There are a lot of blog discussions these days about the economics of blogging.  While there is still a lot of debate on the legitimacy of making money blogging, as I pointed out in my earlier post on the The Professionalization of Blogs the reality is blogging for profit already exists and is growing rapidly.

Despite the growth of for profit blogs, successful blogging business models are still being developed and few blogs generate substantial revenue.  Today, most for profit bloggers have a mix of income streams.  My favorite for profit blog is Manolo’s Shoe Blog and related sites.  While the cagey Manolo won’t reveal much, it is clear from the site he uses a mix of the following revenue generating methods:

Advertising:  Most for profit blogs run ads.  Blog networks such Blog Ads and Google’s Adsense make it easy to add advertising to a blog site.  However, the payment models are not very lucrative, and only the top sites in terms of traffic generate more than a few dollars per day.  The Problogger site has extensive information on advertising and blogging, including what leading blog sites charge for ads.  Also take a look at Dave Pollard's post on blogging for dollars.

Sponsorships:  Sponsorships are another form of advertising where the sponsor gets placement and potentially other services from the content site.  Silicon Valley Watcher uses sponsorships as their primary revenue source.  In addition to banner placement on their site, SVW also helps the sponsor develop programs to reach their audience.  Infineon Watch is an example of this approach. 

Affiliate Programs:  If you’ve ever wondered why so many blogs have a “books I am reading” section, the reason is the Amazon Affiliate program.  This program pays web sites that sell Amazon books.  Most ecommerce sites have affiliate programs, and they are easy to use.  As with ad networks, it takes a lot of traffic to generate much money with affiliate programs.  Check out Manolo’s Shoe Blog and its use of affiliate programs.

Selling Products or Services:  Bloggers are increasingly using their sites to sell products or services.   This can be an excellent revenue source.  Again, check out the Shoe Blog to see an example.  Also, many leading bloggers have leveraged their blogging skills and are now also paid consultants, paid speakers and book authors.

Working for a Blog Network – Gawker Media pays their bloggers $2500 per month plus bonuses for traffic growth for what is effectively a part time job.  For an excellent description of how Gawker works with their contract bloggers see this post on I Want Media.

As with any entrepreneurial venture, starting a blog is a leap of faith.  The advantages of blogs as a small business are very low start-up and operational costs – the only real cost is the bloggers time.  The challenge for all for profit bloggers is creating a large enough audience to support the business.

For many years IFTF research has shown – no surprise here - that trust is a critical factor in people’s decision making processes.  More recent research shows that consumers are increasingly information intensive in their product research, and online consumers actively use and trust online information sources in product research. 

We’ve recently started a research project looking at how consumers use blogs as part of their product research and purchasing decision processes.  Our early results indicate that blogs currently have little or no impact on most consumers.  However, leading edge users of online technology are starting to mine blogs for product related information.  This is especially true for product categories that are viewed as high cost or high risk purchases (health, technology purchases, cars, etc).

Our preliminary research is showing that leading edge online users are skeptical about blogs as trusted sources of information – even blogs authored by friends.  However, often these leading edge users have blogs they trust for product information. 

When asked the reasons why they trust certain blogs, the answers generally have to do with:  their view of the credibility of the author and content; the amount of traffic they perceive the blog to be getting; the number of other sites linking to the blog; how active the blog is; and the look and feel of the blog.  Blogs that rate high in these areas tend to be trusted more than sites that rate low.  This is very consistent with studies looking at how online users perceive web sites in general.

The question is will blogs achieve high levels of consumer trust, and if so what kinds of blogs will be trusted??  What will this mean for corporations and how they communicate with their customers??  What role will professional blogs play in customer communications??

Please let me know your thoughts.

Thanks,

Steve

The Professionalization of Blogs - Implications for Communications

Back in March Newsweek ran an article about blogger Jason Kottke quitting his day job and becoming a professional blogger.  At the Institute for the Future we’ve been following the emergence of professional blogs for several years.  By “professional” I mean blogs that are authored by people who blog for a living or blog as part of their work.  While this definition is not precise, my aim is to differentiate between blogs written for fun or as hobby, and blogs written to make money or support a business. 

Professional blogs are already common.  ProBlogger reported that the 30 most trafficked blogs all have income streams.  Roughly 85% of Technorati’s Top 100 are professional blogs by my definition.  In many segments professional blogs already dominate in terms of traffic and influence.  Gizmodo and Engadet, for example, have more traffic and links than all the other consumer gadget sites combined. 

There are many factors driving the rapid growth of professional blogs.  The cost of setting up and maintaining a blog is very low, and the audience reach potential is high.  The advent of advertising based business models has created revenue opportunities for entrepreneurial bloggers, and blogs can now monetize a quality audience.  Blogging is also seen by many as an interesting job opportunity with an appealing lifestyle. 

The growth of professional blogging has attracted both new media entrants and traditional media companies.  Micro-publishing start-ups such as Gawker Media, Corante, and Weblogs, Inc. are producing professional blogs on a wide variety of topics.  Traditional media firms are also adding professional blogs at a very rapid pace, with Business Week being one of the latest to blog.

Product information and industry information blogs are particularly attractive to blog publishing entrepreneurs.  These tightly focused sites – like Gizmodo and Engadget in consumer electronics – have audiences that advertisers are willing to spend money to reach.  Because of this, many of the existing professional blogs target product or industry information (Silicon Valley Watcher and Auto Blog are two of many examples)

I believe that over the next few years most product categories and industries will be “covered” by professional bloggers.  These blogs will be better resourced, more professionally produced, and will likely have more compelling content than amateur or hobby blogs.  They will also be more aggressive about site promotion and traffic generation.  Like Gizmodo and Engadget in consumer electronics, professional industry and product blogs will have larger audiences and greater influence than amateur blogs.

It is important to point out that I am not saying that amateur blogging will not thrive and grow.  Just the opposite, I think amateur blogging will continue to rapidly expand.  However, in areas that will financially support professional bloggers I think the professional sites will attract relatively large audiences. 

Corporations will need to identify professional blog sites that cover their products and industry and develop programs for working with these bloggers.  Customers and other stakeholders will increasingly use professional blogs as part of their product and company research efforts, and these blogs will impact corporations much like traditional media has done in the past.

The questions I have on this topic are:

1.  Does this view of professional blogs make sense??  Do you agree or disagree with this??  How big and influential to you think professional bloggers will become??

2.  Should corporations try to work with/influence professional bloggers, and if so how?? 

3.  Do you think regular people will be more likely to read and interact with professional or amateur blogs??

Please leave a comment and let me know what you think.

Thanks,

Steve

Whether you’re confounded about how to communicate with them, or you’re dreaming of becoming one of them, you won’t want to miss next week’s focus on professional blogging. Leading the discussion is Steve KIng, a senior advisor at the Institute for the Future (IFTF).

King has been looking into the blogsphere at IFTF and finds that an increasing number of blogs are being authored by professional bloggers. He defines professional bloggers as those who see blogging as their primary business, or as an important marketing channel for their primary businesses.  He says blog oriented micro-publishing firms like Gawker and Weblogs Inc. have emerged, and  many individual bloggers have quit their day jobs to pursue a living through blogging.  These "professional blogs" are attracting relatively large audiences and gaining influence across the blogosphere. 

King will give us an overview of professional blogs, their economics, how micro publishers are changing the communication landscape, and what this will mean for corporate communications and public relations.