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The ad market for blogs

Two months ago, I wrote about the economic weight of the blogs, concluding that it was quite small. In the last two weeks, several reports confirmed my opinion and showed that I was even too optimistic.

Let’s start with two quotes from “Online ad spending hits record in 2005” (Elinor Mills, CNET News.com, April 21, 2006).

The amount of money spent on Internet advertising in the U.S. rose by 30 percent last year to a record $12.5 billion, according to a report released Thursday by advertising trade group the Interactive Advertising Bureau and independent auditor PricewaterhouseCoopers.

Keyword search ads led the sector, representing 41 percent market share and $5.1 billion in revenue, followed by total display advertising, with 34 percent market share and $4.3 billion in revenue, and classified advertising with 17 percent market share and $2.1 billion in revenue.

So in the U.S. alone, keyword search ads alone are representing more than $5 billion. Pretty impressive for a market which didn’t exist a few years ago and which is largely dominated by Google.

By the way, have you seen the last stellar financial results of Google for the last quarter? Read for example “Google’s Giant Stride” (Burt Helm, Business Week Online, April 21, 2006).

Google’s revenues for the quarter soared 79%, to $2.25 billion, over the year-earlier quarter, while earnings surged 60%, to $592.3 million. Excluding fees paid to its advertising partners, revenues were $1.53 billion.

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But let’s go back to the ad market for blogs. In “Triple-Digit Growth for Blog, Podcast and RSS Advertising, MarketingVOX gives some details about the size of this market.

Combined blog, podcast and RSS ad spend by the end of 2005 totaled $20.4 million, a 198.4 percent increase over the 2004 levels for user-generated online media - and is projected to climb 144.9 percent in 2006, reaching $49.8 million, according to a new report, “Blog, Podcast & RSS Advertising Outlook,” from PQ Media. Total spending on user-generated online media is forecast to grow at a compound annual rate of 106.1 percent from 2005 to 2010, reaching $757.0 million in 2010.

The blog ad market is the largest of the three, at $16.6 million accounting for 81.4 percent of total advertising in 2005, followed by podcast advertising at $3.1 million and RSS at $650,000.

For more information, you can read the PQ Media press release or buy its report, “Blog, Podcast and RSS Advertising Outlook” for $995!!

Obviously, I have no way to check if these numbers are right. But if they are, it means that the blog ad market for 2005 in the U.S. was valued at $16.6 million when online advertising represented more than $12 billion. In other words, the ad blog market represents less than 0.1 percent of the online ad market — excluding the indirect market.

Pretty small isn’t? It would be interesting to know what are the numbers for Europe and Asia. Please send me your comments if you know more about the size of these markets.

3 Responses to “The ad market for blogs”

  1. leafar Says:

    The ad market will be small for blog that’s for sure but the affiliation program will not !
    Blog is CtoC therefore it’s selling without ads, I thinks you don’t look at the right metrics. What will be interesting is to know the sales volume @ Amazon that comes from blogs. And Amazon itself will probably not have the exact metrics since a lot of good blogs { ;-) } are not host on .typepad.com or blogger.com but on privately owned domain names {like .blogsforcompanies.com}.
    What do you think ?

  2. InternetActu.net Says:

    Et si les médias 2.0 étaient moins profitables que les médias 1.0 ?…

    Comment MySpace.com, le Skyblog américain, va-t-il transformer son immense popularité (70 millions de membres, 28 milliards de pages vues et 35 millions de visiteurs uniques en mars 2006) en un business rentable ? C’est la question que pose cet …

  3. Blogs for Companies » Blog Archive » Is there a future for ads on blogs? Says:

    […] Two months ago, I told you that the ad market for blogs was pretty small. A survey from the American Advertising Federation (AAF) released last week brings more bad news. It confirms that a majority of advertisers think that “blogs are too risky to advertise” because of the lack of predictability of the editorial content. Read more… […]

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Roland Piquepaille
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