Outbrain Launches “Sponsored But Good” Revenue Model

Last week NY-based recommendations service Outbrain raised $12 million with a total of $18 million in total venture capital funding. Today Outbrain is announcing the launch of their revenue model which they are calling, "Sponsored But Good".

Here’s the idea – by now you’ve probably seen the Outbrain ratings and recommendations widget on sites across the Web. Going forward if the publisher enters into the program, whenever possible, a maximum of one of the recommendations will be a sponsored recommendation. Outbrain assures me that the sponsored recommendation will be closely related to the content being discussed in the blog post. The interesting thing about this program is that the links will never point to a product page; instead they will point to another blog post discussing the topic. So Apple might buy the iPhone topic and point the traffic to a blog post about the iPhone, etc.

Here’s an example of what the recommendations box will look like:

The content site and Outbrain will share in the generated revenue from the click. Outbrain says that if you decide not to signup for their program, any monies earned through your blog will be stored in an account and donated to charity at the end of the year. This is the first time I’ve seen any advertising company do this.

I like the concept of the Sponsored But Good program but after buying millions of dollars in media year-over-year, here are my concerns with the program:

• Enough supply – are there enough blogs in their network and enough blogs that will activate the feature to give Outbrain enough inventory to sell?
• Deep sales force? Since this concept is new, it will take a lot of convincing to get brand marketers to sign off on the ad dollars. They will need to overcome the objection of "why should I spend money to push traffic to another blog post and not my brand site?" Also, they will need to sell enough ads to have at least a decent fill rate initially
• How many clicks will it take for a blog (even a massive one) to make enough money to make the program attractive?

If Outbrain is able to convince brands to try out this new model, they could do very well with the program. It will just take a lot of sales and convincing to get the buy-in for this new online advertising form.

Note – Outbrain asked me for my feedback on their model a couple of times over the past few months. I was never paid – just reviewed what they had and provided my feedback. Most of what I told them are the same things I wrote above.