Six Apart adds contextual ads to blogs; Google will follow; but Yahoo? (GOOG, YHOO)

Includes: AABA, EBAY, GOOG
by: David Jackson

Six Apart sent an email to customers announcing the integration of Kanoodle contextual ads with its hosted blogging software product
TypePad. This is clearly a sensible move for Six Apart, and probably
presages a similar strategy from Google. But where does it leave Yahoo?
Details and quick comments:

Six Apart's announcement:

A significant evolution in weblogging has been the
relationship between blogger-created content and contextual
advertising. Unobtrusive contextual ads have become a large component
in weblogging as bloggers realize it's often a good way to subsidize
their online passion (we're talking weblogging, here).

been working on a way that allows our subscribers to take advantage of
the opportunities of text-based advertising. Starting today, TypePad
Pro users can now easily set-up and integrate text ads directly into
their weblogs, track their earnings with TypePad and use the money to
pay for their subscription.

Setting up contextual advertising on
your weblogs is easy. You don't need to know HTML or how to edit your
templates. You have full control over the colors and configuration of
your ads. If you choose the "easy setup" option, you can even have
TypePad configure the ads for you. The new earnings tab makes it simple
to view your earnings and track ad impressions and clicks.

money you earn will be applied to your subscription fees. Ninety days
after you join the program any money left in your account can be
transferred to a PayPal account or left in your earnings account to
continue paying for your TypePad subscription.

We think the
ability for our subscribers to easily (you won't have to independently
apply for an account) set up text ads on their weblogs is indicative in
our effort to make TypePad Pro the service of choice for dedicated
bloggers. Later this summer, we will add additional features that will
expand TypePad Pro users' ability to earn and track revenues.

So, if you're a TypePad Pro subscriber, be sure to check out this new feature!

Quick comments:

  • The integration of contextual ads with blogs is an obvious source
    of revenue for three constituencies: companies that provide hosted
    blogging software, companies that provide contextual ads, and bloggers.
  • Look for Google to quickly follow by implementing AdSense contextual ads on its hosted blogging platform, Blogger.
  • Six Apart has some advantages over Google in implementing
    contextual ads on blogs: (1) TypePad is a paid subscription-based
    service (unlike Blogger, which is free), so customers already have
    accounts which can now receive income without further sign-up
    requirements. (2) Paying money into accounts to cover TypePad fees
    obviates the need for Six Apart to send checks or electonically
    transfer earnings to recipients. In contrast, Blogger users would have
    to sign up for new AdSense accounts to receive ad income.
  • Note TypePad's selection of PayPal (owned by eBay, ticker: EBAY)
    over sending checks or electronic transfers. PayPal is cheaper than
    both for small transactions. This is an incremental positive for eBay,
    as it will increase the number of PayPal accounts and extend PayPal's
    reach outside eBay. Not clear what deal Six Apart struck with eBay.
  • Yahoo (ticker: YHOO) is readying
    a contextual advertising service to compete with AdSense, but has no
    blogging platform of its own
    . Despite its partnership with Kanoodle,
    Six Apart would still make a good  acquisition for Yahoo due to its installed base of hosted blogs and the quality of its blogging software.
  • Six Apart is not revealing the proportion of ad revenue that it is keeping for itself and partner Kanoodle. Google also fails to reveal the division of ad revenue between itself and its smaller content parters. Yahoo has a competitive opening here: it should clearly disclose the revenue split of its new contextual ad service when it rolls out.

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