How Digg Found a Way to Make Money

Digg Ads, the system in which advertisers submit or sponsor content with the look and feel of the social news site, is contributing up to 30% of its revenue
By Liz Gannes

Social networking behavior—endless repetitive page views, unvetted content—isn't a great fit for traditional forms of online advertising. Early attempts to bring search or brand ads onto sites like MySpace and Facebook had pathetic results compared with the trajectories of the sites' popularity and attention. But now, a few years in, social media companies are starting to discover how to advertise to their own audience. And in the last five months, Digg has figured out a model that makes sense. So much so that its new site-specific ad formats already account for more than a third of its revenue.

Digg, through its savvy users' curating of news, facilitates tons of page views, comments, and clicks to publishers' sites, but as we here at the GigaOM network have seen firsthand, such bursts of traffic do nothing for advertisers' click-through rates (CTR). So the company last year launched a program called Digg Ads (it kicked off with paying customers in October) in which advertisers submit or sponsor content with the look and feel of Digg. The company's publisher and chief revenue officer, Chas Edwards, who came to Digg from Federated Media, told us that it realized that its "local language" is blue headlines and yellow vote boxes. So now ads are made in the "vernacular" of Digg.

Five months in, Digg Ads are contributing 25%-30% of the company's revenue, said Edwards.The site also runs Digg-looking ads in its standard Interactive Advertising Bureau (IAB) spots, bringing in about another 10% of its revenue.The company doubled its revenue in 2009, becoming profitable on an EBITDA basis, and expects to do the same or better this year, according to Edwards.

While Digg—which has an 11-person sales team and uses Microsoft to sell its remnant inventory—had initially thought Digg Ads, with their cheap cost-per-click pricing, would be most useful for e-commerce advertisers like Best Buy (BBY) and eBay (EBAY), that changed quickly out of the gate. Now, the big spenders are brand advertisers from sectors like automotive, entertainment, and financial services—the folks who would traditionally be running banner ads and the like, said Edwards.

TELLING CTR SPREAD
Digg Ads as a whole see about a 1% click-through rate, but what's interesting is the spread between more successful ads and less successful ones. Campaigns that mimic the style of Digg—using a numbered list, for example, or pointing to articles rather than product information—were much more effective, with up to 4% CTRs compared with 0.3% or 0.4% for the worst-performing Digg Ads. Toyota (TM), for example, ran 16 different creatives for a Prius campaign with Digg (this was before the recall), said Edwards, with one of the most successful being a link to a Toyota-sponsored eHow article on "10 Tips from Happy People." Of course, how many cars were actually sold through the promotion (and perhaps later recalled), we don't know.

Alongside sponsored story submissions, Digg also invites advertisers to buy ad units and fill them with relevant organic Digg content. So, for instance, in conjunction with CES in January, Intel (INTC) ran a package of the top-ranked stories out of the trade show that updated automatically within an ad unit on Digg's site. It was actually Intel that came up with the idea of running the same dynamic Digg units on other sites where Intel advertised, said Edwards, something Digg hopes will become standard practice. Overall, those ads get 0.9% CTRs in standard IAB units, said Edwards, up to 2% when put in a Unicast slider ad unit that comes across the page.

What's next for Digg, which at 40 million monthly uniques is a long ways from where it wants to be? As the site redesigns itself this spring to become a personalized news home page by harnessing more signals about what each member is interested in, targeted ads will follow, said Edwards. And the Digg Ad formats will come along for the ride, bringing in dynamic feeds of relevant sponsored stories.

Digg Ads, by definition, aren't the solution for every other social media site hankering to monetize, but other sites should also be able to find value by mimicking and blending in with their own particular mix of user activity and engagement. Which, if all goes well, will bring value not only to the companies' bank accounts but to their users' experiences, too.
Fonte: Business Week

American Express compra empresa de pagamento online por US$ 300 mi

Revolution Money foi estabelecida pelo co-fundador da American Online (AOL) Steve Case e acordo deve ser concretizado na semana que vem.

SÃO PAULO - A emissora de cartões de crédito American Express anunciou nesta quarta-feira que vai comprar a especialista em pagamentos pela internet Revolution Money, por US$ 300 milhões.

O acordo deve ser concretizado no início do ano que vem, segundo informou a empresa. A Revolution Money, que foi estabelecida pelo co-fundador da American Online (AOL) Steve Case, fornece serviços de segurança nas compras online.

Com o negócio, a Revolution Money se tornará uma subsidiária da American Express e fará parte da sua unidade Enterprise Growth.

"Novos produtos de pagamento e plataformas estão evoluindo de modo rápido e é importante para nós continuarmos identificando as tecnologias que podem estender nossa liderança e nos colocar à frente da área de pagamentos tradicional", afirmou o presidente executivo da American Express Kenneth I. Chenault

LEIA MAIS
Lucro da American Express tomba no segundo trimestre
JP Morgan, Morgan Stanley e American Express levantam US$ 7,7 bilhões
American Express anuncia demissão de 4 mil funcionários
American Express e JP Morgan emitem dívida sem garantia da FDIC
"Enquanto a Revolution Money é uma empresa jovem e relativamente pequena, nós acreditamos no seu grande potencial", completou o executivo.

Fonte: Época Negócios