Do You Compensate Content Creators?

Written by Allen Stern - July 21, 2008

There's been a good bit of discussion recently with regards to online advertising spend. Om Malik wonders if Silicon Valley should be worried about the current state of online advertising. Large companies like GM have announced overall ad budget reductions. Blodget calls a lot of what's currently going on, "Internet wreckage".

So I am curious, how do you compensate the content creators for the content you consume each and every day? By content, I mean audio, video, photos, text, etc. Specifically with regard to tech startups and tech blogs/content sites. More and more people I speak with say they read most blogs in a feed reader and never interact with the sites themselves. As we move more and more to mobile, are users interacting with advertising on mobile? No.

On our last frontpage Digg, my tracking noted that 52% of the visitors were using some sort of ad blocking software. This past weekend Michael Markman asked, "Can anyone remember the last internet ad you clicked? How many can you remember clicking in the past five days?" The majority of the replies were "no". Why not?

Please view the video below for my thoughts on the current situation and potential crisis. I am very interested in your thoughts so please leave a comment.

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COMMENTS - Add New Comment

Submitted by Charlie Anzman on July 21, 2008 - 9:24pm.

Hey Allen - Think we're looking at a wholesale change in monetizing blogs. Hundreds are now starting them everyday and I've already got a bet on direct sponsorship emerging (from large and small companies), with them approaching you, not the opposite. For obvious reasons, wasn't a popular post for me a few weeks ago, but still believe it. Deliver value in a defined space, keep the price reasonable, and they will come.

Submitted by centernetworks on July 21, 2008 - 9:45pm.

Thanks for the feedback Charlie - I agree that sponsorships are the way to go - but the better ad interaction rates, the better the ads do, the more return rates there are and the easier it is to sell future ads to new sponsors.

Submitted by Anonymous on July 21, 2008 - 10:14pm.

It's unfortunate that techies think it's cool to block ads or not interact with them - all they are doing is hurting themselves.

Submitted by Scott Goldblatt on July 21, 2008 - 10:19pm.

Allen - Is it about actual clicks or about brand awareness and recognition? I was speaking with a potential partner/advertiser just this past week and when asking him about his ad's performance on a competing site to ours, he said that it was less about performance and more about having their name/logo in front of a lot of eyeballs. The question is, then, is it necessarily about the clicks for the advertisers or is about their branding?

Submitted by centernetworks on July 21, 2008 - 11:12pm.

Scott - I think that the sponsor ads are normally a combo - where advertisers want to be associated with the site but also they still want results.

I do agree though that if the site has questionable ethics or positions, then no clickthrough rate might win over an advertiser.

Submitted by francine hardaway on July 21, 2008 - 10:20pm.

I don't go to the sites, and I don't click on ads. I had this conversation with Om over the weekend. But what I do is try to use the products. I want to support the products, not the ads.

I think we need to get in a dialogue with advertisers about new models. And I have always believed the new model is sponsorship. With a coupon or something to prove you bought the product.

Submitted by tilll on July 21, 2008 - 10:37pm.

(Disclaimer: I am leaving my comment here because I know you like your comments on CN vs. Friendfeed. :D)

My thoughts on ads, I can see where you are coming from in your video (Brooklyn - j/k). I also don't use an adblocker, even though I must admit that I briefly experimented with NoScript last week and did notice that all websites load a lot faster without ads, I also got annoyed because I had to enable scripts for each website.

Then, ask yourself who are those people running an AdBlocker? I don't want to call them power users because that makes them bigger than they are, but they are not the overage Internet user. Your blog just tends to attract people in a certain space and unfortunately (for you and others) those people are a bit more tech savvy than the rest of the crowd and know how to install an adblocker.

Anyway - ads, the problem I see are those useless monkey ads (and similar) all over the net. They annoy me as well, I can see why people resort to blocking them. And from the perspective of someone running a website they also annoy the hell out of me. Because they make my website look bad/cheap (just by content and design) and they also make the website load slow.

Generally, I like advertisments - when done well. Unfortunately most of the ads online are the opposite.

The opposite, useless, because they do not provide any value to me as a user. For example, why do I want to sign up for University of Phoenix, or why do I have to hit three monkeys on an ad? Or shoot a chicken? I could go on and on, the bottom line is: I see no reason to watch and interact with those.

On the other hand, if an ad is interesting, of course I click on it and check out a website.

The larger problem (IMHO), is that for most websites it is hard to monetize their traffic with meaningful advertisement, and also to offer a great diversity at the same time. Or why would you want people to click on the same ad which they have already seen a dozen times?

