014. Reluctant Salesman: The Sponsor Ads Era
by Richard MacManusOver 2006, I ramp up Read/WriteWeb's advertising business, by first partnering with John Battelle's FM Publishing and then copying TechCrunch's sidebar ad format.
After Microsoft Search Champs in Redmond had finished, I began my journey back to New Zealand. My first layover was twelve hours at the San Francisco airport, so I’d arranged for Marc Canter to pick me up. I was helping him with a couple of reports as part of my ongoing work for his company, Broadband Mechanics, so he drove me to his house in Walnut Creek. There I met his wife, Lisa, and their two small daughters, and Marc and I discussed his latest project. It was for AOL, the dot-com company that was now trying to reinvent itself as a Web 2.0 company. Marc had been hired to spec out a new product, AIMSpace, which—like everything he did at that time—he envisioned as a “digital lifestyle aggregator,” his term for a multimedia-laden social network.
Later, Marc took me and his family to a dinner at Max’s Opera Café in Burlingame. It was five minutes from SFO, so the plan was to eat and then drop me off at the airport for my flight home. I’d invited members of the Web 2.0 Workgroup to attend too, if they were in the area.
Mike Arrington and Gabe Rivera both came to the dinner, along with a bunch of other people I’d gotten to know over the past year—including ZDNet’s Dan Farber, Rojo’s Chris Alden, angel investor Jeff Clavier (a French man who now lived in the valley), and blogger Stowe Boyd. Mike also brought his girlfriend, Jenn, whom I’d first met back in October. I sat next to Chris, and we talked about the possibility of more consulting work for Rojo. The previous month I’d finished a market assessment and product analysis for him, and I was hoping to rustle up more work.
At Max’s Opera Café in Burlingame, January 2006.
Freelance consulting was still my primary income source at this time. Although I’d had a few sponsors for Read/Write Web, it wasn’t yet a dependable revenue stream. Around two-thirds of my income was coming from the freelance work I did for Marc, with the rest coming from ZDNet and irregular jobs like Rojo. In fact, I was hoping to bring other consulting clients on, to lessen my reliance on Marc.
Over the past year I had been exploring assistance in monetizing RWW, since sales and self-promotion weren’t among my natural talents. In particular, I hoped to join an advertising network called FM Publishing. The company had been started in 2005 by John Battelle, the cochair of the Web 2.0 Conference. I’d emailed John to inquire about FM as early as April 2005, when he first began blogging about it and positioned it as akin to a book publisher (the FM stood for “Federated Media”). “I plan to partner with site authors, acting as a platform which provides important services to them—revenue (in the form of advertising), back end support, and the like,” he’d written. He was already doing this for the popular tech-culture blog Boing Boing, in his self-described capacity as “band manager.” So his plan was to turn that into a business.
Prior to sponsor ads, I was running low-yielding text and display ads from the likes of Google and Yahoo.
I didn’t think I needed help on the publishing side, but I knew I needed help getting revenue. “I’m a small tightly focused blog with high quality content,” I’d written to John the previous April. “Writing is my strong point—not sales or promotion. Also I don’t have the contacts to get good sponsorship deals. In short: I need help to monetize my blog.”
It wasn’t until nearly a year later that I finally joined FM Publishing. “I’m currently approaching 12,000 RSS subscribers and my traffic is very healthy these days,” I wrote to John in early March 2006, cheekily adding that “I see you’ve added some sites recently which I’m sure have less traffic than me.” John emailed me back: “As we tell all authors who join us, it’ll be a while before real money flows in, but this looks good.”
At the beginning of April 2006, I joined the advertising network FM Publishing.
As John had warned, it was a slow start. In April 2006, I earned the grand sum of $153.94 from FM (rounded down to $150 for the check). For May it was $200 and in June $250. My agreement didn’t preclude me from doing deals with sponsors with whom I had a direct relationship and who hadn’t yet been in contact with FM. Mike was a member of FM Publishing too, but I’d noticed that he had begun to sell his own 125 x 125 square adverts on TechCrunch sometime during May 2006. He had a web page setting out both his statistics (“over 3 million page views per month”) and rates for the square ads ($7,500 per month). TechCrunch’s traffic far outstripped Read/WriteWeb’s—it was over ten times as much.
At first I had wanted to leave the revenue generation to FM Publishing. But after the first few months of disappointing payouts, I was finally ready to do some hustling myself. So, at the end of July, I wrote a post announcing that I was making RWW sponsor packages available. My plan was to copy Mike’s business model and format of 125 x 125 square ads in the right sidebar.
