02:06 PM

[News analysis] Monetizing the blogosphere—advertising networks and aggregators focus on RSS feeds

-The gold rush for the RSS feeds of blog publishers

by Tom Foremski for SiliconValleyWatcher

Things are heating up around RSS technology as advertising networks and aggregators focus their attentions on technology at the heart of blogging.

Kanoodle, the New York city based online advertising network, today joined with MoreOver, the San Francisco based news aggregator, to offer RSS based advertising with a service called BrightAds RSS.

Startups such as Pheedo, in Walnut Creek, Ca., have managed to raise venture capital for their RSS advertising networks.

And other companies are building businesses that offer a variety of RSS-based services to publishers and corporations such as KnowNow in Silicon Valley. And late last week, UK-based Nooked launched a service that aggregates RSS feeds from blogs and corporations into an easily searchable directory.

The incredible success of blogs as an alternate news source to the established media has created a potential bonanza for companies that can figure out the best way to monetize blog content. RSS feeds allow readers of blog content to subscribe to a blog and read the entries in a newsreader, or on a different web site. The RSS feeds of blogs are a key focus for commercial ventures because:

  • More blog readers -- often as many as four times as many -- use RSS feeds to read blog content rather than visit the host site. This means there are four times more opportunities to sell text ads through the RSS feeds than on blog pages.

  • Most blog publishers do not have the resources to mix their own text ads into the syndication feed.

  • Blog sites do not have the analytical tools to manage their RSS subscriptions.

  • RSS feeds can be expensive to maintain because they use a lot of bandwidth.

  • RSS feeds are increasingly important because they are an opt-in communications channel that is unpolluted by spam and spyware.

  • By controlling the RSS feed, ad networks are able to collect demographic data on users across a broad range of online sites, allowing for premium targeting of advertising messages.

The advertising networks will host a blog’s RSS feed and split the revenue with the blog owner, keeping about one-third of the advertising money.

Blog publishers gain statistics on who is subscribed to their blog, but they do not receive information on what types of other blogs their subscribers read, and other aggregate data collected by the advertising networks.

Google was the first to find a way to monetize the content on blogs with its AdSense advertising network. This is available to almost any web site owner and it delivers text ads based on the context of the web page content. It splits the revenues with the publisher; but it will not disclose how much it takes. Google does not yet have an RSS AdSense program.

Our Take:

RSS feeds are part of the crown jewels of any blog or online publishing site; and blog site owners should make sure they do not get locked into a situation where a third-party controls their subscriber base.

At SiliconValleyWatcher we have decided to decline invitations from RSS advertising networks until some of the commercial issues are settled. We also have a philosophy of a “walled-garden” and we seek to protect our readers as much as possible from the deluge of commercial messages online.

We also believe that blog publishers will increasingly seek to restrict the way RSS feeds are commercialized by third parties. RSS advertising networks can become trusted partners with blog publishers but they need to provide more than just analytics and a revenue split, they need to also provide ways of protecting blog content from being commercialized by others.