Feed the Need: The State of RSS Advertising

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While the Internet is often referred to as a medium, in reality its role is that of a dynamic environment through which various media are implemented. These media range from streaming to email to instant messaging, and because of the versatile, dynamic nature of digital communications, this list is a constantly lengthening one.

One of the most nascent forms of Web-enabled media is colloquially known as "really simple syndication," or RSS feeds, which offer a revolutionary way for Web publishers to reach their audience. Instead of relying on the mercurial nature of readers' online viewing habits or the increasingly ineffective use of email to push content to users, RSS allows publishers to enable readers to pull fresh site content into a desktop RSS aggregator. Yet getting eyeballs on the content is only part of the equation—content providers are still seeking out the best way to monetize RSS feeds.

So, as more consumers realize the timesaving benefits of being able to scan numerous Web sites for new content quickly via an RSS reader, it's no surprise that advertisers are clamoring for new ways to reach these eyeballs. Following suit, a number of companies have begun to promote the concept of an RSS ad network, which would facilitate media buying across a variety of feeds. Adding credibility to the viability of advertising via RSS are the rumblings from Internet giants Yahoo! and Google of plans to implement their own RSS advertising networks.

Yet RSS is still relatively new, with numerous kinks to be worked out. These include the issues surrounding what types of ads are most effective, how—or even if—RSS publishers can place ads into feeds without turning off readers, and who owns the rights to advertise in and around RSS feeds. What follows is a look into the current state of RSS advertising, how RSS advertising differs from other media, as well as a look at the twists and turns involved with successfully advertising via RSS.

Advertisers Sniffing at the Door
The use of RSS to access content is growing exponentially, both in terms of numbers of readers as well as the amount of time each consumer spends interacting with their RSS aggregators. As with any content delivery mechanism, advertisers are eager to reach this new audience, albeit a relatively small one at present. "Right now RSS advertising is almost nothing. The total ad budget being spent at the moment across the entire market is $250,000 a month," says Scott Rafer, CEO of Feedster, an RSS search engine. But that number is rising quickly. "By the time this article comes out, it will be up to $1-2 million a month." 

Despite RSS adoption rates of only 2 percent among Internet users, according to a Forrester research report released in July, advertisers are anxious to find ways to reach this growing audience. "They're not concerned about the number of consumers using it," says Bill Flitter, CMO of Pheedo, an RSS ad network. "They all realize that RSS is growing. What they're telling us is that they want to figure RSS advertising out, so when it can scale to the level email and banner advertising are at, they'll be ready." In fact, one roadblock to RSS advertising's growth is actually insufficient RSS inventory in which to place ads. 

RSS is also suffering from some growing pains, particularly a lack of standardization, which is painfully evident in the number of RSS aggregators on the market today. "In the browser space, there are basically three browsers that give us any concern. With RSS, there's literally hundreds of different types of news aggregators," says Flitter. "A lot of news aggregators actually strip out images, so if you had an image ad, it wouldn't be displayed." While graphical RSS ads are being used, it's this issue of incompatibility that's contributed to 98 percent of Pheedo's traffic being text-based. 

What's Old is New Again 
The basic premise of RSS is built on a subscription model, rather than surfing for content or searching through an engine like Google. The success of search-based advertising foreshadows what many believe is to come for RSS, although there are some distinctions in how subscription should be perceived versus search/surf. "There's a reason why search and advertising are paired up the way they are, because if you can find the right search results for people, you can find the right ads," says Rafer. He points out that with subscriptions, consumers have selected a source from which they want to get updates via RSS. Thus, he says, "What they're looking for is a lot less random, much more consistent. The math for delivering ads is completely different."

Many believe that the focus with RSS should be shifted away from traffic and generating more page views. Instead, RSS should be viewed as a means for publishers to establish a relationship with consumers. "I think in RSS, I want to hear about ads and information as long as I know and trust the advertisers. It's much more about generating loyalty and retention," says Charlene Li, principal analyst at Forrester and author of research reports "RSS 101 For Marketers" and "Using RSS As A Marketing Tool." "It isn't just space that you're buying, it's the attention of that individual user." 

Feedster's Rafer likens this dynamic to a medium of yesteryear, RSS's ink-on-paper predecessor. "The word I use with old-time publishing guys is ‘periodical.' That's really what we're talking about here. All these blogs are turning into very informal periodicals," says Rafer. "Old magazine guys remember the value of building relationships with customers. 

With RSS, we're back to the point at which advertisers can build up brand profiles and make offers that evolve over time."

The ability to track user behavior offers a significant advantage over serving ads based on the contents of a single feed. "A normal system could serve ads based on the general content of a particular feed, but we're in a unique position to know what readers are reading," says Greg Reinacker, founder and CTO of NewsGator, developer of the NewsGator line of RSS aggregators, which do not currently include advertising. "Based on the data we have, we could theoretically deliver ads that are much more targeted." 

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