Last night I saw an ad for a jQuery cheatsheet and registered with dzone.com in order to get it. I bet that's a lead of some kind and I interacted with them because there was something I wanted from it.

Another example is, that when I am on SourceForge, Slashdot, etc. and see an interesting ad, of course I click it. The reason, I am the audience. And it's not a super annoying monkey ad but maybe something I am interested in.

Sometimes I even click the ads on Google if they look more straight to the point as in what I was searching for then any of the search results suggest.

Now, coming to your point - supporting websites by clicking on their ads. I am sure that would be nice, but I also don't have the time to do all that. If I'd click on ad on every website which I think deserves it, I wouldn't be able to do anything else in the day.

Maybe think about this - donating for opensource software seems to work pretty well. Personally, I have donated for various projects. Again, I may not be the average here but there are people who do it.

I think of projects where people request 10k to work on a new feature over the summer and it does not even taken them a week to get that in in donations. There is an easy trade in services, or what people want. He works on feature X which a couple people want. The parties donating are pretty diverse, individuals and companies such as Microsoft, Yahoo, Google, etc..

Coming back to blogs in generally, I personally, I also wouldn't mind a subscription service.

And RSS feeds? They are a huge convenience to me. And I think your conclusion is off here, would people read the site if there was no RSS feed - probably not or not that often.

Judging from my personal experience (= workload during the day), I rarely make it on all the websites that are of interest to me. Luckily I have a feed reader and can catch up with them when time permits. If I would not have that, I would not read them period.

Last but not least, you say that something needs to be done in order to continue the growth of online advertising. I don't think that is exactly the case. Online advertising is already more effective (in terms of costs and leads) than almost any other advertising (tv, magazines, cars) and more money will go in there regardless if people have an adblocker or not.

Anyway, need to come to an end. :) Great video, Allen!

Submitted by centernetworks on July 21, 2008 - 11:16pm.

Thanks for the compliment Till and the long comment. I do agree that the tech audience is more savvy with regards to tools to get around ads. This is why in my career I've always marketed to non-tech audiences. The mainstream audience will interact with ads. The purposes of this video and this discussion is to see where we can move the tech sector on ads. Why shouldn't we get more share overall.

It's sad that a few baddies can move people to block and/or not interact with ads. A simple click a day would do wonders overall.

Submitted by Will on July 21, 2008 - 11:25pm.

This puts it in perspective for me; I've never really thought about it like this.

I have 113 feeds that I subscribe to in Google Reader, and there is no way I could check those on a regular basis.

Additionally, you have left out the fact that people are beginning to put ads in their RSS feeds. If you are custom coding your site, you can do this fairly easily. If not, I'm not sure about what blogging softwares will allow you to do this, but if you pass your feed through FeedBurner, you have the option of enabling Google Adsense.

I'm not sure how most people go through their RSS readers, but I browse with Google Reader, and when an item is interesting enough I open it in a new tab to read in full when I'm done going through all of my unread items.

Nice post; you inspired me to click on one of your ads.

Submitted by Cyndy Aleo-Carreira on July 21, 2008 - 11:42pm.

Allen, I'm always torn on this issue. I run No-Script only in cross-site scripting mode so it prevents any exploits. I don't click on ads out of "appreciation" because I (and probably the advertisers) consider that click fraud. If I have no interest, click through, and then close it, how is that any better than running Ad Block? It isn't going to get the advertiser to continue running the ads, and will probably end up with the advertiser pulling the ads after seeing a click thru but a trend of quick exits.

The problem with ads on tech sites is that they are all the same, and you tune out after a while. There's nothing compelling or interesting, and I think the standard 125x125 block hurts tech ads even further. You can't market a complex product in that amount of space and get people interested.

I think the above commenter (sorry, too lazy to look it up) who was talking about corporate sponsorships meant a solo sponsorship, not an ad. I bet every single person who reads tech blogs knows who sponsors Robert Scoble. I also bet they know who was sponsoring Shel Israel, even if that's mostly because of the puppet parodies. I don't even have to think to remember Scoble's sponsor, but I can't name a single one of the advertisers on TechCrunch or any other tech blog.

So I guess what I'm saying is that I don't even think it's the ads themselves or the revenue model, but the format

Submitted by web2marketing on July 22, 2008 - 5:40am.

well - this is online begging! *gg* i think you should see your blog as a showcase of your products and services! the problem is: if your blog IS the product! then you surely have a problem today...

Submitted by Pete Prodoehl on July 22, 2008 - 7:38am.

