The Real Value of Audience

We didn’t make the list, not that we’re surprised or even disappointed, really. The list? 24/7 Wall Street’s ranking of the 25 Most Valuable Blogs.

While I might argue the nuance of “value” (does audience size and ad revenue trump meaningful discourse?), I am impressed by the analysis Douglas McIntyre put into valuation and ranking of the top blogs. While admitting at the outset that “there is no way to accurately put a value on blogs,” the site drew revenue estimates from data and assumptions about advertising and other commercial revenue, quality and quantity of ads, traffic and traffic growth. The site then based total value on a multiple derived from estimated operating margins, longevity of the blog, outside funding, and the dependence of a blog on its founder or lead personality.

Omitting the blogs of large media companies and blogs as the market-facing vehicle for another primary business, 24/7 Wall Street’s list shapes up like this:

1. Gawker (including Gawker, ValleyWag, Gizmodo, and Wonkette, among others): $150 million.

2.MacRumors: $85 million

3. Huffington Post: $70 million

4. PerezHilton: $48 million.

5. TechCrunch: $36 million.

6 (tied): Ars Technica $15 million.

6 (tied): Seeking Alpha $15 million.

8 (tied): Drudge Report $10 million.

8 (tied): Mashable $10 million.

10. GigaOm: $8.4 million.

Valuations quick tapper off. No. 23 Talking Points Memo is pegged at $860,000. McIntyre assigns no price to No. 24 Travelpod and to his No. 25 pick, his own 24/7 Wall St. (I recommend reading the post in which McIntrye explains his reasoning for each blog, expecting his own.)

There are a couple of take aways from this analysis, and the first is clear: only very, very few bloggers will get wealthy at this game, at least as it is played today. With literally thousands of people and companies trying to make a business of blogging, it must be disheartening to learn that fewer than two dozen blogs are valued at more than $1 million businesses. And we can assume that the valuations drop fairly dramatically from there.

In high-flying Silicon Valley, we might also observe with some surprise that many of the popular tech blogs weren’t valued more highly. In fact, some of the most credible tech blogs (I’m thinking of VentureBeat, for example) don’t even make the list.

But it doesn’t take too much parsing, though, to figure out why. If blogs are to be valued as media companies, then the value of the brand lies in the value of the audience, or more accurately to the value the audience generates for advertisers.

While bloggers are big on growing traffic and page views, they too often to so without considering who is behind that traffic. In the world of brand advertising – and let’s face it, that’s where the big advertising money is – quantity doesn’t equal quality. A popular tech blog may attract 1 million visitors a month, but if that crowd doesn’t buy anything, if they don’t move product, they really aren’t that valuable in the eyes of major advertisers.

Indeed, this is a chorus in an on-going debate I’ve had with Shel Israel who argues that blogs have become more influential than mainstream media. In some quarters and for some purposes, sure. If your aim is to drive traffic to another blog or Web 2.0 site, then yes, coverage in or advertising on a popular blog can move the needle…if your target audience is the technical elite. If your objective is to sell toothpaste or canned soup or family sedan, well, then, not so much.

Let’s face it, young technophiles who live with their parents, bathe irregularly, and don’t pay for anything are not an attractive demographic. Popular blogs have a lot of readers, just not readers who buy stuff. In fact, if you look at the ads on these blogs, they’re all about cranking up the noise in the echo chamber; they aren’t about selling consumer packaged goods and luxury vehicles.

And it’s likely to stay that way, at least for a while.

Don’t get me wrong. Blogs are an important new media. Yet without the independent audience measurement and audit mechanisms to certify performance, qualify audiences, and justify ad spends, they remain the wild frontier for the richest brand advertisers.

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2 Comments »

  1. Unless of course the blog serves another purpose beyond drawing ad revenue. And even then, is there anything particularly innovative about the kinds of advertising we’re seeing on the high ranking blogs? My answer is a resounding no. That despite the fact blogs are supposed to provide an alternative method of publishing that uses technology only invented in the last few years. Strange.

  2. A key point, Dennis, and one I only alluded to when I wrote that we could debate the nuance of “value.”

    And you’re right that adverts on blogs are really no breakthrough, just as they aren’t on any other Web page. It’s not unusual that old media hangs on in new formats before breaking out to use that new media uniquely. Early film was nothing more than a camera pointed at an opera stage, after all.

    Still, advertisers need a means to measure ROI and until they have that, only the most creative will push new concepts.

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