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Is the bubble back in online media?

Posted By Darren Rowse 3rd of November 2005 Pro Blogging News 0 Comments

It’s the wrong end of the day for me to be digesting much of this article but Is the bubble back in online media? looks like an interesting read over at Online Journalism Review. It’s got comments from a variety of ‘experts’ on some of the recent sales of new media enterprises and how they might relate to independent blogs. Here’s a quick grab before I hit the sack – will digest more of it tomorrow but am interested in your thoughts:

‘Perhaps the safest deals in online media are for the sites that offer tools and technology, rather than pure journalism and content. That’s the interest from VeriSign in buying Weblogs.com, an old ping service started by Dave Winer that lists recently updated blog posts, along with Moreover, one of the original online news aggregators that has moved into monitoring blogs. While a blog itself might be difficult to value, it’s less difficult to understand the value for a trusted blog infrastructure.’

Thanks to John for the tip off.

About Darren Rowse
Darren Rowse is the founder and editor of ProBlogger Blog Tips and Digital Photography School. Learn more about him here and connect with him on Twitter, Facebook and LinkedIn.
  1. “Perhaps the safest deals in online media are for the sites that offer tools and technology, rather than pure journalism and content.”

    Hmm, I’m not so sure. During the dot com boom/bubble/bomb of the past companies/venture capitalists were pouring countries worth of money into startups that promised the earth and often didn’t deliver. Many of the companies were valued at several magnitudes above their real worth.

    Why weren’t they worth that much? (Partly) Because their customer base wasn’t there. We weren’t used to and OK with ads every time we turned around. In short the value was decided by the capitalists/spin doctors rather than a critical mass of the public getting involved.

    Sure at the current time some blogs/networks are selling for a motza, but I think they have more real value as measured by the very real volume of people/consumers that partake of the blog/network. It’s not a speculative case of trying to flog something that you think people will like when they see it. It’s a case of selling something that millions of people have already proven they like, return to and value.

    #late night ramble out

  2. There’s certainly a bull market out there, if not a bubble.

    Some of the most interesting content around comes in Tertiary blogs. When you read articles on the blogosphere in the mainstream media, like the WSJ or NYT, they often seem thin and off-topic compared to the analysis you’ll find by Tim O’Reilly, Scoble, Om Malik … lots more, all on blogs. The MSM has noticed this and is interested in getting a piece of the action. Hence AOL buying WIN etc. This consolidation will undoubtedly continue to happen. Hence the rush to start blog networks that will ultimately pay out on the sell-off.

  3. I liked the “cantankerous editor” quote. I’m a person who doesn’t play well with others, and couldn’t imagine selling my blog unless the offer was out of sight.

    Interestingly, I did have someone approach me about that back in the boom days. I said sure, I’d sell it – for several million. The person who had expressed interest laughed and said it might be worth $50K or so.

    Perhaps so – but *to me* it’s worth much. much more. It is, after all, the source of much of my consulting income, which makes it worth much more than a lousy $50K anyway. If I were to sell, I’d need enough to just roll up the carpets and fade into retirement – anything less would be pointless.

    Obviously we didn’t come to terms :-)

  4. I did not read the entire article but I still have the following to say: Advertising has existed since forever. It will go where ever there is a huge audience because there will always be products to sell.

    If your sites have a huge audience then advertisers will pay you to show their ads.

    We are mainly in the business of giving users what they want and we do it by journalism. They come to our sites in droves and other companies want to sell stuff to these people and thats how we make money.

    As long as people are connected to the internet and as long as we keep providing high quality info to people I don’t believe ad publishers are in trouble.

    The dot-com bomb happened because people were throwing money away at places that did not even have solid products. The people used the money to buy them selves boats and mansions instead of working on their promised products.

    Information is a valuble product. Intelligent bloggers have it and the people want it. Advertisers want people and we have the people on our sites. As long as thats the case I don’t see what the problem is.

  5. I have to confess I have wondered where all the money is coming from that is being paid out to AdSense publishers. You have to believe that the Adwords buyers are getting a good return on their spending, but sometimes it seems unlikely. Yesterday on one small site I had 4 clicks that paid me $16. It’s hard to imagine that any site paying $8-10 per click [assuming that Google is paying me 40 – 50 %] can be making a profit. So I do fear that there is a bubble in ad revenue.

    As for site value, of course it is all about traffic. The more businesses depend on their website’s for sales and/or leads the more that internet traffic is the gas that drives any industry. Therefore any site with significant targeted traffic will have value.

  6. It would be in the best interest of everyone to diversify their sources of income as soon as possible bubble or not.

  7. I agree with others saying it’s all about traffic. If you can get 50K-100K visitors per day, you’ll get someone interested in buying some piece of your business, whether it’s for advertising, or to own it all.