I can't remember when I last clicked on an ad. That said, I publish on the web, and have been doing so, for over 10 years. I don't expect to get compensated for it monetarily, and maybe you shouldn't either. I feel I contribute my knowledge and information, and hope other do as well, and we can share it all together. If you don't have a passion for what you do, can can't support it somehow, then don't do it. I'll continue to publish even if I make zero dollars. I'll find a way to make it happen because that's what I do. Maybe your business model needs to change? Would it be better if I clicked on ads that I had no intention of becoming a customer of?

Submitted by dean collins on July 22, 2008 - 8:54am.

When was the last time you were watching tv and then walked over to the phone to purchase the product you saw being advertised 30 seconds before hand?

Cadillac must be selling a ton of those CTS-V's over the phone if this was true.

Bad internet marketing is about click through rates because thats the easy way for marketers to track success.

Bad internet marketing is about selling ad space because thats the easy way for content providers to 'make money'.

Far more effective solutions are available but it requires hard work on both their sides.

You want to see good internet marketing check out this example from the masters in the business McDonalds.

http://deancollinsblog.blogspot.com/2008/07/two-all-beef-patties-special-sauce.html

There is a reason they are the best.

As for sponsorships.... most of the proposals I've seen are just banner ads with a twist, want to be effective - come up with soemthing out of the box and people will be interested, both of the reader and marketers side.

Cheers,
Dean Collins
www.Cognation.net

Submitted by Justo on July 22, 2008 - 12:40pm.

Allen, I'll start out by saying I believe in advertising as a legitimate revenue source, in fact my blog which is still in it's infancy centers around advertising, affiliate marketing, and the technologies behind them. So don't think I'm down on advertising, I don't use blockers.

However I think your question, "what are you doing to compensate me", is pretty naive. When the business plan for centernetworks was developed did no research go into monetization and paying the content producers beyond "we'll be ad supported"? Click through rates of .5% - 2% are pretty standard and are not a recent phenomenon. Isn't this a failure of centernetworks to figure out the correct business model? Nobody is forcing you to (nearly) give away your content.

I think you suggestion of clicking on ads to compensate the content producer is actually very unethical. If the advertiser is paying per click, and you have no actual interest in the product beyond getting money for the content producer you are stealing from the advertiser. People should only click on ads because they are interested in what the ad is offering, not to remedy your lack of a business model.

Submitted by centernetworks on July 22, 2008 - 1:52pm.

Thanks Justo for your comment. What I am suggesting about clicking on ads is that sure, if an ad appeals to you click it. But sometimes you need to see what's behind the ad to see if you are interested in the product or service. Similar to how when I write a review of a service, you will click it to learn more from the company's pov.

And I am not sure how clicking an ad became my lack of a business model.

Submitted by Justo on July 22, 2008 - 2:35pm.

Okay, maybe lack of a business model was too extreme, ad supported content is a business model but it may not be the most optimal for your particular business. If I were to go to Alaska and sell ice, technically I would have a business model but, it just wouldn't be a very lucrative one.

I guess I should ask, do you believe there is some implied social contract that should validate content supported by ads? Magazines and TV advertising are primarily about brand building since it's a one way interaction, we cannot "click through" an ad in Maxim magazine. But why is there an expectation that we should interact with ads on a website just because the content producers have deemed that to be the correct monetization scheme. I'm sure CenterNetworks generates enough traffic that the advertisements could be sold at a fixed cost to advertisers looking more for brand building as opposed to direct response action which is traffic levels where that majority of blogs dwell.

Rather than trying to guilt trip readers why not go the Wall Street Journal route and go the paid subscription route? Sure you will lose readers, probably a lot if paying the bills and sustaining your business is more important than having your opinions heard, but would you rather have 5,000 who appreciate the quality of your content enough to pay for it, or 50,000 that read it just to put off doing work for another 10 or 20 minutes?

Like I said, I was wrong to say CenterNetworks has no business model, but your own frustration with the very audience you depend on seems to indicate you have chosen the incorrect one.

Submitted by antje wilsch on July 22, 2008 - 1:01pm.

I can't give credit to whoever was recently talking about this (my boss sent me the URL but I must have deleted it, so if anyone knows...).

Print ads (magazines, newspapers) have advertising (older model) down to a science. Things like ads are never in the same places, never on the same pages, and never the same size. If you see an article you like and it's on page 62, you'll notice that the pages around 62 won't have page numbers on them. This is all done deliberately. They know full well that user's brains are conditioned to patterns and skip over them.

We do the exact OPPOSITE on websites. We adhere to standards because if we don't people get confused and leave the site. This is an anathema to advertisers. Part of this reason is because web ads, small and cheap to make, are so ugly and detract from the site design, so we want them separated from the site, apart. This is not conducive to user behaviour.

