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$500m Across 50,000 Blogs Probably Low

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A few days ago blog ad network Chitika released a study [PDF] co-sponsored by University of Texas, Dallas that projects revenue for the top 50,000 weblogs at $500 million.

Various bloggers have been quite skeptical of this figure and their research methodology, including TechCrunch, Just Make Money Online, and various other blogs, though the main response seems to have been simply ignoring the data.

But if you do the math, it really does make sense and the numbers are not only reasonable, but perhaps just a bit low…

Let’s calculate things out. First off, $500 million / 50,000 blogs means that, on average, each blog in the top 50,000 list earns $10,000/year. Go a step further and that’s a fairly humble $192 per week or $27 in daily revenue.

Given that the dozens of blogs in Federated Media, B5 Media and related earn hundreds of dollars per day (and some, thousands per day), that means that the blogs at the bottom of the 50,000 list might well earn 25% of that $10,000 average figure, or a paltry $50/week in revenue.

The research study further posits that the average blog generates income from multiple revenue streams and that Chitika is not the greatest revenue stream for these weblogs (a degree of humility and one that bolsters the legitimacy of the research in my opinion). They also posit that the top few percent of blogs generate the lion’s share of the revenue, which is completely consistent with the Long Tail nature of the blogosphere (and the so-called "A list" phenomenon too).

Then the research closes with a curious comment: "If online advertising is like advertising in a mall, advertising in the blogosphere is like advertising in a country club." I’m not entirely sure what they mean, but their explanation is that there’s more social value to advertising on the very top blogs, that is, that adverts on the top few are worth far more. That’s undoubtedly true, but that’s true in any medium: having an industry authority talk about your product or endorse your company is always going to be worth more than the straight eyeballs count might suggest. That’s why different publications have different rate cards: if it weren’t true, CPM would be standardized and you’d just buy the number of eyeballs you can afford.

Nonetheless, I have to say that I think their $10,000/year/blog revenue projection for those top 50,000 weblogs is quite believable and, if anything, low. I know that this weblog earns more than that, and certainly my Ask Dave Taylor blog earns multiples of that. Two data points, but I know that there are plenty of other bloggers who have figured out how to earn quite a bit more than $27/day in revenue from their site.

What’s more interesting is to consider that according to their projections, the top 10% accounted for 80% of the revenue, which translates to the top 5,000 blogs earning $400 million, or $80,000 per blog for those top 5000 blogs. Now we’re talking some impressive numbers. (Conversely, that means that the remaining 45,000 blogs in the survey only earned $100 million, a miniscule $2,222 annually per blog or $6.08 / day in revenue. You can earn more than that washing windshields in a busy intersection!)

One more calculation. The researchers also state that the top 1% accounted for 20% of the revenue. This means that the 500 top blogs earned $100 million, which works out to $200,000 per blog, per year or $547/day. Yeah, I know blogs in that range, so that definitely works for me as a back of envelope calculation. If the top 50 blogs aren’t earning 10x that, I’d be darn surprised, actually.

How about you? Are you making money from your blog and do your earnings fit within this set of projections? Can you believe that bloggers are earning over a half-billion in annual advertising revenue across the entire blogosphere?

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$500m Across 50,000 Blogs Probably Low
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