Blog ad revenue is down. But are bloggers’ lack of flexibility and innovation to blame?

The noise this week in the blogosphere has been the collapse of the ad market and its impact on high-profile blogs like The Inquisitr and TechCrunch. It also has been the source of layoffs at popular blog ad-network, Federated Media. But is the economy the only one to blame?  This question got me thinking about blogging and advertising, and it seems to me we, as bloggers, are simply stuck in the wrong model? In an online world where performance, high relevance and permission mean everything have we as publishers been talking the talk but not walking the walk?

Blog advertising surprisingly old-school

The advertising techniques that we’re utilizing are heavily based on the print media monetization strategies that we often rail against when trumpeting the death of newspapers. Aggregate eyeballs, sell display advertising against them, maximize impressions, drive clicks to the advertiser and hope that the sales funnel math works out in the advertiser’s favor and they re-up the ad spend moving forward.  Whether the blog is part of an ad network or sells direct, these display ads make up a large part of advertising revenue for the sites.

Additionally, poor-performing Google Adsense units and the negative impact on search of text-link ads has spurred blogs to embrace more display advertising. This has led bloggers to plaster their home page and individual post pages with ad units everywhere.  But it seems that bloggers have become too complacent with the display advertising model. It is no wonder that they are seeing the same declines that are hitting other display-advertising driven revenue models.

Running in to the wind

But this model is the exact model that is facing the biggest headwinds in advertising.  High-cost, display advertising to broader audiences is the exact advertising that is getting decimated.  I argue that it is time to embrace advertising that matches the advertising reality of the new Web economy.  Gone are the gravy days where bloggers could rely on the outmoded print-based advertising schemes.  Now, bloggers must reinvent their ad offerings and embrace the key tennants that we all have been heralding as the new way to advertise on the Web: performance-based, exceptional relevance and permission-based.

Performance, Relevance, Permission

These three tenants have been heralded as the keys to success in Web advertising. And I would argue that bloggers have not been demanding enough of themselves to take full advantage of these innate capabilities. To make it through this economic downturn bloggers must embrace them immediately and aggressively to spur ad revenue and open up new opportunities for ad growth, rather than competing over the shrinking display pie.

• Performance – Bloggers must look to take pages out of the affiliate marketer’s playbook.  By looking for products and services that align with their audience needs and selectively choosing to promote the best of breed, bloggers have the opportunity to create additional revenue while bringing value to their audiences.  Now, I’m not here to debate about journalistic integrity and affiliate marketing.  1) People already believe that blog reporting is biased (and for the most part it is). 2) By clearly marking and identifying posts as sponsored you are able to eliminate any confusion about the content (simply look at the ‘Advertorial’ model in magazines/newspapers.)
• Relevance – The long-tail continues to splinter in to even smaller niches.  Bloggers must realize that they must sacrifice sheer traffic volume in exchange for the most relevant eyeballs for their niche.  Instead of trying to become another online generic content center, and writing articles across a variety of topics just to drive search traffic, blogs must refocus on their core audience and drive quality audience and then sell advertising that aligns with that audience.  By being too generic or by not daring to be more targeted bloggers lose out on advertising opportunities.  Smaller audiences mean smaller ad buys (which advertisers like) and better return  due to increased relevance (which advertisers like) and more repeat buys (which bloggers like).
• Permission-based – Display advertising interrupts the experience.  People are trying to filter out ads so that they can read the valuable content.  Bloggers need to work more closely with advertisers to find content of relevance and provide permission-based advertising opportunities around that content.  For instance if you’re writing about a hard-drive give manufacturers an opportunity to purchase “learn more” links that lead to content. Or develop advertising-based content sections that can be sponsored by relevant advertisers.  The Philips-sponsored digital frame section on Amazon is a perfect example.

Two Opportunities: Scoble and NPR

Bloggers should look to the advertising models employed by Scoble and by NPR for opportunities to increase and improve ad performance.  Scoble’s Seagate sponsorship is the perfect example of how bloggers can look to cut larger, longer-term sponsorships that give a level of exclusivity to the sponsor for an extended period of time.  This allows bloggers to lock-in revenue and gives their sponsors maximum exposure to their audience.  While the sponsorship doesn’t have to be all-encompasing, it can be done by section of the Web site, category of posts, the RSS feed or email notifications.

NPR’s sponsorship model is similar, but more interesting is their member-listener model.  Bloggers should look for ways to bring added value to their listeners in exchange for their patronage.  NPR has made this model their life-blood in raising funds for stations.  And the premium items don’t need to be content.  Take TechCrunch for example. Would I pay $100/year to get access to a TechCrunch networking group, or discounts to special events, or swag or a chance to hear Mike talk at a town-hall style members-only meeting?  Absolutely.  Will everyone do this? No. But not everyone needs to.  NPR has listeners and then member supporters. You can listen (read) all you want, but if you want to get involved in a more intimate way you have a chance to do so (and it’s not just getting extra radio programming).  Bloggers need to look for ways to leverage their passionate members of their community.

Challenging times demand creativity

In addition to these two opportunities bloggers need to get more creative about working with their community and advertisers to generate value.  Why can’t a tech blog team with a new technology provider to conduct a study on a business segment by polling the blog’s audience?  Invite people to participate in a survey about, say streaming video, then give all participants a private copy of the report that can be published and sold.

Chris Brogan and the Walmart Mommy bloggers have found opportunities to sponsor brands in exchange for sharing their experiences with audiences.  While people have debated the ethics of these relationships, I believe with clear disclosure and transparent, honest feedback these types of arrangements can be very valuable to all parties involved.

Bringing it all together

Clearly, old-world advertising will not get bloggers through the recession.  These economic times demand that bloggers get creative in finding ways to bring value to their advertisers, their audience and themselves while maintaining the integrity of their brand and product.  What do you think they need to do to make it through this downturn?