RSS Advertising, Coming Fast

  |  April 7, 2005   |  Comments

Consumer RSS usage is already large, and it's growing fast. More important, its effectiveness is finally becoming measurable.

It's hard to keep up with all the new developments in online advertising these days. We've just gotten the hang of selling and delivering Web-based advertising solutions, permission-based email, search, and contextual ads. Together, these constitute over $10 billion in annual ad spending. Yet, the development community continues to deliver an ever-growing array of new interactive consumer channels and touch points.

Some recent developments aren't surprising. Technologies such as addressable video ads, commercial SMS (define), and broadcast-quality streaming video are relatively straightforward and have been long anticipated. Others, such as blogs, podcasting (define), user-generated tagging, and RSS (define), were far less predictable, and their advertising applications are still much debated. Whether and how each will fulfill its promise as a powerful online advertising channel may not be determined for years... except for RSS.

Why RSS? Because consumer usage is already large and growing fast; more important, because RSS advertising effectiveness is finally becoming measurable.

RSS has been around for years. Developed by Netscape engineers in 1997, the technology permits users to directly receive content feeds from publishers and other content creators. It provides an open and efficient method for digital content syndication. It received little attention outside the hardcore Web content management community until 2001. It wasn't seriously considered a major consumer distribution and contact channel by the online advertising community until 2003.

Analysts and pundits have predicted for years RSS use could eclipse the Web or email as the primary method for receiving and viewing content by some consumers. Yet many in the industry haven't paid those predictions much heed. Given RSS' acceleration over the past year or so, those predictions may not be wrong.

RSS use is big and growing fast. In November 2004, the Pew Internet & American Life Project found 6 million Americans already use RSS aggregators for online news. Studies also show the more consumers use RSS, the more they want. A recent Slashdot.org study reveals 73 percent of existing RSS users intend to increase their RSS consumption this year.

Anticipating this growth, the major portals are investing heavily in delivering RSS feeds. Yahoo has integrated RSS feeds into its My Yahoo Service. Large content publishers are moving as well. NYTimes.com has made RSS feeds a major component of its offering.

Advertising embedded in RSS feeds is becoming a hot topic. Over a year ago, Pheedo released an RSS advertising case study. Last fall, Wired magazine ran a story about the growth of RSS advertising.

Despite this attention, as Jupiter Research's David Daniels pointed out last week, much of today's research indicates marketers will be slow to adopt RSS for e-marketing. I believed the same, until I read in Fred Wilson's blog about his recent experiments with RSS advertising (full disclosure: Fred Wilson and USV are investors in my company).

Wilson has been getting about three times the number of RSS requests for his blog as he gets page views. He's been running contextually targeted Google AdSense ads on his site; he recently implemented a new service from FeedBurner that inserts contextually targeted Overture ads into his RSS feeds and measures feed "views." Incredibly, after only three days of testing, he discovered the effective clicks and revenue yield from Overture ads in RSS views were almost equal to his AdSense page views. In other words, using a new technology to insert and measure ads and audience, he can monetize his existing RSS readers at a rate that should double his total online ad revenue.

Over three days, Wilson's blog had 7,450 page views. For those same days, RSS views on his FeedBurner feed were 7,350. These RSS views account for only 30 percent of his total RSS subscribers because, as with many blogs, his RSS views are three times his Web page views. During those days, he had 36 AdSense click-through from his Web pages. He had 10 Overture clicks from his RSS feeds. If similar ads were inserted in the other 70 percent of his RSS feeds, they would very likely produce total click-through numbers that approximated his Web page yield. Wilson's AdSense ads are optimized for his pages (they've been running for over a year). His Overture ads haven't yet been optimized for his feeds, since this is the first time they ran.

Wilson is now able to generate revenue from his RSS feeds, plus he has real visibility into the audience he's attracting. He can determine how many people actually view his RSS feeds, rather than just how many feeds were sent, which was all he could do before.

This is big. Wilson's blog is tiny, and his experiment is by no means scientifically and methodologically bulletproof. But it's very likely to be directionally accurate. If the new RSS delivery, ad insertion, and tracking tools from companies such as FeedBurner and Syndicate IQ can work at this level, and as RSS usage continues to grow this will quickly become a big market. Traffic is already there. Ads are already there. Now, it appears, the tools are there as well.

This is a hot space to watch. It won't be the next coming of search. It won't even be the next coming of commercial email or rich media. It will, however, become an important supplemental revenue stream to a lot of content owners and small publishers, particularly bloggers, where it's quite common three-quarters or more of their audiences use RSS feeds, rather than the Web pages, to view content.

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ABOUT THE AUTHOR

Dave Morgan Dave Morgan founded TACODA Systems in July 2001 and serves as its CEO. TACODA is a pioneer and leading provider of behavioral-targeted online advertising solutions for driving quality branding relationships. TACODA delivers advertisers high quality, targeted audiences from premium sites, powering successful online advertising campaigns. TACODA-enabled Web sites, which number over 2,000, reach over 70 percent of the U.S. Internet audience monthly. Its roster of customers, mostly Fortune 1000 business, includes branded national, regional and vertical sites, and 75 percent of the top 20 U.S. newspaper companies. Customers include the New York Times Digital, Weather.com, iVillage, Gannett/USATODAY.com, The Tribune Company, Belo Interactive, BusinessWeek.com, About.com, Advance Publications' Advance Internet and Forbes.com. Virtually every top 50 online marketer has run campaigns on TACODA-enabled sites, including travel, automotive, packaged goods, consumer/health products and consumer electronics companies.

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