Global Trend

Blogs Become Mainstream

Consider this statistic: The term “Web log” was coined in December 1997. Today, some 35 million people read blogs. In other words, eight people have begun reading blogs, on average, every minute of every day for the past eight years. That’s one every seven-and-a-half seconds. And there appears to be no end in sight.

According to a recent article in AdAge, the time that employees spend reading blogs during working hours collectively equals 2.3 million full-time jobs. On average, they spend 40 minutes a day, or 3.5 hours per week, doing it. That’s 9 percent of the workweek! In 2005, the time American workers spent on the job reading blogs amounted to 551,000 person-years.

Technorati, a company that tracks about 20 million blogs, reports that the number of Web logs on-line has quadrupled each year for the past three years. If growth continued at this rate, by early 2009 there would be a blog for every single person on the Internet.

With this new Internet-within-the-Internet growing so rapidly, media companies are trying to figure out how they can make money from it. For example, America Online recently bought Weblogs, Inc. for $25 million. But, no one is yet sure what AOL is going to do with the site, which hosts 100 blogs on a diverse variety of topics.

At about the same time, Verisign bought Weblogs.com for about $2 million. Fittingly, Verisign announced the purchase on its company blog.

It all has the familiar ring of a bandwagon phenomenon, much as Web sites themselves did in the mid-‘90s. Everyone had to have one, but few companies knew what to do with them. Whether you call it micro-publishing or user-generated content, Web logs are still too new for mainstream companies to understand their full impact. However, it’s clear that individual users are going to contribute a great deal to the content that general audiences see in the coming years.

One example of this type of phenomenon is the purchase last March of Flickr by Yahoo. Flickr is a service that lets users upload photos and share them on the Web. Since the $30-million purchase, the user base has increased by 400,000, to 1.4 million. This blog-like phenomenon is encouraging Yahoo to open up some of its other products to user input. And that may be changing the way we define what a media company is.

For example, Intermix Media, which owns MySpace.com, was recently purchased for $580 million by News Corp. MySpace has 27 million registered users, who essentially “hang out together” in virtual space. The fact that MySpace, which offers none of its own content, can attract such an enormous crowd is an indication of the power of blogging.

Such major blog-related acquisitions by mainstream media companies seem to indicate that user-generated content has reached the tipping point. At this moment, 12,000 new blogs begin publication every day. This trend is being supported by blog search tools offered by both Yahoo and Google, as well as RSS and so-called “ping services” that alert users when new material is posted on a given site. These developments simply reinforce the “pull trend” that we’ve been following with regard to every aspect of consumer media from entertainment to news to advertising and product offerings.

That’s why companies such as Fortune Interactive are clamoring to get in on the action. According to a report on Business News Wire, in October the company launched a new “Web log marketing service” for companies that want to create corporate blogs.

There is no question that more and more corporations are using blogs as a tool for raising brand awareness and targeting consumers. In fact, according to the New York Times, businesses will spend up to $100 million advertising via blogs in 2006.

Given this important trend, we offer the following six forecasts for your consideration:

First, blogging is at the same stage today as the Internet was 10 years ago. As many blogs and bloggers as there are, the phenomenon is in its infancy, and most companies frankly don’t know what to do with it. All they know is that they can’t afford to be excluded. This simultaneously presents many opportunities and pitfalls.

Second, those who can create a successful blogging community in the next year or two will be in a position to sell out. Expect to see a spate of start-ups with virtually no capital requirements and an upside of $2 million to $500 million, based on the price of recent acquisitions.

Third, in the next two to five years, expect to see many companies make “impulse purchases” of blog enterprises that simply don’t pan out in a profitable way. Just as many companies “threw good money after bad” for a Web presence in the 1990s, numerous firms will do the same just to be part of the blog craze.

Fourth, a few savvy companies will eventually figure out formulas that can harness the power of the blog. Just as eBay developed a business model that fulfilled the potential of the on-line auction, a few firms will identify the right formula for making blogs pay off. Most likely, the blogging success stories will arise from the grass roots level, as eBay did, and not from a top-down initiative from a large, more well-established corporation. Don’t expect the winning models to come from relatively new giants like Google or Yahoo.

Fifth, whether or not large established companies can make money from the blogging trend, they will have to pay attention to the threats they pose. For example, Web logs are a favored way for consumers to retaliate against companies for perceived wrongs. Consider VirtualTourist.com. The blog details bad travel experiences with a gloves-off approach, giving hotel owners fits. Or consider how Kryptonite, the maker of bike locks, was blind-sided recently when a blog published a video showing how to pick its supposedly un-pickable lock with a Bic pen. Because Kryptonite wasn’t paying attention and had no blog of its own to answer the charge, it was unable to respond. This type of experience will soon be standard for any and every product and service. Corporations must be ready to counter unfair attacks and make good on promises.

Sixth, blogging will reinforce other trends mentioned earlier to completely change the way marketing, advertising, public relations, and even selling are executed. For one thing, new technologies are already making it possible to access blog content anywhere, anytime. Bloglines, the leader in RSS readers, now offers versions of its software that allow users to access blogs using a Blackberry, cell phone, Pocket PC, or Sony PSP gaming unit. This accessibility will only accelerate the trend toward the growing importance of blogs as a way to distribute information and reach consumers with marketing messages.

References List :
1. ADAGE.COM, October 24, 2005, “What Blogs Cost American Business.” ⓒ Copyright 2005 by Crain Communications, Inc. All rights reserved. 2. FORBES.COM, October 7, 2005, “If Content Is King, Are Consumers Royalty?” by Peter Kafka. ⓒ Copyright 2005 by Forbes Publishing, Inc. All rights reserved. 3. BUSINESS WIRE, October 17, 2005, “Fortune Interactive Launches Turnkey Web Log (Blog) Marketing Service.” ⓒ Copyright 2005 by Business Wire, Inc. All rights reserved.4. THE NEW YORD TIMES, November 26, 2005, “As Corporate Ad Money Flows Their Way, Bloggers Risk Their Reputation,” by Louise Story. ⓒ Copyright 2005 by The New York Times Company. All rights reserved. 5. LODGING HOSPITALITY, September 15, 2005, Vol. 61, ISS. 13, “Spinning the Blogosphere,” by Glenn Haussman. ⓒ Copyright 2005 by Penton Media, Inc. All rights reserved.