund a global network of paid newsbloggers - a sort of new-age Associated Press.

Danziger (a new-media architect from way back) is working on step one - the development of mechanisms for distributing big-ticket ads to hundreds of participating blogs so that advertisers can reach the blogs' cumulative millions of daily unique users. Meanwhile, Simon dreams of tying together bloggers in every corner of the globe whose local savvy and grasp of the language and politics of their regions will basically beat the holy hell out of any foreign correspondents.

Both say they want to beat the [L.A.] Times.

Danziger's plan is a good one, provided he can get a solid sales force and reliable tech: it was only a matter of time before someone began to actually build what the blogosphere's been projecting and dreaming of for several years now - a fat pipe for ad money. The ad market is poised to tap into the smart, passionate and micro-targetable audiences of blogs. If Pajamas Media builds the engine correctly (I talked with Danziger for a bit and it certainly sounds like it will) then there's some good cash to be made.

Simon's plan is a lot more amorphous - a worldwide network of pundit/reporters whose local smarts and compelling voices beat the news organizations in the ground war and everyone in the battle for mindshare - but it needs a hell of a lot more development. There's a vast gap between responsible reporting and passionate blogging, particularly when the blogosphere, by and large, does most of its reporting by standing on the work already done by the world's, um, reporters.

As someone with more than a passing interest in this proposal, I'm curious to hear from readers whether they think either or both aspects of the Pajamas Media proposal will fly.

FULL DISLOSURE: I've been contacted about participating in the proposed syndicate.

UPDATE: Roger L. Simon has a post providing some more explanation -- and an open invitation for other bloggers to join in.

Meanwhile, Marc Danziger provides a lot more explanation in this post -- including his take on the future of newspapers and blogs:

I think that newspapers - as a model for the kind of legacy information middleman that makes up the media industry - are badly wounded, but I doubt that they will die.

But they will go from the 93% of the market for written news - and more important for a certain class of advertising - that they once owned to, say 50 - 60%. And more, they will lose the ability to set prices for advertising in the market, which will make the business model for the newspaper much, much tougher....

Blogs will become another media channel. It will happen in part as top bloggers become media figures themselves (and vice versa); as media companies create or sponsor blogs; as blogs intertwine with 'tentpole' media properties that are somehow related to them ( and food blogs; and sex blogs; and so on).

But the heart of the blogosphere will be the emergent, fast-changing, unstructured (formally, anyway) world of blogs as we know them.

And the questions will be how to build useful interfaces between that world and the highly structured world of advertisers, media consumers, and blog novices while respecting the dynamic nature of the blogs themselves.

Both links via Pieter Dorsman. And go click on Tim Oren's thoughts as well.

ANOTHER UPDATE: Looks like Joshua Micah Marshall is also adding some bells and (foreign policy) whistles to Talking Points Memo.

posted by Dan on 04.29.05 at 10:25 AM


The internet was once a library. You only needed to enter to obtain knowledge. To remove material for study outside the sounds of silence you needed a card. Privately or publicly a tax was levied by the community to maintain it(the physical structure and its collection).

Eloit Spitzer is right. Elaborate malware takes the pleasure away. We should not have the internet ruined by commerce. Let's just pay a tax to an infrastructure maintainance contractor(we need someone to take down all those sites of losing political candidates) and go home to read, listen and learn. Continue our tax to our provider for e-mail. The idea that you need to be bundle together bloggers, etal so they can stay active is ridiculous. They should be ignored just like all the people whom think my postings mean I am a troll.

posted by: Robert M on 04.29.05 at 10:25 AM [permalink]

They'll get the ad dollars if they can get the bloggers -- the page views are there.

As for "new" journalism -- Pajama Media needs a new model. Something that turns the old model (i.e. one correspondent delivers news from a particular field) on its head. To date, bloggers have been successful at revolutionizing journalism, insofar as they've extended the conversation beyond the traditional MSM, though not to MSM's exclusion.

It'll be interesting to see what happens.

posted by: Rus on 04.29.05 at 10:25 AM [permalink]

I'm saying this is the death of blogging. With advertising dollars will come pressure to increase hits, pandering to the masses, and avoidance of any remark that might offend moneyed interests.

It's only a matter of time before blogs reach the same level of blandness and corruption that characterize the print media and broadcast news.

posted by: Joel on 04.29.05 at 10:25 AM [permalink]

I would think this idea would force online news services to begin charging for articles, which would start draining the wallets of these bloggers.

Media would then crack down on unauthorized excerpting of articles. It would be the end of blogs as we know them.

posted by: Scott on 04.29.05 at 10:25 AM [permalink]

I highly recommend the extraordinarily insightful comments from "Lonewacko" at the lavoice link.

