Chitika's bogus half-billion-dollar blog business

Chitika, an ad network for bloggers, has released a self-serving and utterly ridiculous study estimating the blogosphere's revenues at $500 million. Shamefully, the University of Texas participated in the charade (PDF), relying on data from Chitika customers and Technorati popularity rank. Chitika's customer sample, of course, could be biased and flawed in a thousand different ways; why the UT-Dallas researchers didn't insist on a random sampling is beyond me. And Technorati, of course, measures the number of blogs that link to a blog — an interesting datum, but not one that correlates with traffic, or that advertisers particularly care about. A more realistic estimate?

Organic, the online ad agency, pegged ad spending on blogs at $40 million last year. That estimate was generated by looking at the actual spending patterns of big advertisers, and should be considered more reliable. Chitika, of course, hopes to attract attention, and through it, gullible new customers hoping to get their slices of a mythical $500 million pie. And the cliché power-law chart Chitika produced looks good in a PowerPoint. Expect to see Chitika's puffed-up number recycled in countless sales pitches in years to come.