$500 million revenue across 50,000 blogs is probably low…

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?

8 comments on “$500 million revenue across 50,000 blogs is probably low…

  1. Well, my blog is ranked 16,411 on Technorati, so I guess it’s in the top 50,000 – and I make nothing off it, so you can count my $10,000 towards someone else. Actually I make plenty off my blog indirectly – I’m an academic so have a steady job and a professional network that’s certainly enhanced by my blog, and I get writing and speaking gigs regularly from people who’ve found me (and trust me) because of my blog. But I assume that survey wasn’t talking about that kind of indirect earnings?

  2. I wouldn’t get sucked into the -* well, the average top blogger makes $10K a year *- argument. There are a fair number of bloggers making big bucks, but think long-tail. Those in the long-tail – more than likely the 49,900 other bloggers – are not making much at all.
    I liked Jill’s comment – indirect earnings (or additional derived value) from a blog is hard to measure, but certainly impact bloggers.

  3. I can also relate to a blog being a tool to extend your professional network, its an excellent medium to extend your credibility to people who you might otherwise never come in contact with, and are more closed to the good ol’ boy/girl network.
    As far as blogs making $200,000/year or $10,000/year, I would be hard pressed to think that many blogs make this type of revenue from the blog itself — in the form of advertising, as the paper and post suggest.
    I have the same line of thought as Jill and Eric on this, if you consider revenue generated from blog leads, then I myself can also tell you I have earned in the vicinity of $10,000/Dlls a year in contracts from having a blog, and I am ranked in the 300,000+ range on Technorati.
    However, coming back to the $200,000/$10,000 revenue making blogs of advertising, I would consider a blog making this much money a media outlet/company by itself, one which has simply dropped the more editorially stringent tone in favor of the more informal blogging tone, but nevertheless an entity with deep roots to more formal advertisers — as media Co’s tend to have — not just the lower-barrier lower-paying Adsense advertising model, which seems more prevalent in all but the top 1,000 or 5,000 blogs.

  4. I LOVE it when professionals launch a blog to establish credibility with either their peers or potential clients. A blog of that sort is the best marketing tool any bootstrapping business owner can wield.
    However, studies of this sort just fan the flames of the “get rich quick crowd”. I had one client who launched a word press blog and 6 weeks later was STUNNED that he wasn’t listed at the top of Google. His sole blog entry was the “Hello World” that comes as part of the Word Press installation! When I told him he would need to post to his blog, and do so at LEAST three times a week, he was surprised. I had another wanna be client declare that she wasn’t interested in working that hard to make money. Sigh!
    I’m sure this study will cause a swift up turn in blog inquiries. It’s like being a dog breeder when your breed shows up in a kid’s movie… you just brace yourself for the onslaught.

  5. I’m not quite in the Top 50,000, but I can say this: my blog makes money but its purpose is much beyond something directly tangible. I use my blog to showcase my writing and research skills, therefore I make money indirectly through clients who hire me for my other writing services.

  6. The numbers make perfect sense to me. Interesting data that would be even more interesting if revenue streams were broken out by source: advertising, product sales, affiliate revenue, related consulting/speaking income, etc.

  7. I don’t have a blog, but I adore reading them. I am continually impressed by how much work people put into what amounts to huge, free, continuously-updated resources for web junkies like me.
    Y’all deserve any money you get from your blog. But no, I won’t buy you a cup of coffee.

  8. Hi Dave – do you think there’s a connection between the age of the blog and the earnings? Ask Dave Taylor seems to have been around for a long time.
    Or are there other factors that differentiate the more successful blogs from the low earning ones?
    I was quite shocked when I saw some new top 50 bloggers list this morning and the guy at number one was on the Sunday Times Rich list. I never knew that blogger earned so much.
    Personally – I don’t monetise my blogs much yet. The Kwik Fix plumbers one is more of a customer relations tool, and a way of getting potential customers to the site etc.
    And I really don’t know what my personal one is yet. I only moved it from a free blogger account I’d been practising on about 5 months ago, and for now, I just like writing it.

Leave a Reply

Your email address will not be published. Required fields are marked *