• by Mark Walsh  @markfwal, March 25, 2008

The growing crowd of vertical ad networks got bigger Monday, with Forbes announcing plans to launch a network spanning more than 400 business and financial blogs.

Forbes is among the latest media companies trying to squeeze ad dollars from the Internet's long tail by aggregating niche blogs and Web sites around specific categories and selling targeting advertising across the sites.

The company already launched a separate ad network last November encompassing core properties including Forbes.com, ForbesAuto.com and ForbesTraveler.com, and has a total audience of 25 million.

Others launching ad networks in recent months include CondeNet (the online arm of Conde Nast), Martha Stewart Living Omnimedia, CBS Corp. and Burst Media.

None of the fevered ad network activity has been lost on investors, either. Last month, women-oriented ad network Glam Media raised a venture round of $84.6 million, which would value the company at a half a billion dollars.

Even so, signs are also emerging that niche ad networks may not be a magic bullet for Web publishers trying to compete with huge ad networks run by the likes of Google and AOL's Platform A.

Earlier this month, The Washington Post Co. folded its Blogroll Ad Network launched in 2006 because of heightened competition from large portals and blog-focused networks such as Blogads.

Digg.com last year dropped blog ad network Federated Media in favor of Microsoft to sell the bulk of advertising on the social networking site. Digg founder Kevin Rose said Microsoft's ad technology was better suited to keep up with the site's growth.

Many blog networks will ultimately flop for a variety of reasons--whether a lack of focus, a too-small audience or too-high ad rates, according to Larry Genkin, publisher of Blogger & Podcaster Magazine.

"Also, networks are going to find themselves to be vulnerable if they don't own the blogs in their network," Genkin said. "Networks in that situation must either offer their members something unique or provide a superior value proposition." He noted that Digg ditched Federated Media because the company ended up getting a better deal from Microsoft.

Jeff Lanctot, senior vice president for global media at Avenue A|Razorfish, sees similarities between the rise of blog ad networks and the emergence of conventional ad networks in the past.

"There will be a proliferation of blog networks for a time, given the relatively low barriers to entry in the business," Lanctot said. "Over time, those networks that create the most value for publishers, and the most efficiency for advertisers, will command the largest share of budgets."

In Forbes' case, Genkin believes the company's new network is adding value by having its bloggers work with Forbes exclusively--essentially creating their own network.

"This is very shrewd. They're leveraging the strength of their brand to deliver a unique benefit to their network members," Genkin said. "They'll deliver more reader value, and at the same time have more targeted inventory to serve ads."

Certainly, that's what Forbes is hoping for. "Our intent is to extend our reach onto these blogs aimed at business decision makers," said Michael Smith, senior vice president and general manager of operations at Forbes.com.

He declined to say what CPM rates would be for the blog network, but said ads wouldn't be sold at the same premium as those on its Forbes Audience Network. Forbes.com said it expects the new venture to boost revenue by 10% to 15%.

Nick Ricci will oversee sales, marketing and promotion for the blog network as well as the Forbes Audience Network. Ad technology provider Adify will power the new network.

Smith further declined to say what the ad-revenue split would be with bloggers, but said it would be close to a 50/50 arrangement. Silicon Alley Insider reported Monday that in December Forbes was offering bloggers 40% of whatever revenue their sites generated. That would be lower than the 60/40 split Federated Media and other networks pay, according to SAI, which works with Federated.

Blogs that will be part of the formal launch in the next few weeks include www.xconomy.com, www.talkingbiznews.com, www.cxoadvisory.com and www.calculatedrisk.blogspot.com.