Haute Links: When Blogs Become Ads

  • By Rachel Swan
  • Wed Mar 27th, 2013 4:00am
  • NewsNews

Blogging may be a labor of love, but it doesn't have to be a free labor, says Oliver Roup, founder of the San Francisco tech company VigLink. He's turned that idea into an elevator pitch, and embraced it as a credo.

Four years ago Roup became fixated on “affiliate marketing,” an industry that rewards bloggers for linking their content to product sites, offering a small commission if the link results in a purchase. After leaving his job as a program manager at Microsoft and never quite cashing in on his Harvard MBA, Roup was itching to start a business — and the new link economy looked promising. It dispensed with the old church-state separation of editorial and advertising content, providing a vessel for advertisers to really “get in front of” their audiences. The concept seemed more effective than static display ads, but less tawdry than pop-ups. Done right, it could solve problems that have long bedeviled Internet advertisers.

But Roup also thought the industry was not living up to its potential. In 2009 he wrote a software program to trawl the web, sniff out links on individual blogs to Amazon, and count how many recouped money for the blogger.

“Less than half of them,” the CEO recalls with a smug half-smile, sitting in the conference room of VigLink's Bryant Street headquarters and gripping a Coca-Cola bottle. Running his fingers over the word “Cola,” he remembers seeing a window of opportunity. The industry needed a new leader to step in and consolidate its operations. He had the brains to do it.

Roup set off to create a vast network of merchants, bloggers, and third-party intermediaries known as “affiliates.” (If you run a shoe blog and want to make a small commission by linking key words to products on Zappos, you can ask an affiliate to help.) In all he persuaded more than 30,000 merchants to join, creating an empire. With access to more merchants, he says, bloggers get more bang for their buck. Roup compares it to a distribution network with individual affiliates as suppliers.

The venture capital that VigLink has attracted — from Google Ventures, First Round Capital, and Emergence Capital, among others — is evidence enough of the company's buzz in Silicon Valley. But it's also drawn skepticism from outsiders who worry that the business model enables ordinary writers to become product shills.

Since unveiling the program in 2010, Roup and his 23-person staff have taken an aggressive approach to expansion. VigLink has courted fashion bloggers, political sites, social media gurus, tech product forums, and popular editorial sites like PCWorld and Macworld. Roup has helped a raw food blogger in Vancouver turn each kombucha mention into nickels and dimes. He developed a software script that fishes for key words in blogs and automatically links them to retail sites, turning each one into an intricate patchwork of hidden product advertisements. He's even created a mechanism to convert Facebook pages into promotional feeds.

As companies like VigLink shift from product review sites to Facebook profiles, they're starting to raise hackles in Silicon Valley. Critics see an unsettling trend that could blur the line between social networking and advertising.

With product placement held as the new Holy Grail for Internet advertising, marketers are racing to find faster, better, sneakier ways to insert commercial endorsements into everyday web chatter. Companies like Adly Inc. hire celebrities to endorse brands on Twitter in the context of an “authentic” conversation. Facebook recently settled a class action lawsuit for its “Sponsored Stories” function, which turned ordinary users into unwitting advertisers after they “liked” a brand. The branding arms race has mushroomed into a multi-billion dollar industry, with software developers constantly introducing new tools to make every ad seem like a recommendation from a friend — or better yet, an expert.

Roup has positioned himself right at the cutting edge of that movement. Working from a sixth floor office in SOMA, he and his staff are driving tens of millions of dollars in e-commerce each month. VigLink says it grew 118 percent between the 2011 and 2012 holiday seasons. It's virtually peerless in the Silicon Valley, competing only with a similarly-themed British company called Skimlinks, which also has offices in San Francisco. Roup's acolytes say he's created a new frontier for merchants who want to embed their products in social media — a practice that VigLink's vice president of marketing, Oliver Deighton, calls “going native.”

“It's a way to … reach people at the moment they're being influenced,” Deighton adds.

But some experts argue that embedded marketing erodes trust from consumers. Vivek Wadhwa, a tech entrepreneur and adjunct professor at the future-focused Singularity University, has a particularly jaundiced view. He says it's becoming hard to tell whether the average blogger has a material interest in her editorial content.

“I don't trust the web for any product reviews,” Wadhwa says in a phone interview. “I just go to specific sites like Amazon.”

Rae Hoffman, an Internet marketer and author of the popular Sugarrae Blog, conceded that bloggers often debate whether affiliate marketing can “devalue the authenticity of a review.”

“The problem, in my opinion, lies in if a blogger changes their opinion on a product or service — or creates a false one altogether — simply to make sales,” Hoffman says via email. “But honestly? Those kinds of people are deep enough in the affiliate world that they are likely to [work] directly with most or all of their merchants. i.e., I don't see services like VigLink 'creating' a problem in that regard.”

Roup sometimes finds himself embroiled in that discussion, even though he's quick to distinguish VigLink from sleazier models that encourage bloggers to lard their sites with crap. Because VigLink only pays content creators after a user makes a purchase, he says, there's not much reason to blindly name-check products in hope of driving more traffic. “Simply using us won't make worthless content worth something,” he adds.

Roup describes VigLink as a morally agnostic “technology enabler,” meaning it should bring in cash without shaping content.

Still, there's something unsettling about the “natural” flow of content to commerce. It might make some readers nostalgic for the days when ads were big, tawdry, blocky things, and blogs were a profit-losing operation. And never the twain would meet.

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