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#1 projectphp

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Posted 03 January 2009 - 06:44 PM

http://blog.reddit.c...-on-reddit.html

You may have noticed over the past few weeks the occasional appearance of Sponsored Links in the New Links box at the top of reddit's front page. This is a new method of advertising that we think is a better fit for reddit than other more traditional approaches. Sponsored Links will have a blue background color and will say "Sponsored Link" in the corner to make it clear the link was not submitted from the community.

Just like with regular submissions, you can vote, comment on*, and hide individual sponsored links.

Interesting.... Wonder what, if anything, this'll change. Is Digg next?

#2 A.N.Onym

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Posted 03 January 2009 - 11:28 PM

Interesting, indeed.

Thanks for sharing :)

Digg won't change, because it partnered with Microsoft to deliver ads. It took them months to change untargeted ads to targeted ads (i.e., move car ads to the auto category, etc).

Edited by A.N.Onym, 03 January 2009 - 11:29 PM.


#3 iamlost

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Posted 04 January 2009 - 12:18 AM

It is interesting to watch the SM 'sudden' giants thrashing about trying to stay alive. Given that they began without viable revenue plans and none have developed and that the debt 'pit' for each is in excess of 100-million I have little expectation of any achieving financial success.

Amazon was able to buy market share in bubble times and succeed. This is not a bubble time nor do any SM sites actually have saleable products. All they can hope is that someone with deep pockets interested in data mining buys them before debt kills them. I suspect that SEs and other interested parties are simply hoping to buy various carcases on the cheap...eventually.

#4 projectphp

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Posted 04 January 2009 - 01:32 AM

I'm not sure Reddit has that bad a position iamlost.

They sold to Conde Nast / Wired (http://www.techcrunc...cquires-reddit/), only raised 100K and, from memory, only have about 6 employees, so you gotta think. even @ those numbers, they robably come pretty close to profitable.

Compared to Digg... (http://www.techcrunc...tal-ad-product/)...

Digg apparently spend $10 million a year and make ~$5 million, for a loss of ~$5 Million. If you consider that they have 70 employees, and could easily sack about 80% of those, they could, if they chose to, go close to profitability as well in a hurry.

Granted, $5 million a year isn't Google, Yahoo or anything web 1.0 in terms of revenue, but a 2 million a year profit is a pretty good company (worth close to $20 @ the crazy P/E of tech companies).

The question is how much bad money VCs will throw after good trying to turn a $5 million revenue comapny into a $500 million one. I'm not convinced, even slightly, that it is possible for the social news sites, as the model, unlike Search, seems geared towards unprofitable or, at best, mildly profitable in the "won't change the world" moderate sense.

Given Digg raised $26 million recently, even @ $5 million a year, they're 5 years away from bankruptcy, so I can't see them dying, but if they get crazy and start chasing the crazy $$ of a potential IPO, they could burn that cash a lot faster.

Time, as always, will tell I guess.

#5 A.N.Onym

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Posted 04 January 2009 - 02:17 AM

In my opinion, they simply need to implement other advertising/business models, other than just throwing out random advertising from random advertisers to their users.

With due diligence (and the data they have about peoples' interests on their website), they can pretty much provide the most relevant advertising for the website. I don't see why they are not doing it, unless they are burying their head in the sand.

And I agree that if Digg hired and fired well, they'd be much more profitable. I am not sure why they need so much servers. Maybe they need better software architecture?

Edited by A.N.Onym, 04 January 2009 - 02:18 AM.


#6 projectphp

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Posted 04 January 2009 - 03:19 AM

I'd never scrimp on servers, but I could imagine 70 employees being high, especially as they don't seel to anyone (not even ads).

I think that is the key to where they're going Yura, and probably what they're doing: building a detailed profile of every user, what theyvoted for, what they clicked on etc in order to do better targetting of advertising.

If they get THAt right, and could link it into ads on third party sites (ala AdSense), they might have a killer model. They'd know a LOT about people, and be able to deliver some pretty compelling ads!



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