Ensight – Jeremy Wright

I realized recently that before I started b5media I was, as Aaron would say, a “talker”. Not that I didn’t “do”, but I spent most of my creative energy blogging, critiquing others businesses and thinking up really, really smart things to say (note the sarcasm, please).

Once b5 got up and running, and especially after we raised our first round of funding, I put most of my creative energy into “doing”. This meant less time for “talking”. Which is sad, since reflecting on a blog is a great way to distill learning and remember what’ important.

So, in light of the industry difficulties we’ve seen in the last month, and particularly this week, I thought it’d be good to add some perspective (at least from my experience) to a few disparate conversations happening around the blogoworld.

These conversations are:

• The closure of Know More Media (see here, here, here and here)
• Much gnashing of teeth around whether blog networks will/can survive or not (see here, here, here and here)
• Reflections on and thoughts about blog-based ad networks and why they’re so darned hard (see here, here, here and my previous post)

I want to draw particular attention to David’s post at XFEP (a fantastic blog, btw), where he says:

I assumed because there would be a great deal of higher quality, focused blogs that we could get some high advertising rates, and when you bring our traffic together, we have a fair bit of page views, but still the advertisers aren’t running to our doors. I’ve shopped around the network a bit to some companies trying to gauge their response, and so far it has been a really lukewarm response.

[...]

Everyone also seems to be forgetting the time and effort that needs to go into selling these companies on buying advertising from you. This can take an immense amount of time depending on the company and it can also be difficult when the coalition is young and thus the brand everyone is flying is unknown. I always thought 9rules should have done something to help its membership make money through a network advertising service, but I realize now, in working with Grand Effect, that it just takes so much time.

David was one of the founders (I think, if not he’s certainly incredibly key over there) at Grand Effect which was a fab idea that ended up being more work than they’d have thought.

With all this stuff going on (failures, talk of failures and talk of how tricky this industry is), I thought I’d share some perspective from in the trenches, as it were. Given that this is being written off the cuff, expect it to be fairly long (yeah, yeah, I know, it’s long already… just you wait!).

First, though, I want to enumerate some reasons why running a blog network,  blog ad network or a blog “alliance” is harder than folk realize. But hopefully some of this post can help solve some of the stumbling blocks, as well as highlight the issues so folks go into these projects with eyes wide open. Put it this way, there’s a reason that out of the 8,000 networks out there, less than 50 have reached scale and less than 10 are truly successful (for the record, KMM would have been on that top 10 list).

