Understanding The BlogHer Ad Tier System: Part One

by anna on April 26, 2010

This is the first in several posts explaining the statistical evidence I have found that suggests there is a tier system that — together with traffic — governs how much money publishers on the BlogHer View definition in a new window Ad network make from running advertisements on their blogs. For a review of what I’ve discussed already on the topic, you can start with a post that questions how bringing a very high traffic site onto the network might impact other posts here. Then, you can read my kind of convoluted metaphor for the money-making scheme here, and my more general introduction to all the issues involved from the last post. Today, I’m going to show you how the tier system can be shown just by looking at how my own statistics have changed over the course of my time serving BlogHer ads for about a year and a half.

What I Have Learned About Tiers View definition in a new window In Online Ad Networks Over The Course Of The Past Week

BlogHer is not the only online ad network that uses tiers. Tiers are used by many (if not all) online ad networks to package small sites with big ones in order to create a more “effective” CPM rate and, therefore, be more attractive to advertisers and big ad agencies. For example, a premium, high traffic site like ThePioneerWoman.com is where big brand names are going to want to advertise, but it would be tough to sell a package of ads to an advertiser with all premium sites like this. Why? Because ThePioneerWoman.com is only going to be running ads at very high CPM rates (like $12 CPM or more, say). So, to be attractive to a big brand, the advertiser will package ThePioneerWoman.com with a small site, so that they can sell the “pack” at a rate of like $8 CPM, and the advertiser gets some hits on ThePioneerWoman.com, and some on the smaller sites, and the network gives PW the CPM of $12, and the little guy the CPM of like $3, and pockets the difference.

That’s one kind of tier. A CPM tier.

Then there’s a tier for available ads, which is what we’ve been talking about with BlogHer. From looking at stats, it is my *theory* (again, just a theory, because without anyone admitting it, that’s all I can say is that this is a theory) that there are several different tier systems at work at BlogHer: one for CPM rates, one for available paid ads, one for who gets house ads, and one for who gets defaults. And possibly more. It is also my theory that the tier system is not tightly controlled by anyone, but can be altered for various reasons. My subsequent posts on this topic will explain how I arrived at these conclusions, beginning today with a look at my own stats, and the conclusions one might make from them. Bear in mind that my stats actually provide the weakest of the evidence for tiers: only after looking at the numbers for many other people did I become totally convinced of the tiers being real, like I said before, it’s just too much to do all at once, so I’m still going to just start with my own numbers.

My own traffic

There are a couple of things about website traffic that constantly change — one, your traffic changes throughout the year for various reasons — your blog grows, online traffic ebbs and flows, maybe your posting changes. And two, how many ads are sold changes throughout the year, because of the fact that ad budgets (as Blogher is so terribly fond of pointing out) are funded in a cyclical fashion. Because of this, it’s really tough to compare things in terms of dollars and cents from one quarter to the next. This is why I started looking at the percentages of unpaid ads I was running now versus before. Below is a graph that shows what percentage of unpaid ads I was running throughout my career as a BlogHer ad network member. Just so you understand, in this case, a high percentage is a bad thing, it is a high percentage of ads for which you are receiving no money — these are public service announcements, remnant ads (“leftover” ads that didn’t run from the previous month, this doesn’t really happen anymore but it did back in 2008), or completely blank ads, or house ads (technically you might receive some compensation for these ads but the rate is very, very low, so I’m counting them as “unpaid”). You want a low number here, because any time you serve an unpaid ad, you’ve got crap on your site that you’re not being compensated for, and you are still being held to the storied BlogHer editorial guidelines and all that jazz, and running BlogHer headlines, and all that jazz, even though you’re not being paid.

OK, so that’s kind of a volatile graph, but you can see that I was running a bunch of unpaid ads at the beginning, and then eventually I went down and stayed down pretty steadily for a while, and then went back up, and then kind of went back down, like halfway down and stayed there until they booted me off the network. These kinds of fluctuations are usually explained by the “cyclical nature of advertising sales.” In the interest of addressing those arguments, let’s consider that graph according to quarterly boundaries, noting that Quarter 4 (October, November, and December) is traditionally the most lucrative quarter for advertising because of the holiday season. If it’s a lucrative quarter for advertising, then my unpaid percentage should be going down, because there should be more ads on the network — provided that the fluctuations in this chart are only being caused by seasonal changes to the ad market, that is.

abdpbt View definition in a new window.com/personalfinance/wp-content/uploads/2010/04/q4overlay1.jpg"

If a revenue decrease were as simple as seasonal changes, there wouldn’t be these kinds of inconsistencies. You wouldn’t see a sharp increase in unpaid ads during the holiday season like I did in Q4 of 2008, and then see them flatten out in Q4 of 2009. If anything, you would see them decrease during that time, and then increase afterwards, when things got bad, and the curve would look similar both years, only changing in tune with the economy.

