Don’t get too big, the advertisers will avoid you

Filed as General on August 31, 2006 6:03 pm

Mike Rundle of 9rules has written a post on traffic, and b5media’s traffic in particular. It’s gotten a little heated in the comments, pies flying all over the place, but it’s still a good read for everyone that’s been thinking about stats and what they actually mean. You won’t find any truths, but if you didn’t have any doubts regarding stats before you’ll definitely get some.

And yes, that’s old news.

What got me thinking is Rundle’s second paragraph, where he rants a bit about Digg having trouble selling ads. I found this interesting:

The only companies that can afford to run ads on Digg are those with gigantic advertising budgets, and the companies with gigantic advertising budgets go for more mainstream sites that have a more proven return on investment.

So if the poster child for “Web 2.0″ has trouble selling advertising, and “Web 2.0″ is all about giving services away for free and selling ads (tongue in cheek), what hope is there for the rest of us?

Is that an actual problem? Can you get too big? Obviously you can mass up to many costs and not afford to run your site, but could you actually be so successful that the advertisers will shy away from your “reasonable pricing”?

Of course. Growth problems in a company is only natural, and the same goes for websites. During the period when you get too big (Digg right now according to Rundle) you’ll outgrow your regular advertisers – they just can’t afford you. I’ve been in that situation myself with previous projects, where 70% of the revenue came from set priced ads meant for retailers. We got big, had to adjust the ad pricing – and the retailers where gone, as was most of our revenue!

What you need to do is adjust to your growth rate. Analyze your advertisers so that you can phase in new possible revenue streams when you become interesting to them. That’s what we did, and it worked out great in the end. (The dotcom just about killed us, but that’s another story.)

So no, I don’t really think you can get too big. It’s just a matter of business strategy, and if you’re lacking that you’ll probably never get the being to big-problem anyway. However, I think you can monetize more per visitor if you’re in a position to chop up your website in smaller portions, which in turn can continue to grow. Let’s say you have an entertainment blog writing about music, movies and celebs – and you make it big traffic-wise! You might consider splitting the blog into three separate, but related, blogs and therefore still attract the same kind of advertisers as you did before you got too big and expensive. At the same time you can offer bigger players the option of advertising over the blogs in a nifty little package. So that would be a way to tackle the growth problem, but it won’t work for everyone obviously.

Hey, I think I just invented the blog networks all over again.

To make a long story short. Mike Rundle needn’t worry about “the rest of us making money” – if we just sit down and think our business strategy through we’ll cope just fine.

Tags:

This post was written by

You can visit the for a short bio, more posts, and other information about the author.


Submissions & Subscriptions

Submit the post to Reddit, StumbleUpon, Digg or Del.icio.us.

Did you like it? Then subscribe to our RSS feed!



  1. By Mike Rundle posted on August 31, 2006 at 9:29 pm
    Want an avatar? Get a gravatar! • You can link to this comment

    Hey thanks for the writeup, much appreciated.

    I think the problem isn’t really Digg but FM Publishing, their ad sales network. FM is new to the ad sales game and even though they have hired a lot of people with great sales backgrounds, it’s very tough to be the new kid on the block selling ads on sites you don’t own, especially when their authors can leave at any time. If you check out the rate cards for Yahoo, CNet, and other large web properties, you’ll see that while they are a bit higher than Digg, you have a drastically larger audience reach which I’d say is a preferred quality.

    Although we all make a big deal out of Web 2.0, it’s still very much restricted to the tech-savvy… take a look at Flickr. Flickr is one of the most successful “Web 2.0″ companies to date, but Yahoo Photos (a very non-Web 2.0 property until their recent redesign) had traffic many times larger than Flickr because they’re more of a mainstream site and application. It’s difficult to think about, but the biggest “Web 2.0″ companies and applications still have a long way to go before they can take on the bigtime media and news outlets in terms of raw traffic.

  2. By Easton Ellsworth posted on September 1, 2006 at 1:24 am
    Want an avatar? Get a gravatar! • You can link to this comment

    Thanks, guys, for the thoughts. Worth thinking about.

  3. By John Evans (SYNTAGMA) posted on September 1, 2006 at 6:04 am
    Want an avatar? Get a gravatar! • You can link to this comment

    Mike’s totally right here. There’s a huge chasm beyond flagging an affiliate banner for TLAs and getting into the big advertising world of mainstream media. The word “blog” is only part of the problem : Read more.

  4. By Thord Hedengren posted on September 1, 2006 at 6:49 am
    Want an avatar? Get a gravatar! • You can link to this comment

    Mike,
    I completely agree regarding the problems of an ad startup. Getting into the major players is hard enough for companies that has been around for years, and that is of course a part of the problem. Still, I think using such a new venture is also part of Digg’s (in this case) growth problems since they would overcome lots of the barriers there are between Web 1.0 and 2.0 by using a traditional agency. They’re big enough for it, surely.

    Web 2.0 is indeed very techie infected, and that sure is a problem. However, a smarter branding and presentation should turn the table for a lot of these sites. The problem is, most of them has their roots in their founding developers. If they instead took their idea to someone who know business and people (yeah, big generalization here) I think you’d have a very different story for lots of the interesting 2.0 services out there that fail to make money and attract mainstream users.

    John,
    I’m sure some people shy away from blogs. When I’ve been setting up campaigns for clients in the past I’ve been careful with forums and you could have the same feel for blogs. Still, I don’t see it as such a big problem as you (presumably) do. The right choice in ad sales will get you major advertisers on you badass supersized blog as well. There are technical barriers to overcome, perhaps more than usual when it comes to blogs, but – again – if you have the right business strategy then it shouldn’t be a problem.