“The advantage of blog ads is that they are well-targeted and cheaper than traditional forms of advertising,” said Miklós Gáspár, co-founder and chief operations officer of the American firm and managing director of the European operations. “Five years ago, when we started to do this business, bloggers were not really open for hosting ads on their sites. By now, we have a large blogger base and several bloggers in our portfolio make a living solely from hosting ads.”
Pressflex was established in 1998 with the idea of providing Internet know-how and technology to publishers. To date, the company provides turnkey sites and know-how to more than 100 news­papers and magazines.
“We established Pressflex at a time when most newspapers decided to go online,” Gáspár said. “Our concept is that we act as the webmaster for publishers. Because we serve so many clients with similar needs, we have special expertise and cost advantages.”
Pressflex offers two basic services, depending on whether the clients need new sites or have existing sites they would rather improve. In the case of new sites, clients can choose the Pressflex turnkey site service.
“While each site has its own unique look, all Pressflex sites reside on a common software and hardware platform that our team manages and is constantly upgrading,” Gáspár explained.
“Our publishing platform has grown out of eight years of research, experimentation, client input and tweaking. What we offer is the Internet analog of a printer, marketing consultant and fulfillment bureau rolled into one, with costs shared among multiple publishing peers.”
The idea of applying this service structure to blog ads came in 2002.
“As blog writing became a popular form of self expression and entertainment, advertisers discovered this platform as a new way to reach target audience,” Gáspár said. “Through Blogads.com, we save bloggers the trouble of having to handle the technical aspects of advertising, and make them more visible for potential advertisers.”
He said that to date, blog ads account for about 80% of the company’s revenue.
According to the company’s website, Blogads.com places ads on 1,100 peer-selected blogs with 300 million impressions a month in hives such as New Yorkers, Gothamist blogs, lawyers, evangelicals, gizmophiles, gays, conservatives, baseball fans, foodies, liberals, and scientists.
Among the blogs represented by the portal are PerezHilton.com (gossip), 105 million hits/month; Gizmodo.com (technology), 35 million hits; DailyKos.com (political), 14 million hits; ConcreteLoop.com (African-American), 6 million hits; Deadspin.com (sports), 6 million hits; Jalopnik.com (cars), 6 million hits; CuteOverload.com (pets), 4 million hits; Treehugger.com (green), 4 million hits; TowleRoad.com (gay), 2 million hits; and Valleywag.com (Silicon Valley), 1 million hits.
Besides giving the opportunity to reach a new target audience, the software developed and used by Blogads.com offers a cheaper solution compared to traditional forms of advertising, and higher yields for bloggers.
“We offer advertisers a cost-efficient, do-it-yourself tool, now in its third generation, to find the perfect blogs, create a campaign, schedule, pay and track results,” Gáspár said. “This system also enables us to give 80% of the advertising revenue to bloggers, while advertising agencies generally take 50% of the ad revenue.”
He said blog advertising also has the advantage that advertisers can edit ads in real time as readers respond to their ideas.
While Gáspár declined to disclose the firm’s revenue, data available on the company’s website indicate that its gross monthly revenue amounts to about $1 million on average, 80% of which is paid out to bloggers.
As for the growing popularity of blog ads in the US, a recent Financial Times article said that in the entire 2004 campaign, the parties and presidential candidates combined spent roughly $17,000 for ads on political blogs. During one week recently, one presidential candidate alone – Democrat John Edwards – spent nearly the same amount on more than 25 liberal blogs asking people to sign an online petition opposing the Iraq war.
“Such spending isn’t an anomaly,” the paper said. “An unusually early start to what has become an unusually competitive presidential race has prompted campaign veterans to look to the Internet for new, relatively inexpensive ways to reach potential supporters, and to raise funds.”
The article argues that the elongated and competitive 2008 presidential campaign cycle has prompted the candidates to use the Internet to help with fund raising and generating support.
“What’s at stake? Candidates in both parties need to raise enough money and early support to compete in the large number of primaries expected to be held by February,” the Financial Times wrote.
“As online fund raising becomes a staple of campaigning, the presidential candidates are now experimenting with ads on search engines and political blogs and using free Internet sites like YouTube.”
As for challenges faced by the Hungarian subsidiary, Gáspár revealed that it has been hard to recruit talented professionals, especially IT specialists.
“In Hungary, we handle the customer support and IT services with only 20 people,” he said. “The small personnel of the company often scares away talented candidates, who are used to small Hungarian companies going bankrupt by the dozens every day. It takes some time and effort to overcome this prejudice.”