I have read a number of posts throughout the blogosphere regarding IZEARanks, RealRank and the potential impact on lower traffic bloggers. I want to address those concerns and provide my perspective on the importance of these and future analytics services we will offer.

I believe that a fundamental component of successful marketplaces is transparency and openness between buyer and seller. In the PPP and SocialSpark models the buyer is the advertiser and the seller is the blogger. The advertiser is interested in purchasing an ad unit that delivers a value (clicks, views, purchases) that coincides with an acceptable return on investment. The blogger is interested in maximizing the income from their blog and making the most money possible for the time and money they put into publishing it.

Buyers and sellers ultimately determine what something is worth based on a comparison of available options and alternatives. Some of those comparisons are apples to apples, others are apples to oranges. In our case advertisers can try different blogs and forms of advertising (display ads, search, affiliate programs) and bloggers can try different forms of monetization and ad networks. At the end of the day it comes down to market forces and value creation.

If PPP and SocialSpark are to be successful long term we need to keep the value equation in mind at all times. If the price/value ratio is too high advertisers will leave us, too low and bloggers leave us. There has to be a balance.I believe the best way to achieve that balance is by providing data to both parties so they can make informed decisions. Bloggers have the most data in the marketplace right now, but we have been making enhancements to improve visibility for advertisers.

Traffic is a big part of the value equation for advertisers (the buyers), for that reason IZEARanks and RealRank are a step in the right direction. The more comfortable advertisers are with what they are buying the more likely they are to engage bloggers.

What about the small bloggers?
I am personally convinced that there is a huge universe of untapped value in smaller bloggers. However,  a blog with 100 pageviews a day should not command the same offer per post as a blog with 10,000 pageviews a day (generally speaking anyway).  The PPP system allows advertisers to target based on overall traffic and assign a value to the blogs they are targeting. It should come as no surprise that blogs with higher traffic receive higher offers, but at the same time smaller bloggers should receive offers that are inline with the value they deliver.

That said traffic is only part of the equation. While RealRank provides insight into traffic, traffic doesn't always equate to return on investment for the advertiser. Here's an example:

Blog A : 1,000 pageviews a day : $10.00/post : 40 clicks on average = $.25 CPC
Blog B :10,000 pageviews a day : $100.00/post : 100 clicks on average = $1.00 CPC

While Blog B may be 10x bigger and deliver more clicks than Blog A, Blog A actually delivers a lower cost per click than Blog B. That could be because the quality of the post is higher, the blog is more targeted to the subject, the post stays on the homepage longer, the audience is simply more inclined to click, etc.

Advertisers can back into this value equation with some manual processing right now and I know many do. In the future we will make it even easier to determine historical value delivered with ROIRank.I believe all bloggers should focus on value creation for the advertiser, but it is even more important for smaller blogs as they can't depend on volume alone. Value is one metric that allows smaller blogs to compete with the big boys, especially if they focus on their niche.

We have already seen a favorable response from both advertisers and bloggers on RealRank. I look forward to making the system even better and more effective over time.

Technorati Tags: izea, IZEARanks, payperpost, Real Rank, ROIRank

Posted by tedmurphy at 03:31 PM in IZEARanks | Comments (1) | TrackBack (0)