Nuffnang going for Revenue Sharing model?
I read this interesting blog post by Danny Foo, and he says something about Nuffnang is planning to implement a revenue sharing program. But all this while, I thought all advertising program operates on revenue sharing model? If they don’t take any shares from what the advertisers’ pay, then where would their income come from? Drop from sky?
I always thought that all advertising program works like this:
- The agent (like Nuffnang, Advertlets, Adsense, etc) approach potential advertisers (or vice versa) and discuss together to come up with a deal.
- They agreed on a deal. The advertiser agrees to pay RM10 for every 1,000 impression on say, 50 bloggers they chose.
- The advertisement campaign is on. For that one week, the advertiser gets 1,000,000 impressions from the 50 bloggers, and paid RM10,000 for the campaign.
- The agent takes 30% from the campaign. The rest is shared between the 50 bloggers based on the impressions they contributed to the campaign.
The logic is here. The RM10,000 is their sales, and the payment to the 50 bloggers is their cost of sales. With 30% gross profit from sales, I wouldn’t say it’s a lot. They have an office. They have staffs. They have to look for advertisers. They have to post all the cheques to bloggers nationwide. All these are expenses that are incurred to make sure their operations goes on smoothly.
But Danny’s post makes me think, how does companies like Nuffnang make money IF they’re not using a revenue sharing model? How do they make profit? I doubt the advertiser are willing to pay extra agent fees. I seriously doubt that.
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December 1st, 2007 at 12:42 pm
Maybe it’s just a semantics thing; my understanding is that revenue sharing means affiliates get a percentage of sales as opposed to pay-per-click, pay-per-sale, or other methods of figuring rewards for affiliates. While it’s all ultimately revenue sharing, that term seems to be used to mean affiliates are paid a percentage.
December 1st, 2007 at 5:59 pm
You have brought a valid point I may have missed out there.
However, I’m assuming they’re not making enough because it’s not the advertisers who’re approaching them at the moment. Although Nuffnang and Advertlets may be the only local people doing this, a business in Asia is always a challenge against its business culture as well.
In other words, advertisers say propose to me a plan. They go in and make sure they win the signing. Now this signing may be inclusive of 30%, less or more though as the publishers we don’t know.
So Nuffnang may not be making enough because they’re establishing their brand at this point and want their name to be #1 when an advertiser wants to use blog advertising.
December 1st, 2007 at 6:45 pm
@Trixie: So, what you mean by revenue sharing is the widely use affiliates or referrals thing?
@Danny: I think so too. But one more thing to add is that they could be growing too fast. I wonder if they’ve really made a market research to see if expanding to Singapore is a wise choice. That could be one reason they start charging $1 for every cheque withdrawals. It’s not much, but a lot of publisher starts bitching about their missing $1.
If they’re really operating in the type of revenue sharing model that I am talking about, I guess it’s time for them to adjust their own profit level, since they didn’t disclose how much are they earning openly. Unlike TLA where they’ve made it clear where they earn 50% and the publisher earns 50%.
December 2nd, 2007 at 6:13 am
If a campaign costs X amount, the media buyer (companies like Mindshare, Carat, Zenith Optimedia) already take about 15%, then Nuffnang takes a further say 30% from that remaining 85%, what the blogger gets is actually 70% of the 85% of the original amount.
Revenue share is how all ad networks work, I am personally signed up with Pixel Media Asia and we work on revenue share as well.
December 2nd, 2007 at 6:15 am
There are many local ad representative networks around, Nuffnang and Advertlets are just the first ones that target blogs. The two big players are Innity and Pixel Media Asia.