Blogs will play an important role in the future of advertising, entrepreneurs said Tuesday, but for now the bulk of ad dollars from these web journals still appears to be flowing to search engine Google.
Venture capitalists and Internet executives gathered at the ThinkEquity technology and investor conference in Half Moon Bay, California, are looking for ways to make money on the trend of consumer-created content such as blogs. Blog web traffic was up 31 percent through the first seven months of 2005, according to Nielsen/NetRatings, and hasn’t shown any signs of slowing.
Much of the money to be made now seems to be flowing into the coffers of Google. The company’s context-based advertising scheme makes it easy for bloggers to quickly record advertising revenue.
"Five or seven years ago, you needed to be of a certain size to get ads," said Ariel Poler, a director of Odeo, a startup trying to capitalize on the trend of podcasts, or downloadable audio broadcasts. "The ability to monetize audiences is better than ever."
But large advertisers have yet to enter into the blogosphere in a serious way. Of course, some users post pictures of their favorite products, or rip advertisements from other sites to put on their own blogs.
People relate to certain brands and want to have those brands on their personal sites, said Kevin Efrusy, the managing director at Accel Partners who bet on social networking company The Facebook.
"It’s amazing that you have users advertising for you and liking it," he said.
Blogging will play an important role in the future of advertising, said Mr. Efrusy. He praised Rupert Murdoch’s acquisition of Intermix, the parent company of MySpace, a social networking-blog hybrid (see Murdoch Buys Intermix: $580M).
"I think Rupert got a hell of a deal," he said. "What he’s realizing is that this generation doesn’t watch TV and they don’t read newspapers, either."
Conference panelists said to expect business-model innovation in a space where profit margins can be lucrative.
"There will be more experiments on optional, or tip-based, payments," said Ali Partovi, the CEO of GarageBand.com, a forum for trading amateur music. He suggested enthusiasts might be willing to "tip," or pay more than market price for a song or video that they particularly like.
"There may even be more money to be made there than in the $0.99 per song model," he said. iTunes Music Store, Apple Computer’s popular digital download service, typically offers downloads for $0.99 per song.
