We have been posting a recent theme here about monetizing blogs and how to make money with blogs and blogging.  We have ourselves jumped into marketing and advertising on this blog with ads. For the average blogger off the street, it is difficult to understand the math associated with the various models of payments, be it “pay per click” or “cost per page views” or the many other models available.
Tom Hespos takes a look today at the math behind the direct response model of advertising and earnings and he had me hooked with his opening line:
“Take it from a media buyer. The blogosphere will not be able to sustain itself on the direct response “buy my crap” model that large sites use to cover their costs. Let’s do the math, shall we?”
Being a professional blogger and a person that derives income from my blogs I was immediately interested in why Tom felt my business model was headed for the drawing board. As he runs through the numbers, I find myself nodding in agreement with the formula and his reasoning. Then he hits me with the reality of my situation:
“AdSense and other pay-per-click programs that cater to direct response advertisers tend to pay for beer money to all but the biggest bloggers.”
Actually I don’t drink that much beer, and although I am not what he considers a big blogger, I think I get the gist of his statement. Unless you are one of the A-list bloggers, you are merely wasting your time if you want to have any return on your blogging investment. The investment of time, effort, and perhaps a little money. What Tom does offer is a solution:
“If you do the math, it becomes obvious that in order to support itself, the blogosphere needs to sell itself not on response-generating ability, but on something else.”
“To me, that “something else” is audience engagement. And not the audience engagement the advertising community has been struggling to define.”
Thanks for the wake up call and your shot at a solution Tom.Â
When I speak to client’s, they always want to learn about “Return On Investment” or ROI. They want to know how many eyeballs they get and how much it will cost to get their campaign noticed using the blogosphere. They don’t seem to understand the conversation that takes place in a blog model. Hespos is discussing exactly that model. The PPC model will soon run its effectiveness and with everyone on the planet with a blog, real estate will be easy to acquire.Â
What companies need to focus on in their campaigns are the “egagement” of their potential customer’s attention. Once you have the attention of the customer, the ROI takes care of itself. If everyone in the room is engaged in a discussion about your product, chances are you will have an easy sell and hence your return. Now as a company how do I get them to talk about my product? My obvious answer is to bring the conversation to them and allow them to engage and discuss your product or service.
I agree with Tom that their will need to be some changes in the way companies are using online marketing in their advertising campaigns. The person that comes up with the best and most inspring model that can show some ROI will be the person out front. For now, blogging is nothing but math to the companies writing those online marketing checks. They want the hard numbers and a bottom line. Perhaps, as Tom suggests, we can influence the way they do business.
I’m not quite ready to give up my beer money just yet Tom, but you are on to something.
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Jim:
Thanks for commenting on this post.
I witness a lot of the back-and-forth between agency media buyers and bloggers, blog networks and such. Many agency buyers are valuing the blogosphere in much the same way as they value their ad network buys. Meanwhile, there’s a lot more value in starting and maintaining a conversation on a blog than there is in throwing up more “buy now” ads on tier four websites that let you look up the lyrics to “Octopus’ Garden.” The thing is getting advertisers and agency buyers to see that value.
Cost Per Click and Cost Per Acquisition ads might help defray the cost of a hosting bill or pay for a six-pack every once in a while, but they’re not going to make anyone rich. (That is, unless one has traffic on par with an entire ad network or a big content site). IMHO, even the A-listers are getting ripped off, because advertisers believe only in the response value (and, to a lesser extent, the branding value).
Bring engagement (by way of conversation) into the value equation and you win. Blogs, message boards, social networking sites, email discussion lists and other online communities do conversation very well.
What will it take to get agencies and advertisers to realize this? I’m betting it’s a few success stories (something I’m working on). If you’re interested, we’re building a compelling story for one of our clients who sells life insurance right now. Every day, the conversation that happens on his blog is directly responsible for generating loyalty, good will and incremental policies. And he’s prepared to talk about it in detail.
Thanks again for your comments and for linking to the piece.
Comment by Tom Hespos — August 24, 2006 @ 9:48 am
Jim
I completely agree with Tom’s sentiment that companies are going to look beyond direct sales from their blogs. But you mentioned:
“What companies need to focus on in their campaigns are the “egagementâ€? of their potential customer’s attention. Once you have the attention of the customer, the ROI takes care of itself.”
I disagree. Getting attention doesn’t guarantee getting ROI. ROI can still be hard to get because it may require continual attempts at gaining your customers’ attention. And then, how do you keep them fully engaged once you have it?
Companies have to really understand there customers’ needs and expectations in this new arena.
“If everyone in the room is engaged in a discussion about your product, chances are you will have an easy sell and hence your return.”
Let’s hope so, but it is still up to the company to provide and excellent customer experience. A blog could be detrimental if the company is not.
“Now as a company how do I get them to talk about my product? My obvious answer is to bring the conversation to them and allow them to engage and discuss your product or service.”
How do you go about ‘bringing the conversation to them’? The key word there being ‘bring’. By simply having that blog in the first place?
Food for though.
Comment by Jonathan Trenn — August 27, 2006 @ 1:21 pm
Jonathan,
You are correct,I did make some assuimptions to make my point. I assumed that the product or service was in demand and that the product and service was of the highest quality. Of course this has to be the case if you are going to capture the attention and keep it. Bringing bad quality to the customer is not going to have you in business very long.
Yes I believe that through the use of search engines and the optimal way blogs are included in search results, you will be bringing the conversation about your company to them.
Comment by Jim Turner — August 27, 2006 @ 1:40 pm