So what accounts for the sharp differences in the graph? Let me see if I can illuminate things by telling you a few things about what happened during that timeline, both on this blog, and elsewhere in the BlogHer Ad Network, and you can draw your own conclusions.

In late April of 2009, I was chosen as BlogHer of the week. The next month, my percentage of unpaid ads changed drastically. To be exact, it went from almost 61% unpaid ads (that means that only 39% of the ads I was running were actually giving me revenue) to about 28.5% (meaning that about 71.5% of the ads I was running were paid). The next big spike in my percentages occurred in January of 2010, when my unpaid ads jumped up to about 53%. That was also the month that Ree Drummond joined the BlogHer network. In February of 2010, I wrote a post questioning whether our revenue had been going down because of this move. That month, my percentage went down again, to 36% unpaid ads, right smack in the middle of Q1 (the worst of the financial quarters).

When it’s one person, it might be dismissed as coincidence. My next posts will make it seem more difficult to do that.

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{ 26 comments }

1
MommyNamedApril April 26, 2010 at 6:27 pm

seems like all i’m running lately is house ads. i’m interested to see the next installment…

2
jonniker April 26, 2010 at 7:05 pm

I can’t believe how much work you put into this, Anna. I am so, so impressed and fascinated and … wow.

Dude, you’re doing a kickass job.

3
nic @mybottlesup April 27, 2010 at 5:46 am

ditto.

4
monkey April 26, 2010 at 7:45 pm

Why do you think your unpaid ads spiked up in July of 2009 and then back down again?

5
anna April 26, 2010 at 7:48 pm

Monkey, I didn’t hypothesize because it was a spike on the smaller side. But my guess was, that was when I bashed the party at BlogHer and that probably didn’t win me any friends. But it might just have been a coincidence. If it’s a small deviation, you have to allow for it just being an off month, I think. It’s the really, really dramatic changes that are harder to ignore.

6
monkey April 26, 2010 at 7:54 pm

Ha! I was going to make a joke/tease you about the Sparklecorn brouhaha when I noticed the July 2009 date but didn’t want to get you in any more trouble.

7
Monkey April 26, 2010 at 7:58 pm

I was also hypothesizing about whether they start funnelling more paid ads to their big name blogs in preparation for the Blogher conference (the companies might ask for it at that time).

8
Eliz April 26, 2010 at 8:01 pm

This represents a ton of work. Thank you for delving into this so prodigiously.

9
Alias Mother April 27, 2010 at 6:47 am

I’m on my last day of maternity leave, which means my brain has atrophied almost beyond hope and most of what I took from this post is “blah blah blah” (my fault, not yours), but I am alert enough to be intrigued. It matters not at all to me–as I run a completely ad-free site and do my paid writing for the print world (where I know what I’m getting paid in advance of doing the work. Crazy concept, no?)–but the business of blogging fascinates me. Probably because it is a new frontier to the business of writing and I expect that what shakes out here will eventually cross over.

Thank you for doing the work. There’s nothing better than a smart, talented, cool-headed muckraker.

10
Kate April 27, 2010 at 7:18 am

Thank you for doing this, Anna.

11
Kerry April 27, 2010 at 8:52 am

My head hurts just reading that. I can’t imagine actually doing the work and then writing about it.

It did prompt me to look at my own stats for this month (which is the only month I have). If I’m doing the math right, 62% of my ads are either PSAs or house ads.

12
anna April 27, 2010 at 9:20 am

My guess, based on what people have reported, is that you’re doing the math right.

13
Mo April 27, 2010 at 11:40 am

Wow. Just wow. I’ve been reading all of your posts on this and I’m just blown away. I’m not large enough to belong an ad network, but this is still fascinating to me because it’s a study in unregulated business practices run amok. I can’t wait to see how this shakes out…

14
Heather April 28, 2010 at 5:13 am

I keep coming back to read your updates on this topic. So interesting. I feel like it’s some weeknight drama I can’t get enough of.

15
Alexis April 28, 2010 at 7:00 am

Truly fascinating stuff. I am anxious to see your other figures since it really should be quite clear just what the mathematical trends are. While it has been almost five years since I stretched my statistical muscles, with enough graph/numbers comparisons it would probably be possible to to derive a loose model of the formula used for all this. While this post indicates that it is not just a formula, but a system that can be altered at the discretion of interested parties (and by that I mean BlogHer’s PR/Marketing departments), none the less I bet you can develop a decent system for predicting just what will happen based on all the variables. Now that would a be a great tool for bloggers to have…

16
sarah April 28, 2010 at 12:54 pm

I stumbled across your blog with your recent Blogher Ads posts, which I found very informative and thoughtfully analyzed, given the limited information that there is out there (a lot of speculation is inevitable when trying to compare one site’s income with another, as that information isn’t readily available). I’ve been very interested in this business of ad revenue, particularly with regards to Blogher Ads because I am also using their ad network, and your posts (particularly the Pioneer Woman one) raised a lot of interesting questions.

