Too Early For RSS Advertising?

This article by Hollis originally appeared in ClickZ on February 28, 2006.

RSS, the means by which Web publishers can easily distribute their content to users who opt in to receive it, still has a fairly low intentional user adoption rate. An October 2005 Yahoo study finds only 4 percent of the online user population has knowingly used RSS. With such a low adoption rate, one might hardly expect to see advertising in an RSS feed, but it’s out there. Heck, if someone can sell ad space on his forehead, why not in RSS feeds?

Though certain advertisers can currently succeed at RSS advertising, advertisers who buy RSS advertising to reach the masses right now shouldn’t set their expectations very high.

Quick State of RSS

Given the low adoption rate, you might be able to guess the typical RSS user profile: college-educated males, 18-34, with above-average household incomes. If you’re thinking of buying RSS advertising now, keep this demographic in mind.

Far more publishers than users have adopted RSS. Publisher statistics are more elusive than consumer stats, but go to any major online publisher and you’re almost assured to find the little orange RSS/XML subscription button next to the content. RSS’s main advantages are that it’s a spam-free, opt-in, direct-to-consumer, economical means to deliver information. Who wouldn’t want to exploit it?

RSS Advertising Opportunities

At two years old, advertising in RSS feeds is still in its infancy. Specialized feed management companies, such as Pheedo, FeedBurner, and Feedster, offer advertising solutions, while Google and Yahoo now both syndicate contextual search ads in RSS feeds. Ads may be purchased on a CPM or CPC basis, depending on whom you use, but the number of publishers willing to serve ads in their feeds is an obstacle. Expect to see this change as publishers lose eyeballs to their feeds and, by virtue of their own business models, must make up the lost ad revenue by adopting RSS advertising.

RSS feed ads appear primarily in text formats. They’re limited mainly by user understanding of their RSS newsreaders rather than by technology advances. The feed manager converts simple text into a small image file conducive to the XML-generated feed. The ability to push rich content such as podcasts and video feeds via RSS exists, but the audience lagging behind the technology hinders rich content development.

Pheedo offers two types of placement: inline, which is an embedded ad, and standalone, a separate post starting with “AD:.” The company finds standalone ads outperform inline ads by over 900 percent. Advertisers can request one format over another, but ultimately the publisher decides. Some view the standalone version as too gray an area for their tastes.

Average CTRs on standalone ads are upwards of nearly 8 percent (compared to less than 1 percent for inline ads). Like the CTRs of online ads and email of old, these high CTRs can likely be attributed to the lack of clutter and the medium’s newness, but consumer opt-in and contextual relevancy weigh heavily as well. Look for CTRs to fall over time, however, as user fatigue sets in.

Ad targeting exists, though not always within the advertiser’s control. Advanced providers like FeedBurner, with 10 targeting channels and demographic targeting, and Pheedo do provide some means to target, but algorithm and publisher controls also play a factor. The RSS feed managers work directly with media buyers to develop custom plans.

RSS Advertising’s Future

Most industry players point to the rollout of Internet Explorer 7, featuring an RSS reader embedded in the browser window, as RSS’s turning point. Yahoo Mail will also have a fully functional RSS reader embedded into its platform. With everyday user tools incorporating RSS, adoption will accelerate and RSS advertising will no longer be viewed as risky, cutting-edge stuff.

With greater adoption will come RSS delivery of more rich advertising and editorial content, and more features to manage more content. As publishers and RSS ad networks continue to figure out what kinds of RSS advertising works, more advertisers will come to the table.

Is RSS destined to become the new email, as some predict? I think that’s a long way off. People like added conveniences, but it’s hard to get them to entirely give up easy technologies they’re comfortable with.

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