Digg to Federated Media: "Show Me the Money!"
This phrase, first coined by star wide receiver Rod Tidwell in the movie Jerry Maguire (and oft-repeated by goofy bastards in shiny suits all over the world), must be on the tip of Digg CEO Jay Adelson's tongue. Community-filtered tech news site Digg, certainly one of the hottest web properties going right now, has yet to capitalize on their phenomenal growth and loyal userbase. With ad sales represented by John Battelle's Federated Media, Digg are finding themselves more often than not forced to fall back on Google's Adsense program to generate revenue.
Update: Digg CEO Jay Adelson responds. See bottom of article for more information.
Sure, Federated Media's four employees have blogs, but can any of them sell an ad? With the exception of Google's highly successful automated AdWords program, most online advertising is still sold by teams of real people employing antiquated technologies such as the telephone, in-person pitch and liquid lunch. Federated Media have chosen to follow the Google model, offering a self-service approach where advertisers must sign up and deploy advertising campaigns via a series of interconnected web pages. Hardly the exciting, kick-back enhanced world of advertising the market knows and loves.
It doesn't seem to be simple a case of Digg being an unnattractive destination to advertisers, either. The anti-Batelle blog BattelleWatch, points to recent dissatisfaction expressed by Newsvine -- a social news start-up and customer of FM:
"Although the site has tripled its unique visitors since May, recording our best month ever in July, you may have noticed that ads have been very slow to roll in. This disappoints us, because even though we're now visited by several hundred thousand users a month, the site (and all other sites within the FM Publishing family, including Digg, Fark, Metafilter, etc.) still has a high level of unsold inventory. To the average web user, less ads is a good thing, but we're very concerned about helping you monetize your content and paying our own bills as well!"
They claim that Newsvine has now moved to a different advertising provider, although Federated Media continue to list Newsvine as a client. At the very least, it would seem the gloss has worn off the company founded by the very man who coined the term "Web 2.0".
Since publication, Digg's CEO, Jay Adelson, has responded to this article in discussion about the story on Digg. Apparently they are happy with Federated Media's performance, or lack thereof:
FM has set our expectations from the start. This is not "on the tip of my tongue."
We knew FM was growing and we're giving them an opportunity to do so. We love their model, and we're enjoying the fact that we have time to let them scale. Futhermore, Digg doesn't even use up FM's resources; They have assigned specific people to us (they have more than four people, I assure you) and it does not take away from their other clients.
It's a weird thing: Yeah we could be making more money, but hey, we're "enjoying" watching a trickle of advertising come in. Let's hope these words don't come back to haunt them in a year or two.