I saw this site that appeared to be trying to be an online news site, i.e., it didn't appear to be outright spammy. "National" something or other. Yet, I counted at least nine ads. It was pretty funny. There might have even been one or two ads I didn't see. At a not-exactly-spam celebrity blog they've got it cranked out with the maximum of three adsense blocks total: one on the left and two running down the right.

posted by: The Lonewacko Blog on 04.29.05 at 10:25 AM [permalink]

Agree with joel to the point that the injection of advertising dollars is a double-edged sword - it can denigrate for the reasons he states, but it can cut positive too by allowing some of the bright, talented and creative bloggers out there now the income to dedicate themselves to blogging. As long as the web remains a free media for distribution of content, some of the negative cuts will be mitigated by the ease to which new talent can draw attention and prominance. For me the time of alarms is when physical bandwidth reaches the point that visual media like video begins to dominate the written word on the web. This is the beauty of the web to me, a multi-faceted source of intelligent and creative discourse. The written word contains little entertainment value other than the imagination and interest the reader brings. No pretty face or pyrotechnics to hide a weak arguement or a badly turned phrase.

posted by: Jon on 04.29.05 at 10:25 AM [permalink]

it can cut positive too by allowing some of the bright, talented and creative bloggers out there now the income to dedicate themselves to blogging.

At the point where you get enough raw traffic and/or a lesser quantity of targeted traffic to become a full-time blogger, you're in the mainstream. If you weren't generally acceptably mainstream in your views, you wouldn't have so much traffic. Note: I'm not calling Insty a pabulum pusher.

posted by: The Lonewacko Blog on 04.29.05 at 10:25 AM [permalink]

I expect to see a pretty substantial law of unintended consequences impact. Money will enter the equation big time. This will mean control of content - No dissing the advertisers. Lawyers will not be far behind. And where lawyers go, legislators follow quickly. Unrestricted comments would be the first casualty.

posted by: Richard Heddleson on 04.29.05 at 10:25 AM [permalink]

By the time blogs become a major news source to the general population and actually draw significant numbers of people away from newspapers (rather than serve as an additional source), newspapers should have worked out ways to stay alive and healthy, if not bask in the glory and possibilities of the internet.
My prediction is that newspapers will increasingly drop the "paper" part for two major reasons: first, it costs the publishing company a lot to get the raw materials, print, and deliver the paper; and, second, customers pay more for the "paper" part of the newspaper due to the reasons stated above. Because customers prefer to pay less, and will more readily subscribe to something that is cheaper, most major newspapers should have a majority or strong minority of their customers receiving their news through the internet.

This will actually have an interesting effect on US culture. I don't want to speculate much, but I believe the possibility of finding 100 different sources and perspectives on the same basic story within a second will change the way America thinks about the news. Additionally, internet news will vary from TV and radio in an acute way: it is 'impulse-driven', as I will call it. To read a specific story on the internet, you have to search for it, while television will present a story regardless of your wishes, and you will have to do work to get away from that story. This means that less attention will be given to sensational events like Scott Peterson or Michael Jackson, and more will be given to things which are important to the news consumer. Don't apply what I say to any great extent, because much of the news will still exist for entertainment, rather than informative, purposes. I just hope that I am right, because I am so sick of Jackson, Peterson, and all the other characters that are thrown in front of the American public.

If newspapers are smart, which they are, they will find ways to make considerable profits on the internet. They have numerous advantages over bloggers; mainly money, sources that were involved in the event or are authorities on the subject, organization, money, groupthink (it can be a good thing, too!), money, credibility, and more money. Major news networks have the capital to develop the infrastructure that blogs lack – things like a user-friendly news search engine, software that may automatically update or fact-check (that would either be a blessing or a disaster, depending on if it's made by Google or Microsoft), and host large files. Blogs are not, and may never be, self-sufficient. There is far too much piggy-backing on the existing news media and companies like Google for blogs to even think about being self-sufficient. The major news networks are the backbone of news and political blogs, whether bloggers want to admit it or not, so we can't exist without them. The money that the news industry will pour into the internet will help bloggers. At the very least, we will be able to find better news stories; at the best, we will fuse with the rest of the media and become indispensable, but that would take longer. Mind you, both might happen.

By moving to the internet, news sources will inevitably gain a few traits of blogs. This may mean that the New York Times copies one of my posts into their editorial section (not like they ever would, but that's because of differences of opinion). Why not? I can't think of a blog that hasn't violated copyrights of a dozen or more professional news sources. This seems like the most likely fusion of the blogosphere and major media networks, and it is a natural one. What better way to silence claims of media bias and irresponsibility than to adopt the complainer and their arguments? What better way to publish an opinion worthy of publishing but which the editorial staff cannot produce?

Changes to internet advertising and MSM practices will not end blogs, nor will it limit them. As long as there is a way for blogs to be read, there will be bloggers clamoring for readers. The MSM will pull more news-nuts onto the internet, thereby expanding the audience open to blogs. As a natural result, the blogosphere will benefit.

In terms of new advertising, I don't see much of a sword, no matter how many edges it has. Content-based advertising means that advertisements for a company will not be placed on a blog that attacks that company (software might require some fine-tuning, of course). Also, a blogger may be able to ban some advertisers from their blog, or select the subjects and content (text, pictures, or movies) of the advertisements that would go on the blog. I see little reason not to have this, as there will be hundreds of thousands or millions of different internet ads to choose from, and the blogger would only limit the amount they make on advertisements (if there is a noticeable difference at all). If bloggers only get paid when a visitor buys something from the advertiser, I see no logical reason that a blogger could be sued for what they say about the advertiser. Indeed, some restrictions may be placed on comments, but that would probably only apply to those who rabidly attack the advertiser – those people would be trolls anyway.

posted by: Chris Edwards on 04.29.05 at 10:25 AM [permalink]

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