Are Paid-Post Broker Commissions Out Of Line?
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Trying to forecast trends online is like trying to forecast how many flies will land on a dog turd.
Perhaps this is why John Chow decided to simply declare PPP Direct dead on arrival.
I think John and I have similar philosophies with regard to monetizing our blogs. Similar, but not the same. For instance, selling comment links is just naked greed. But, he’ll get a few flies to land on that turd.
Like I said, it’s like forecasting flies on a turd to try to figure out where all this is going, but if you step back and look at the mega-trends and apply some basic economic theory, we can get an idea of the direction this is all heading.
But, that’s not why you’re reading this.
Paid-Post Broker Commissions ARE Way Out Of Line
Services like ReviewMe and PPP Direct are just online media buying agencies. Offline agencies that do media buying in offline publications provide research, media planning, negotiation, and creative placement. For this, they typically get a 15% commission from the publication. An advertiser that goes directly to a publication can ALWAYS negotiate a 15% discount when there’s no agency commission to pay.
Online agencies provide a marketplace in the form of a directory, order processing, and payment processing. PPP Direct provides a tool for negotiation, but they don’t negotiate FOR you. Linkpost will steer opportunities to you if you pay 50% commission, otherwise you pay 30% and takes yer chances. SponsoredReviews.com takes 35% for a blogger to have the privilege of (maybe) successfully bidding on a campaign. I’ve seen numbers floated around about “old” PPP marking up campaigns 35% - it’s invisible to bloggers - but they provide value with an external sales force sourcing large campaigns for large numbers of bloggers.
Given the activities and costs associated with the service provided, online agencies SHOULD be much closer to the commission pricing of offline agencies. PPP Direct’s move to 10% is great, and I hope they’re able to make a profit with it. The only area of concern for the blogger is that this will attract more competition from other bloggers and could serve to drive average review prices down.
Like I said, it’s like forecasting flies on a turd to try to figure out where all this is going, but if you step back and look at the mega-trends and apply some basic economic theory, we can get an idea of the direction this is all heading. But let’s give it a shot:
Ok, the original graphic I created sucked. I’m at work, and don’t have my usual tools. Here’s the text version:
PPP Direct lowers commision/markup —> Competition lowers commission/markup OR creates value-add services —> Bloggers flood attractive markets —> Average review price drops —> Lowest-tier bloggers drop out of market —> Dropouts replaced by bloggers willing to accept low rates —> New bloggers take too many dubious, low-paying opps —> Quality advertisers and campaigns go to top-tier bloggers.
How did I do? Help me build “alternative futures”, and give me your thoughts about the mega-trends in this industry.
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