    Tools are great, if there are lots of persons using them, otherwise, they shy away in the corner of oblivion…

  8. Jon – there are more reasons for advertisers using Adwords than just trying to sell their goods.

    For some there is a need for branding, for others there is simply a need to be seen above everybody else because that is what they believe to be important and so for them the cost if achieving their goals is not a major concern as long as it is within their advertising budget.

    Still others are prepared to pay more and more simply because they want to destroy others in the Adwords programme that are competing for the same market.

    For them $8.00 a click is probably quite reasonable.

  9. Stuart,
    I agree there are other reasons to want to use AdWords, but they are secondary to profit.
    If you are paying $8 per click and your business is not turning that business into a return of greater than [$8 + costs of doing business] in the long run, no matter how you justify that spending, you’re going to go bust. If that happens en masse, then it’ll look just like the tech bubble train wreck in 2000.
    A company can’t spend that kind of money on one pair of eyeballs for very long if it doesn’t directly affect their bottom line in a positive manner.

  10. How much do companies pay for a 30 second ad during a prime time TV ad? The cost is in the millions. That is excluding the costs of creating and designing the ads. These are untargetted ads.

    Paying $8 per user for targetted ads all across the internet doesn’t seem so bad then.

  11. I made a mistake in the first sentence. It’s supposed to say:

    How much do companies pay for a 30 second ad during a prime time TV show?

  12. One thing you have to keep in mind, and it kind of adds to what khurrum was saying (about advertising having been around forever and wanting viewers), is that web advertising has changed the advertising world, for better or for worse.

    In the past, if you were wanting to spend advertising dollars you did so through television, print (magazines, newspapers), billboards/signs, and in-store branding (such as paying or offering some kind of rebate/deal to have a prominent display or demo for your product in a store – i.e. the end of an aisle in a supermarket).

    Not very interactive, and while you had a guess as to how many people might have potentially seen your product (through circulation numbers, nielsen ratings, traffic counts, etc., and you could meticulously track sales after your ad went live, you still weren’t quite sure just what kind of bang you were getting for your buck. If you were running multiple campaigns (say billboard, TV, newspaper), things were even more convoluted because short of having customers fill out surveys (which many people don’t like), you weren’t sure where your traffic was coming from.

    Now we are entering an age where print media isn’t as important as it used to be, where people maybe able to buy TV shows or record TV shows – either way skipping the ads, and they read their news online.

    At the same time, this age we are entering, where the media, and therefore the advertising is much more interactive, offers a lot more to advertisers. You run an online advertising campaign, you’re going to to start getting instant feedback – you’re going to know where your traffic is coming from. You’re not going to be guessing as to whether the billboard or the newspaper drove more people to your product – you’re going to know what site and what ads drove how many people to your product/site. You also have the luxury of going after your core audience – a billboard or newspaper ad – that may grab a lot of “general” traffic, but with the ability to target the core audiences you want much easier, it’ll pay off for you in the long run.

    That leads me to this – I think there is a bubble, and I think it’s just forming – I think the money is going to be in the advertising revenue, in the traffic that the “tools” generate, and not necessarily because of the tools themselves. You can’t make money off of a tool you give away for free, whether it’s a ping service, email, instant messaging, whatever, but you can make money if you display ads that surround those services. Google is proving this with gmail, some of the ping/blog tracking sites are doing this with advertising.

    When you think about it – when you have these tools, whether they are a ping service or an email setup, you can get a high rate of return versus the amount of time and resources you put into it, in comparison to people running sites that have the actual information on them. If you can build a good service or tool, it can run on autopilot for long stretches of time while you devote your time/energy to other projects (or adding to it).

  13. The bubble has long since burst. We are seeing new forms of media arrise that will take the place of the old big booming ad sales days. There is no way that a time could match 1999-2001. That was total chaos and everything was overinflated.
    We’re going to find people will always buy media, websites and properties. But the prices will never be as high as they were at one point.

  14. Dan’s point above is very good …”you can get a high rate of return [in the tools part of the business] versus the amount of time and resources you put into it, in comparison to people running sites that have the actual information on them.”

    Not all tool and technologies will make money, to be sure. But many content providers won’t make much as well . The concept applies in other technology areas as well: Microsoft started with an operating system (not too exciting), while the opportunity was perceived in computer hardware. In the blogging world, content is king, yes, but that is the sexier part of the business. Not all fun, as you know, but self expression is rewarding.

    That’s why blog search and many other areas will be rewarded- there’s all this great content out there- but how to find it? The early adopters don’t mind surfing a bit to get to the good stuff, but the later adopters want it easy to access. Just one example.

  15. […] There has been some bold predictions that the Blog Bubble is ready to burst. As expected, probloggers are quick to claim otherwise. It is a possibility, I know, but let’s write down a possible scenario. […]

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