Blog Networks in a Tough Economy: Adapt or Starve
The U.S. and Canada are going through hard economic times. You knew that, right?
And you probably knew that blog networks, like all businesses, thrive or perish according to their ability to respond to changes in the economies in which they operate.
But what you maybe didn’t know is the extent to which the current economic struggles of Canada and the U.S. are affecting the blog networks you visit on a daily basis – Gawker, b5media, Federated Media, Splashpress (which owns this blog) and Weblogs, Inc., to name a few.
Or Know More Media, a network for which I wrote and served as editor for over two and a half years from its launch until its demise just over six weeks ago.
The Online Advertising Roller Coaster
Blog networks typically depend on the same business model as mainstream content networks like The New York Times – attract visitors to interesting content and sell advertising space near (or even in) the content. Their main expense is author payment; their main challenge is to get traffic that converts into ad dollars.
When AOL bought Weblogs, Inc. in October 2005 for a reported $25 million USD, the world suddenly took notice of the money-making potential that blog networks held.
Fast forward to late 2008. Blog readership has ballooned, but the U.S. economy has tightened its belt — and its advertising purse strings.
With competition among blogs for ad revenue growing stiffer every day, it’s no wonder that blog networks are feeling the strain like everybody else.
“I have seen advertisers tighten up. When it comes to the choice between the fuel budget and the advertising budget, the fuel is going to come first,” says Gayla McCord, channel editor for b5media’s lifestyle blogs and a veteran affiliate marketer.
Case Study: the b5media Blog Network
Consider the b5media network, which boasts hundreds of blogs covering dozens of niche topics.
I spoke with b5media president and CEO Jeremy Wright about the company’s current challenges and how it is responding to the changing economic landscape.
One major challenge is paying bloggers fairly while keeping operating costs as low as possible. “Our biggest priority is to take care of our bloggers, but we also have to be a business and sometimes those two things collide,” says Wright.
b5media is currently re-evaluating its blogger pay structure as part of a regular annual review. The company uses analytics by Omniture to help it evaluate the success of each blog and calculate author payments.
Adapt or Starve
The key lesson for blog networks and solo blogs alike in this time of possible recession may be this: Develop quick reflexes or perish. As McCord says, “In every good business, there comes a time when pruning is necessary.”
What do you think? How can blog networks and professional bloggers succeed in a struggling economy?
Great article – realistic perspective – solid voice of reason. You Rock Easton!
Thanks Easton for writing the article and bringing things into a little bit of perspective. One thing that still confuses me though is that many other sources are stating that online advertising budgets and growing significantly, is it just going everywhere else except blogs?
I would like to comment on Lorelle’s post about the wordpress.com forums. Any reason comments are closed?
@ ian in hamburg:
I’ve opened it. Very odd. No idea but I’m not in charge. Sorry, Ian. It’s now open and hopefully it wasn’t closed for a reason I don’t know about.
hi! I’m a freelance writer and when I read this, I was a bit nervous because blogging is the only way I earn income. I’m also an economist and I know how bad the world economy is right now.. I hope the internet won’t be as affected.
Thanks Gayla and Jason. Jason, yeah that is kind of confusing. I think what’s happening is that the blog universe is expanding fast like a balloon being blown up, and the advertising universe is too, just maybe not as fast … and then the other part of it is that the blog universe is being increasingly dominated by a few really huge galaxies and super-sized stars, while the little stars don’t get noticed as easily by the advertisers.
Sah, I think it’s just critical to think ahead – say, at least 12-24 months ahead – and plan for diversification, partnerships, etc. to make sure you’re not stuck alone when the music stops somewhere.
Yeah i know what you mean. Actually, i’m just learning to blog and I dont want to have to go back to the corporate world where i will experience the greatest impact of this economic bubble.
I’m freelancing for several sites so I’m not yet that affected but that makes me even more vulnerable when the offers stop coming.
Well a fed bailout is out of the question for blog networks I guess…..
Seriously though, blog networks like any business will need to merge with others and only the strongest will survive. Other channels such as podcasts and vidcasts also need to be explored further.
A family in Western Michigan has found a way to deal with the failing economy. They are selling their family picture on E-Bay (Item number: 280281951487). The minimum bid starts at $200,000.00. They plan to use the money to pay off their mortgage, loans and credit card debt. Bidding started November 2, 2008 and will continue for 10 days.
This economic mess started with the housing market and likely won’t recover until the housing market recovers. Why can’t the banks/lenders drop mortgage rates to the 3.5% area, keeping them in line with the historical margin (1%) above the 10 year treasury? Maybe use some of the $350 billion+ bailout money to help subsidize it, if needed. Maybe get some useful help from the government.
If homeowners could refinance their mortgages and save hundreds of dollars every month on their payments it would have a much greater affect on the economy then a one-time check for $500 (which really does nothing), and it wouldn’t cost us taxpayers anything. If people saw rates at 3.5% and knew they were only going to be there for a few months to a year, I believe we would see people stampeding to buy houses.
The other thing that could/should be done regarding refinancing is figuring out a way to allow just about everyone to do it. No more Loan Modifications. Just let everyone get their payments to something they can afford and hopefully create extra income for most. Spending would pick up, saving many businesses, creating additional income and ultimately additional tax revenue.
Why wouldn’t this work? What am I missing?
HERE is where economic hard times and blogging meet: a blogging campaign to end the economic crisis now: http:twomillionhomes.net
Blogs right now is doing a stiff competition nowadays.We need to produce a quality ones here..well.just want to borrow the word “pruning”..we need that process right now..to produce quality ones…
Spending would pick up, saving many businesses, creating additional income and ultimately additional tax revenue.