Posted by: Blue Heavens | 5 November, 2007

So Many Players in such a Small Market

The furore over the administration fee imposed by Nuffnang has been continuing for so long that it seems that there’s a dark force behind supporting and pushing for this online riot. Now it has even spilled over to the States on TechCrunch. My question is, why criticise and compete when the survival of these online advertising companies are dependent on each other. Being an avid online marketing advocate, I can see that the dragging on of this problem is going to harm not just Nuffnang, not Advertlets, nor other up and coming CPM startups, but most importantly, the credibility of using online platforms such as blogs for doing advertising and running online campaigns.

Let’s start with my main argument her. Over these past few weeks, it seems like a couple of new players in this area coming up to try and inch their way into the small market share that the bloggers in Singapore and Malaysia provides. Of my knowledge, bloggers here can use:

  1. Google Adsense
  2. PayPerPost
  3. Nuffnang
  4. Advertlets
  5. BlogConceptz
  6. Blog2U
  7. Other non-local based services as seen on Sha Money Maker

There might be a couple of others outside my knowledge so feel free to let me know.

So why am I complaining about having so many players in the field? IMHO, it’s more of like demand and supply in an economic theory. To put it simply, I think that, the more advertising “agents” out there that we have, the lesser each one of them will earn in terms of ad sales to participating companies. In the long run, this will affect the overall turnover of the advertising companies, and ultimately, the blogger.

Of course, there might be some counter-arguments that bloggers do not really care about how much they earn as long as they are getting money out of something, or there’s an ever-increasing number of bloggers, and even the number of unique views of internet users are gradually increasing.  Allow me to point out the flaws.

  1. If you think that bloggers do not care much about how much they earn, take a leaf out of the book of the current situation right at our doorstep. Is S$1 per withdrawal a lot of compared to actually getting nothing out of blogging previously? Definitely not!! Of course bearing in mind that we’re living in a fast-paced and competitive society (meaning “kiasu”), everyone will start comparing the proceeds from each advertising services that they make use of. So what if Nuffnang has decided to absorb the fees for a while, how long will they survive with that? I’m sorry but we’re talking about economies of scale here. If so many companies are competing for the meagre sum of money out there, how do you think they are going to cut down on their operational cost. Think about it, if Nuffnang falls, there goes one form of revenue for some of you guys. Do consider the long term benefits of you and the people around you. All in all, I’m talking about consumer perception here. As more startups provide CPM services, it will then be natural for bloggers to contract the common perception that: They’re the boss and they dictate and expect how much money they should be getting.
  2. More bloggers means more places to put ads and more visitors to each site. WOoohooo!! I’m not sure how many of you have heard of the term “Continuous partial attention”. We are living in a world where we are constantly exposed to advertisements no matter where we are in the day. At the same time, we are also culprits of constantly multi-tasking to get our stuff completed during the day in this fast and competitive society of ours. Therefore it seems that the average effectiveness of an ad is slowly eroding, following our gradual ignorance and mental disposal of ads we come across. In this case, I’m going against the effectiveness of online advertising. As a society that is increasingly accepting online advertising as a way of reaching out to the consumers, I would say that there is still a market out there of the players. However, come the day where we’ve reached the point of market saturation, all the small details are going to come into scrutiny, like which bloggers are the companies hiring, why we do (not) want them, how they affect our image etc… Take a look at Facebook, which is on the fast track for online advertising.
  3. Companies that specifically provide CPM services in a regional area and who are engaging the services of geographically based bloggers should not depend on the factor that there’re increasing number of internet users and they are spending more time on the net. As I brought up in the previous point, they come across so many ads everyday and how many do they actually retain in their memory, much less decipher what was in that ad? I guess the main point here would then be the number of UNIQUE visitors, which is definitely limited by the population count of the geographical reach. There might come a day where advertisers will compare the effective reach of these online services and slowly realise that online advertising is all down to hype.

In conclusion, let’s push for a more honest online community and environment. As I said, quarrels and underhand playing is not just harming specific companies, but the whole CPM industry and the faith and trust that advertisers will be placing on bloggers. This is very much a emerging industry in this region, and advertisers are actually taking the risk and playing around with online advertising. So let’s try not to sabotage what we are slowly building up!

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Responses

  1. Very nice writeup you have there, but I feel there are some misconceptions on how internet advertising agencies should conduct themselves in comparison to the real world businesses. This is only what I feel, doesn’t mean you have to agree. 🙂

    Any business online or not, eventually will have to deal with customer retention, referrals, marketing, budgeting and such to ensure the continuation of the business. If anyone feels that since business are conducted online, these basics can be neglected then I must say this is a very dangerous direction for any such companies to adopt.

    Like you have mentioned, all the players cannot live without one another. The advertising affiliate and the bloggers in this case. Take the bloggers out, the company can’t survive still, no matter how many clients they have.

    For a while, one may feel hey Singapore is finally catching up with the internet marketing motives… but what some of these companies have failed is to understand the dynamics of what made Google or PayPerPost a success with so many users despite criticism. Strip everything down, take away the $1 issue, take away the events… it still boils down to one thing – deliverance of ads.

  2. @Ed: Thanks for dropping by!! I agree with you that for these companies, the core functionality would be the deliverance of ads. For that I think that Nuffnang has very much to do to tweak it’s own business processes.

    On the other hand, there’re different focuses of companies and that is referring to the difference between Nuffnang and Advertlets. The focus of Nuffnang would be its community, the core group of people that supports its service. How it decides to rebuild this confidence in these group of people to in turn, encourage new sign ups remain to be seen.

  3. Hi there!

    Just saw your latest entry. The blogsphere here in Asia is at its growing stage, so definitely will have a lot of painful period to go thru.

    I like to invite everyone to take a closer look at just the few you listed:

    # Google Adsense
    # PayPerPost
    # Nuffnang
    # Advertlets
    # BlogConceptz
    # Blog2U

    is their positioning the same? 🙂

    For example, I know that BLOG2u is not cos it is under BAK2u as a marketing arm, which perhaps some misunderstood it as coming into the same blog ad space.

    It is not my intention to fight the same ‘space’ as the boys like Advertlets or Nuffnang (in Sing and Malaysia context) and I do not wish to cos BAK2u is strong (hopefully) in the lost and found anti-theft software environment. We are the only few guys that can offer a suite of antitheft softwares and more.

    So why should we spin off one dept into the ad environment? 🙂

    Well, this is more of value add for our BAK2u partners instead, in the supply chain where the values will far exceed in running a separate business by itself. Also, as myself is not just involves in BAK2u only, but other vested interests in other businesses it creates a platform for us to tap onto the blogsphere better

    Also being a speaker and a lecturer (part time) myself on entrepreneurship, startups and ecommerce .. I see a niche this service can encourage and promote a channel where agents, small business persons can tap onto BLOG2u to reach out to potential customers at only a small fraction of the costs.

    We do not actively look for advertisers, not that the profit is S$1.00 per blogger at S$4 each, but we very much keep it within the circle of BAK2u first to slowly grow it. The true ‘value’ of BLOG2u we are trying to position is that it can be a marketing channel for BAK2u and our partners first. Hit the walls a few times before we bring it out to the world where other overseas partners can benefit from it too. 🙂

    Paddy
    CEO
    BAK2u.com


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