Here is a very simple way to think about the value of advertising on blogs. About.com was
acquired by the NY Times for $410 million at a multiple of over 10 times About’s 2004 revenues and a multiple of over 30 times EBITDA. Several analysts say there is a dearth of ad space inventory. But of course it’s more than that. When you own or deal with a wholesale property you can work a sponsorship deal.
Now consider blog inventory. Unless its part of Weblogs.inc or Corante, you can’t work that deal without significant transaction costs. Like Denton’s Sony deal for $25k/month. This points to the opportunity, not only for aggregate micro-pubs — but for a system where publishers aggregate themselves through commoditization. How to value this inventory is another thing, however.
Reader Comment:
From Jason Calacanis
“Well, anyone who is a hustler can get out there and sell… however, if you’re spending 1/3rd of your time on tech and 1/3rd on selling you’re only spending 1/3rd blogging.
When I modeled the blog publishing model 18 months ago, Brian and I realized there is no reason to do this if you can’t get to 400-700 blogs in three years. We’re at 75 blogs and will hit 200 this year…. that has been a huge amount of work, and I can’t imagine how long it will take to get to 400-700 like About.com!!! Maybe five to eight years!”
Ross Mayfield is CEO and co-founder of Socialtext, an emerging provider of Enterprise Social Software that dramatically increases group productivity and develops a group memory.
He also writes Ross Mayfield’s Weblog which focuses on markets, technology and musings.