In May 2006, TechCrunch began running sponsor ads in its sidebar. This was also when the now familiar green TC design was launched.
When I didn’t get any bites, about a week later I began emailing startups I knew—starting with the ones already sponsoring TechCrunch. One of these was Zoho, an Indian company that I’d written about since 2005 and was keeping tabs on for their emerging web office suite. They were now competing with the formidable Google, which had acquired a small online word processing startup called Writely in March. It was obvious Google was building a web office suite too, so it was imperative for Zoho to get as many users as possible before Google launched its full suite. Knowing this, in August 2006 I pitched them on sponsoring RWW.
“I noticed Zoho is a sponsor at TechCrunch and I wondered whether you’d consider sponsoring Read/WriteWeb too,” I wrote. “There is obviously a strong correlation between our brands, particularly as I have a reputation for covering the ‘Web Office’ space.” I added that, in terms of pricing, “I am obviously a whole lot less expensive than TC,” with my rate for a 125 x 125 sponsor ad at $1,000 per month. That worked out at a $4 to $5 cost per thousand (CPM) advertisement impressions, which was nearly double that of TechCrunch ($2 to $3 CPM, based on the figures they’d quoted). I figured that RWW was a prestige publication, since I focused on Web 2.0 analysis rather than startup profiles. At least, that’s what I told myself to justify raising my rate above that of TechCrunch. Also, my rate was FM Publishing’s stated target figure.
Zoho’s CEO, Sridhar Vembu, immediately emailed back. “Yes, absolutely, we will be happy to. Our Techcrunch sponsorship just ended too as of Aug 15, so this is perfect timing.”
Emboldened, I reached out to Geoffrey Arone from Flock, a new web browser that was also a TechCrunch sponsor. “There is obviously a strong correlation between our brands,” I said, copying and pasting my pitch to Zoho and adjusting it slightly. He emailed back to ask if I would “do a year for $10k.” I realized that this was twelve months of exposure on RWW for not much more than he what paid TechCrunch for one month. This was too much of a hit to my ego, so I made a counteroffer of “$5k for now until end of Jan 07 (which is 5.5 months)” and he accepted that.
Thus, by the start of September 2006, I had four sponsor ads in my sidebar—Zoho, Flock, Pageflakes (a German start-page company I’d been talking to), and Text Link Ads (an advertising business from Cincinnati). In addition to these four sponsors that I’d gotten on my own, I had one sponsor via FM: the Australian software-as-a-service company Atlassian, which paid FM a higher CPM for a premium spot, the horizontal banner that ran in the site’s header.
Read/WriteWeb’s sponsor ads at the beginning of September 2006.
This was the real beginning of Read/WriteWeb as a business, and with both me and Mike now selling our own sponsor deals, it kicked FM Publishing into gear. In early October, FM’s chief revenue officer, Chas Edwards, announced in an email to the FM publishers, “Our fax machine received insertion orders” of more than four times the amount in July (“hence those small checks for August”). The new advertising contracts were from a host of big American companies—Intel, Microsoft, WebEx, American Express, General Motors, Cisco, Hewlett-Packard, Symantec, and others—and he promised the ads would start running in November. “Keep in mind,” he added, “Q4 and Q2 are the strongest months in the advertising business.”
Revenue from FM did increase in that period, but it was still too inconsistent for my liking. By this point, FM was openly frustrated about the sponsor slots I was selling. At the end of November, Chas emailed to ask for a phone meeting. “We’re having trouble keeping up with the units you’re selling versus the ones we’re selling, and on the ones we’re selling, what the positioning will be,” he wrote. “I’d like to get this ironed out asap! This confusion is preventing us from selling more skyscrapers and other units.”
I wrote back to say that I was happy to get on the phone, but that “there’s no confusion from my pov.” I told him I was “simply selling units that you guys are not selling.”
In fairness, FM was still a new business and so was busy ironing out its own scaling issues. But I was quickly learning that I wasn’t a complete amateur in the online advertising business. Read/WriteWeb had some leverage now, and I was starting to use it.
By the end of 2006, Read/WriteWeb was doing thriving business in sponsor ads.
This post is part of my serialized book, Bubble Blog: From Outsider to Insider in Silicon Valley’s Web 2.0 Revolution. View table of contents.
Next up: 015. Power Laws and Digg
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