However, I just want to put out there that I think you’re being a LITTLE unfair to Blogher, because many of these deductions are based on some conclusion-jumping. Perhaps my experience will help round out your understanding of the network, because I’ve got one of the more highly trafficked blogs — I’m not up there with Pioneer Woman’s numbers but I do get more than 1 million impressions a month and therefore I get a larger cut of my revenue (this is no secret, since Blogher is up-front that bloggers with 1 million impressions have the reverse). And lately I have seen that my revenue has been just as disappointing as yours and the other commenters in this post. I actually think mine’s worse — over the past month or two, I’ve only got about 20% of my impressions going to paid ads, and the rest are given up to default and remnant impressions. (When you get more than 1 million impressions, that translates into thousands of dollars lost in ad opportunity, and trust me that makes me sad!!!)

I honestly think Blogher is being pretty honest and up-front about their policies, and I think my experience supports the probability that there are actually no shenanigans going on, and we’re all in the same boat together. When ad inventory is good, we all benefit, but when it sucks (and it really sucks right now), we’re all suffering, not just the smaller blogs. I’ve definitely thought about jumping ship, but I stick with Blogher because I honestly can’t find a better network out there with higher CPM rates that would bring in more money. I’m just hoping things pick up soon.

17
sarah April 28, 2010 at 12:56 pm

oops, I see that my use of the > and < symbols got lost in the post and now it doesn’t make sense! if you could correct that to make the post readable, I’d appreciate it! thanks and sorry!

18
anna April 28, 2010 at 4:22 pm

I don’t really see how this adds anything or refutes anything that I’ve argued in this post. If you think you’re getting a good deal with BlogHer, then best of luck to you, “Sarah.” I don’t care if people want to stay with BlogHer. My only desire is that people are able to make informed choices. I don’t see how your comment informs anybody of anything the didn’t know before reading it. But thanks anyway.

19
sarah April 28, 2010 at 4:38 pm

Wow, I honestly thought you’d appreciate my addition, since you seem like you’re interested in gathering as much information from as many other Blogher bloggers as possible to get a wide and varied range of experiences, not just those that support your beliefs. Sorry to have misjudged you so clearly, and I mean that without any sarcasm. I’ll let you continue to put out your skewed opinions and defensiveness, then.

20
anna April 28, 2010 at 4:42 pm

Oh, I am interested, Sarah. I’d love to know where your blog is, and what your stats are. Can you give me that information so I can include it in my data? In fact, if you don’t want to actually share your stats, I understand. Just let me know where your blog is, that would be super.

21
anna April 28, 2010 at 4:47 pm

By the way, I’m sorry if I sound defensive, but I am automatically suspicious when I see a comment left by somebody who claims to be a blogger but doesn’t leave a link to their blog. So if you are really a blogger, I’m sorry for being flippant with you. I have reason to believe there are . . . less than friendly people reading my writing today, so that is coloring how I’m reading these comments. Please forgive my temper.

22
monkey April 28, 2010 at 5:52 pm

I thought the point of these posts was to show that the doling out of paid vs unpaid ads is based on a tiering system, and that there’s an element of personal bias/unfairness/undisclosed preferential formula that determines who is placed in what tier and that the average blogger signing on to Blogher isn’t aware that he/she may be kicked in/out of tiers on factors other than the blog’s business-worthiness.

I didn’t read Part I or II as disputing that everyone is likely to get paid more overall when Blogher’s media sales department is doing better versus when they aren’t getting enough clients. That seems an obvious enough point to me-I’m reading these posts as attempting to develop an understanding of allocation.

23
monkey April 28, 2010 at 5:53 pm

Sorry, that was in response to Sarah, not you Anna.

24
magpie April 28, 2010 at 7:00 pm

Anna, this is totally fascinating.

25
Annie April 29, 2010 at 7:03 am

I’m finding this series really fascinating — keep going, Anna.

26
Kerry April 29, 2010 at 3:23 pm

You know, I’m interested in this tier thing, even though I sort of feel like there might well be tiers, but that’s how stuff works, and whatever.

But what I REALLY find compelling about this whole thing is the way they’re handling the communication. It seems like a much better way to handle this would have been to answer specific questions from you from the get go (and I’m assuming you gave them a chance to comment). There may be some reasonable explanation for all of this, and that would have been a quick and easy way to get it out. Fine. Cool.

But the tweets, and especially that email today…holy condescension Batman. If I’d ever handled an employee concern like this, I’d have been handed my ass (and this is more like a group of employees who actually generate revenue for your company, so all the more so).

That’s the part that’s getting my goat. I’ve been in situations (lots of them) where people accused me of being shady when I truly wasn’t, and even THEN I would never in a million years have been so dismissive. That just wasn’t an option in any of the companies I worked for (and that’s a LOT of companies).

(Yes, I said “getting my goat.” Because I’m old-timey. If you don’t like it, bite me.)

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