Back in 2004, John Battelle blogged about the idea of Sell Side Advertising. I thought it was a good idea and blogged about it also. The idea was for the publishers to choose the ads that show up on their site rather than the advertisers choosing the publishers. Since then, I think several people haved tried to build things like it, but I haven't seen something that's working well with this theory. (If you know a good example let me know!)
In 2006, we (Digital Garage) set up CGM Marketing to work with Technorati Japan to help explain to advertisers about advertising on user generated content and act as an ad rep company for Technorati and other user generated media sites.
Later that year, CGMM, Digital Garage, Reid Hoffman and I invested in Etology, an ad marketplace company. CGMM, Techonrati Japan, the DG team and I worked on brainstorming what a blog ad network would look like and I remembered some of the thinking from that discussion about sell side ads.
In Septemer of last year, we launched Ad-Butterfly, which was inspired by the discussion about sell side ads. Six months later, we've got 5500 bloggers who have passed our screening and have signed up and around 3700 bloggers actually running ads. This number is continuing to grow. These blogs are generating approximately 100M impressions a month. Right now, we're still not sold out so we're running some house ads, but some rough estimates show, depending on the type of blog you have, that you should end up getting more from our service than ad sense for the same number of impressions, once we can sell through the inventory. I think the magic number in terms of scale to get more advertisers is around 10,000 blogs and 200M impressions and we should hit that sometime soon.
Here's how it works. As a blogger, you sign up for the service and put our badge on your blog. As an advertiser, you search for blogs that you are interested in and request to advertise on their site. The advertiser and the blogger can opt into allowing and using a "review space" which allows the blogger to comment on the ad as well.
After testing the system and talking to bloggers, advertisers and readers of the blogs, we've found that we have a win-win in terms of trust. The bloggers like that they get to choose the ads. The advertisers like that they are paying for space on pages of bloggers who like them. The readers like that the ads are either releveant or at least in some way endorsed by the bloggers and say they are more likely to trust or click the ads.
We've been able to get large brand-named clients like NEC, Toshiba, NIKE, BMW, Suntory and Softbank partially because of this and at least at this point, they seem to be willing to pay a premium for this "friendly network" sort of placement compared to run of network or machine targeted placement.
In addition to scaling the network, we're working on more features to make it easier and more interesting for all of the parties but I think we're off to a good start. I'll post about some new stuff we're working on soon.
So... when I sit down and think about "what comes after ad sense?" I think this might be one of those things...
Thanks to Martin for suggesting I should probably blog this. ;-)