Print ads, because they are so much more expensive to buy, most of them are done really well. You're not going to find some girl in biker shorts doing a dance for a mortgage company, or clip art monkeys. But most people can't really afford print ads and thus don't spend the time or money that they can buy cheaply on the web (in hopes that volume makes up for it).

We need a new dialogue about web advertising.

Submitted by Cyndy Aleo-Carreira on July 22, 2008 - 1:10pm.

Just wanted to add like a +10 for antje here.

Submitted by antje wilsch on July 22, 2008 - 4:51pm.

lol.. I used to think that the magazine people were really dumb for doing that because it would annoy me - but I was there flipping thru pages (ie seeing ads) trying to find page 62.

I saw a GREAT ad for some TV show last winter. [Unfortunately I don't remember the show as I don't really watch TV so it didn't resonate] BUT the ad was very clever. You filled out the form with some data, and it integrated that data into a flash "movie" that was about a serial killer on the prowl (made to look like a real news cast). At the end, it said something like "His preference is for victims who (inserted data you had entered here like male/female age / occupation/ hair color) and he has ONE name scribbled on a paper (insert the name you enetered)" and then you'd send it. It was very cool....

Submitted by centernetworks on July 22, 2008 - 1:53pm.

Yep, I agree. I try very, very hard to never run the dancing woman, the monkey, the flashing 1 million, etc. It's part of the contract you and I have. More to come on that in part 2 tonight :)

Submitted by antje wilsch on July 22, 2008 - 4:33pm.

Do I lose my end of the bargain if I admit the dancing girl actually caught my eye and made me laugh out loud? :)

Submitted by Justin Noel on July 22, 2008 - 5:17pm.

I use a feed reader of course (Google Reader); so, I rarely visit the site I'm reading content from.

However, when I do find something in an feed interesting, I make sure to click through to the original article and then link out from there rather than clicking a link directly from the feed. This way, the blog I'm reading from at least gets a page view.

Unfortunately for the bloggers, I've never bought anything from an ad. When I need something, I search for it and go directly to the ecommerce site.

Allen, aren't you the one who has proposed paying for feeds? Wasn't it something like $1.00 per month? Personally, I'd gladly pay for feeds. However, $1.00 is simply too much. I currently subscribe to 73 feeds. I'm NOT paying $73 per month for them. They aren't that worth. However, I'd pay $.10 to $.20 cents per month for them.

Small change? Yes it is. But it's $.10 to $.20 more than you will ever get from me with ads. Multiply that by the the (tens of?) thousands of other readers just like me and you will make some significant money.

Submitted by Curt Grymala on July 22, 2008 - 7:57pm.

I'll be completely honest and tell you that I seriously doubt I click on even one ad out of 1,000 I see.

The main problem we face when dealing with online advertising is the fact that there are too many scams out there. Even when I see an ad that interests me (which is extremely rare), I'm hesitant to click on it, because I never really know where it leads.

Because of the haphazard way advertising is set up on most Web sites, you really never have any idea who is really sponsoring the ad.

I spend quite a bit of time on video game-related Web sites. I would say that 99% of the ads placed by Google and other ad-feeding services are for illegal, hacker Web sites. I'm certainly not going to click on any of those.

Then, I check my e-mail and find that approximately 85% of my messages are spam advertisements for prescriptions, XXX Web sites and pirate software.

With so little of the advertising online being legitimate, it seems to make more sense just to ignore all of it.

I think everyone is right in saying that we all need to find new ways to monetize our commercial sites. Advertisements simply aren't going to do it any more. That may have worked in the late 90s, but it just doesn't quite cut it now.

Affiliate programs are a little better, but the real way to go is simply sponsorship. Of course, the best of both worlds would be to get compensated (with full disclosure, of course) for every positive review (and possibly negative review, simply because you are giving the company press) you post on your site.

Again, I'll be completely honest. I probably click on one out of every five links to services you review or discuss when I'm actively reading the CN Web site. To me, finding a way to get compensated for those clickthroughs is the way to monetize a site in the future.

Submitted by cheapsuits on July 23, 2008 - 9:04am.

The post is spot on in talking about the need to be compensated for content. However, clicking on an ad just to help the author of the site is ultimately disingenuous to the advertiser. Maybe it's time we realize that internet ads are passive advertising more like billboards,magazine ads or televison commercials requiring no action from the reader. As an advertiser I like page views and RSS subscribers not clicks. It's the only real gauge to the blogs popularity. (RSS ads a twist I know).I see a theme of sponsorship in some of the comments and I ultimately think the answer is sponsorship. I do not see why blogs and or bloggers can't become like NASCAR drivers. I personally think the ad model was broken from the beginning on the internet and needs a sea change to a new paradigm.

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