The two blog advertising companies have caused a stir in the blogging world. They both provides an avenue for blog owners to monetize their blogs.
Difficulty in establishing advertising companies
Establishing an advertising companies such as Nuffnang and Advertlets is difficult because you have to get a lot of bloggers to make your company attractive to advertisers. And then you have to convince bloggers to place your advertisements by promising some monetary rewards.
It is relatively easier to convince the bloggers because they don't stand to lose anything. The most is that they have to sacrifice some blog space for the advertisement, which most of the time looks good.
However it is more difficult to get the advertisers. If I were a potential advertisers, I would want to spend my money carefully. I would worry about the payment system, whether is it Cost Per Click (CPC) or Cost Per Thousand Impression (CPM). Unlike advertising in established website, bloggers are deemed less trustworthy because they have more incentive to click the ads themselves or keep refreshing the page with ads. Established companies are less likely to do so because if it is revealed that they do such practice, then other advertisers will shun their websites. And this means a huge loss in revenues.
Most ordinary bloggers will also lose potential revenues if they conduct illegal clickings or refreshings but the most they stand to lose is a couple of bucks per month. The cost of operating their website is 0. So unlike established websites, they have less to lose and is more inclined to do illegal clickings.
Getting advertisers in the case of Nuffnang and Advertlets is difficult for sure. There are other alternative advertising avenues such as print media or direct marketing. Blogs reach to the youths, but you can also advertise in MRTs like what ITE did at Somerset MRT. Or the Army in teens magazine. Why risk your dollars in blog advertising where you know that you wouldn't get the most out of your money?
This explains why Nuffnang do not have many advertisers these days. And blog2u only displays their partners' ads all the time.
How to succeed in this business
Google definitely succeeds in internet advertising. In fact it is its main source of revenue, by placing ads in search results page and in other websites that place Google Adsense (very much like Nuffnang and Advertlets scripts but not limited to blogs). What distinguish Google is that it is an established company, unlike Nuffnang which is started by a couple of teenagers. It also has a fraud-detection system which will know if the site owners are clicking their own ads. Although not fool-proof, it is can convince most advertisers to use Google's service.
Nuffnang and Advertlets should also be more professional in running the business. I feel that the movie gathering for blog owners is a no-no. It somehow puts an idea that bloggers might be clicking each others' ads and I am more scared in advertising in them.
Nuffnang also childishly cut bloggers' pay because their blogs were down for a couple of days due to Advertlets' script. Yes, they have a right to do so. And they might lose thousand of dollars from the loss of impressions. But nobody likes to get a cut. It just sounds like bloggers are the employees and Nuffnang is the boss. You wouldn't do that if you want a good customer relationship.
The exclusive club is also a disaster. Even Google do not dare to implement such club. It only brings in more intense competition! Sometimes in a business you have to implicitly 'co-operate' with your rivals. Like in the case of petrol stations charging almost the same price. In my opinion Nuffnang is very inexperienced when they implement the club. They might lose a big chuck of their advertisers.
More competition will also stress both the companies' owners. Not exactly what you want to do when you own a small company. If you have a big company, as an owner you can let your employees worry about the profits. But in a small partnership you get to worry about everything. And your income might be tied to the company's profit. So you worry more when you decided to wage war with your rivals. They sure will retaliate!
For bloggers
I found out that you don't earn much from these advertising companies. At most you get $5 per month. You may also get nothing.
Still, there is no cost in putting their ads. The benefits is always equal or greater than the cost of putting the ads. So in economic theory, you should do so.
Some of the bloggers have complained that bloggers are funding extravagant lifestyle of Nuffnang owners. Some alleged that Nuffnang bought expensive Apple computers for their employees. Will you want to share your blogs to make someone else's rich? I think it is quite irrelevant because it does not affect you personally. However, some people do and they quit putting ads. For me, I would be indifferent but will not use the excuse of making some brats rich if I don't put ads in my website. It's more like I don't want to clutter my blog with small icons. I want my readers to focus on my writings instead.
New players
Such blog advertising companies are easy to set up. Blog2u was founded a few months back and I can foresee many will come. Bloggers can put as many ads as possible and there is little barrier-to-entry for new companies. Probably this is why Nuffnang introduce its Gliteratti club. It is to deter new companies which might steal its advertisers.
