Blogonomics: Monetizing passion

By Felix Salmon
April 1, 2010
Gaston Legorburu of SapientNitro. It was a mildly depressing meeting: he pointed out that many very smart publishers are looking hard into these questions, and that none of them have had a lot of success.

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In my continuing attempt to come up with bright ideas for how bloggers can turn traffic, readers, and influence into money, I met this morning with interactive marketing executive Gaston Legorburu of SapientNitro. It was a mildly depressing meeting: he pointed out that many very smart publishers are looking hard into these questions, and that none of them have had a lot of success.

He did make two points I thought interesting. The first is that the key goal for publishers is to get “off the spreadsheet” — to provide some kind of offer to companies which they can’t try to reduce to a CPM equivalent. Sponsored posts, for instance, are not going to be particularly lucrative for bloggers, because they will still be looked at on a CPM basis, and there’s a limit to how much money any company is going to pay when it’s thinking in CPM terms.

Meanwhile, a lot of the ways in which companies try to work with bloggers involve PR-type activities: giving them scoops and media, that kind of thing. That can be good for building traffic and influence, but it doesn’t help turn that traffic and influence into money.

Gaston also noted that the most successful blogs, be they on politics or sports or cars or gadgets, tend to be about subjects that readers get passionate about. When a blog has a high reputation and passionate readers, that’s a potent combination. Interestingly, one of the most successful new finance blogs, Zero Hedge, is exactly the one which has tapped in to a seam of high-passion readers. A high degree of passion often turns into a lot of traffic, which can then be monetized through old-fashioned, low-yielding CPM-based ads. But so far it’s hard to find blogs which have monetized themselves in other ways.

For bloggers, as opposed to blogs, it’s easier: we can get good jobs, or book deals, or speaking gigs, and monetize our reputation that way. But if you’re trying to set up a blog-based for-profit business, so far the only business models which have really worked have been the ones based either on high traffic or on conferences. I hope to see that change. But it hasn’t really happened yet.

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Comments
3 comments so far

Sorry, it’s not that hard to find successful blogs and blog networks that make money using the CPM-based model. I don’t have inside info but these companies are probably break-even or profitable: Gawker, Sugar, Talking Point Media, Curbed, Paid Content, VentureBeat, TechCrunch, Mashable, Serious Eats, Yardbarker, TheEscapist, etc. etc. etc.

No, it’s not easy to make money from a blog. Yes, it’s hard work to build an audience marketers find attractive. And yes, it takes lots of professionalism over many years to get enough credibility to charge high CPM. But how the hell is that different than magazines? Would it “depressing” to know that people have been launching hundreds if not thousands of magazines for decades for 90 percent of them to fail?

Posted by kourosh | Report as abusive

kourrosh, I don’t have inside info either but how do you figure Talking Points Memo is break-even or profitable? TPM Media has a paid staff of 16 and maintains two offices(one in NYC, the other in DC). I’m guessing their costs total $100,000 to $150,000 per month.

TPM, their main site, receives about 12 million page views per month (source: blogads.com). right now TPM is running the following ads:

1) an above-the-fold Google banner ad that probably delivers an effective CPM of about 20-40 cents. (Ads on political blogs pay next to nothing. Trust me.)

2) two below-the-fold Google sidebar ads that probably deliver an effective CPM of 10-20 cents each.

3) two below-the-fold Google rectangle ads that probably delivers an effective CPM of 20-40 cents each.

So that’s an aggregate CPM of 80 cents to $1.60 for the entire page, implying revenue of about $960 to $1,920 per month.

If TPM Cafe, TPM DC, TPM Muckracker, and TPM Video are equally “successful” the entire TPM operation is pulling down revenue of $5,000 to $10,000 per month.

Granted, this may be an unusually bad day for ads, but even on the best day, I don’t see how TPM gets anywhere near profitability.

The other sites you mentioned probably do much better, either because they have higher traffic (see, e.g., Gawker) or because they have a niche audience that advertisers covet (see, e.g., Techcrunch, Serious Eats).

Posted by barneyrubble1 | Report as abusive

crap, my math was wrong. At a CPM of 80c ents to $1.60 per page, TPM has revenue of $9600 and $19200 per month. Multiply by five to get revenue for all five sites and it’s still unlikely that the company is profitable, although it’s a lot closer to break-even than I described above. Apologies.

Posted by barneyrubble1 | Report as abusive
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