10 Reasons Managing Bloggers (and Blog Ads) Is Harder Than Your Grandma’s Corns

1. Analytics and traffic measurement are hard: The truth is, most people don’t know how much traffic they’re using. The term “pageviews” is basically useless. You need to ask “do you mean AWStats? Urchin? SiteMeter? Google Analytics? comScore? Compete? Omniture? Webtrends?” … Packages like AWStats and Urchin actually hurt bloggers looking to sell ads, because they vastly overcount pageviews. On the other extreme, off-site third party measurement companies like comScore and Compete vastly undercount pageviews. And the JavaScript stats have varying levels of trustedness in the industry (from least to most: SiteMeter, Google Analytics, WebTrends, Omniture). People end up saying things like “real pageviews”. Here’s the truth, as far as pageviews that advertisers care about: the only pageviews that matter are real ones, viewed by real people, where an ad is shown. And don’t even get me started on how different companies count uniques
2. “Scale” is larger than it used to be: When b5media started out, the point at which ad networks got interested was 1MM pageviews, and the point at which they started wetting their collective knickers was around 5MM pageviews. These days, you can’t even get a call with a respected ad network at less than 5MM pageviews. Remember, these are the “real pageviews” talked about above.
3. There are “magic numbers” in the online advertising world: It’s sad, but it’s true. CPM levels don’t go up slowly as traffic goes up. There are clear watershed moments. 1MM pageviews. 5MM pageviews. 10MM pageviews. 2MM comScore uniques. 5MM comScore uniques. Until you hit these, and not just hit them but hit them in each vertical you cover, your traffic is basically only worth AdSense-level ads.
4. In order to move beyond AdSense-style ads, you need to move up the food chain: Most bloggers or groups who are forming blogs together assume that if you grow traffic, you’ll be able to quickly improve the quality of your ads. It’s really not that easy. You need to “move up the food chain”. The advertising food chain basically works like this: some media buyer somewhere (in an agency or in a company) decides he want to buy ads. He convinces his clients to spend something ridiculous like 20$ CPM on the ads. He then farms some of the ads out to the ad networks he works with at 4-5$ CPMs (TribalFusion, Burst, etc). These networks then cross-sell and backfill their inventory to the point where regular bloggers are lucky to get a 1$CPM (if they can even get into the network). Boutique shops take the “high value” inventory and do the same cross-selling game, so that bloggers are lucky to get a 2-3$ CPM these days (it used to be 5-6$ CPM). And folk with direct relationships with media buyers get the rest (at 7-10$ CPMs). But if you thougt getting into the ad networks was hard, it’s 5x harder to get into the boutique networks and 100x times harder to get those direct relationships going.
5. Real traction in advertising requires real resources: If you want to move up the food chain, you need “resources”. You need sales people (massive $, think 250K+ per good hire). Then you need a real adserver (3-5K/month plus 10K in setup). Plus you need real data (10-20K/year at the start, going up to 100K+/year later). And that’s before you do anything with your bloggers…
6. Recruiting good bloggers is hard: It can, quite literally, take 20-40 emails to recruit a good blogger. That’s not saying that they’re difficult, but it does mean it takes time. Saying hello, introducing them to the network, finding a concept that works, picking colours and names… This can account for 10+ hours per blog. Running a big network is hard. At least 5x harder than you think it’ll be.
7. Managing bloggers is hard: The truth is that in order for bloggers to want to join a network these days, there needs to be more than just a network bar along the top and some kind of unified feed. There needs to be cross-network promotions, contests, training… on top of regular things like figuring out stats, pay, reports, newsletters, community encouragement, trying to help individual bloggers maximize their potential, etc. These things typically require one or more people full time.
8. Getting through the noise is hard: When b5media launched, there were only a handful of other networks (Gawker and Weblogs, Inc.). So getting noticed was a bit easier. Not “easy”. Just easier. These days, with thousands of networks, it’s hard to get more than a handful of posts from friends (nevermind TechCrunch/CenterNetworks coverage!). Now, I’m not really a fan of spending marketing dollars until you’re fully at scale and spending the $ will result in real advertisers signing up (we only started doing this in the last 6 months, and while it’s been great, we couldn’t have supported this earlier). Don’t spend on press releases. Don’t spend on AdWords. Don’t even print spiffy business cards. Do it fast, do it cheap, do whatever you do better than anyone else.
9. Innovating is hard: The truth is that most everything that can be one in the blog / blog network / blog alliance world has been done. We see a dozen “new” network ideas every week from folk, and the only one that’s stood out recently is NewsGroper, which is a great little site/network/something that has fake blogs by all kinds of people. It’s really a great concept and it delivers on the promise. The Obama blog is particularly fun
10. It won’t get easier: We’re in an advertising slump. Best case, it’s 3 months long and it takes another 3 months for ads to pick up again. So 6 months of “ouch”. And if you aren’t profitable now, it’ll get harder.

Mid-point thoughts

Now, the first half of this post might have seemed negative. Doom. Gloom. Shrooms. But the truth is, blog networks, blog alliances and blog ad networks can work. And here are my 3 tips for each of those worlds, along with a bonus tip:

3 Simple Tips for Starting a Blog Network

1. Don’t rely on one type of revenue: It is sometimes very easy to become dependent on one “circle of life”: more google pagerank means more text links which means more revenue, etc. As soon as Google says “selling text links are evil”, though, things get… hard. And that sucks. Wendy’s post at Sparkplugging delves into this point more and better than I ever could.
2. Do something totally different: When we started we looked at what was out there and put our spin on it. Whether you agree with the spin or agree on the innovation or even like us, the changes we made (structure, promotion of authors, importance of community, ownership of content, platform) worked. But these days so much as been  done, that you need to really shake things up. PopSugar did it by focusing on women and then integrating social networking directly into the network so that for the longest time it wasn’t even seen as a “blog network”. Be geographically specific (Shiny Media has done a great job at this in the UK). Be audience specific, like Sugar. Come up with a unique concept. Use a unique template. Have a great pay structure. Hire the best writers possible. But don’t just be “this cool group of blogs”. That won’t work.
3. Be ready for naysayers: We get our fair share of folk yelling from the sidelines (especially “after the game”). Be ready for this. It’s a crowded space, and people will mock you, say you’re an idiot, say you don’t know a thing about business. Some will even call you a criminal, a fraud, say you’re running a sweat shop. Anything under the sun will be brought up by folk who’ve never done what you’re doing. Ignore the bad stuff. Take the good stuff (cause there will be some) and use it. Always remember that your measure of success has to be internal. What drives you personally and are you succeeding there, is your community happy, what was your vision and are you fulfilling it, are you making a difference, are you having fun… Figure out what’s most important and what it will take to succeed, setup metrics for those things and then measure against those. Let the mockers say what they will. Be Apple. Be the Mini Cooper. Or any of the other companies that went against the grain and got rewarded for it. Hell, be Microsoft or RIM or any of the other “dying” companies that are actually truly success and who went against the grain and got mocked for it. Also watch out for constructive comments. Sometimes they won’t feel constructive, but they’ll actually have value!

3 Simple Tips for Thoughts on Starting a Blog Alliance

Disclosure: I’ve never started one of these, unlike the other 2 areas I’m covering today, so take all of this with a pound of salt and purely as my own thoughts, not judgements on anyone else who’s doing this (successfully or otherwise).

Actually, screw it, I hate when folk do this to me, so I’ll keep this as simple thoughts, vs advice from someone who hasn’t done what I’m commenting on. Here are my thoughts, as a blogger, real simple: provide real value to the blogger, don’t take them for granted, help actually grow traffic, make my ife easier, help me make money. Or don’t. Pick 2. But rock at them. Do them better than anyone else.

3 Tips for Starting a Blog Ad Network

A blog ad network is a unique kind of beast. There’s increasing competition here. It used to just be Federated and Glam, but now you have Performancing, Fortune, Oprah, Disney, SixApart… With more to come. So obviously differentiation is key. Here are my thoughts on what is required for someone starting something like this:

1. Make it verticalized: If it isn’t, selling ads will be nearly impossible without a huge sales team. Cover just tech, or gadgets, or travel. And have real traffic (see waaayyyy above on “real” traffic).
2. Have a single system: Don’t try and cobble one of these together. Cobbled systems are dangerous at the best of times, but with an ad network, everyone has to trust every metric. Traffic, performance, revenue shares, mailing payments, invoice advertisers… You need a single system that handles all of this if you’re planning on doing this for more than a few sites.
3. Have a sales team that can sell the ads: It sucks, but as hard as it is to stand out as a content network to readers, it’s even harder to stand out to advertisers. It’s even more crowded. And your unique proposition has to be really clear. The real challenge here is that you have to be wide enough (ie: coverage) to accept crazy targetted campaigns (single mothers 18-24 living in new jersey with incomes of 50-70K and who like lindsay lohan) while also having enough depth (ie: traffic) to serve lots and lots of ads to those kinds of campaigns.

Final Tip(s) for Success for Everyone

Here’s my final tip for success: be simple. Have simple solutions. Have a simple pitch. Have a simple path to success. 9rules has been through many evolutions, and the reality is that each one succeeds because the concept becomes simpler and simpler. Sometimes it takes a few iterations to explain it, but the core change and new vision is very simple.

Bonus Closing Thought

The hard part of all of this is that, unless you’re doing it for the fun or love of it (which is cool), you’re going to have to make money. And going into a downturn, that gets really hard. Focus on your fundamentals. Spend where you will get return soon. Invest in the now. Keep your business simple and drop the extraneous stuff. If you can’t describe your core business in 140 characters, it’s too complex.

Running This UP the Flag

As I said, this was a long post.

My goal with this post wasn’t to criticize anyone. It was to share a bit of learning from all over the place. Hopefully some of it was valuable. At the end of the day, the reality is that running this stuff is way harder than anyone who hasn’t done it thinks. And anyone who says “why don’t they just…” or “why don’t we just…” or “I wish they’d just…” might consider that there are other complexities / issues / factors that aren’t immediately obvious to everybody. Which is a shame, because when you can find a formula that works, and keep in mind that your bloggers as the most important people (not always perfectly, but as much as possible!), this is an incredibly fun business. It’s an incredibly supportive industry. And there are few jobs that are more fun.