It's important to point out that a large part of AdEngage's business comes from adult sites (2112 out of 3577 currently active sites are classified as adult). This is probably the main reason why Technorati decided to let AdEngage continue to operate under its own name for now.

Self-Serve Advertising

Technorati will first launch the new advertising network as a private alpha, focusing mostly on text ads. Next month, the site will launch publicly and Technorati will add 125x125 image ads as well.

Bloggers are always looking for new ways to monetize their traffic and having another option from a large and respected company like Technorati should draw in quite a few publishers. Most small blogs currently rely on Google AdSense for their income, but a lot of bloggers have also been complaining about the low income they receive from running these ads. Judging from what we have seen so far, Technorati's offering might be a compelling alternative to Google's AdSense, especially for smaller sites.

However, blogs are still big business. While most "regular" people might not be avid blog readers, they still read them passively when encountering blog content via links from mainstream sources, links in emails, or search results. All that adds up to a lot of monetizable, niche traffic. That's where Technorati is hoping to score big. The company says that it "collects, organizes, highlights, and distributes the online global conversation," which is short hand for, "we have a lot of data on who's saying what about what."

This morning I talked to Alan Levy, CEO of BlogTalkRadio, which has been an early beta tester of the new Technorati Media ad network. Levy had nothing but nice things to say about Technorati. "There's no doubt that major brands want to be part of the conversation with the blogosphere," Levy told me, and Technorati has a reputation as a company that understands that conversation. Blogs are conversational in nature, Levy said, and the long tail network that Technorati is assembling will allow brands to be part of that via very targeted advertising.

Appealing to the long tail is a smart play for Technorati. As we wrote last November, there's no money in the long tail, but there is plenty to be made on the long tail because there is volume there. That's essentially how AdSense works -- sell targeted ads to specific niches across a huge inventory assembled from low traffic sites. If Technorati, which sells on a CPM basis and is willing to negotiate the revenue split with blogs -- something Google won't do except with its largest publishers -- can out perform AdSense for long tail bloggers, they'll have a real winner on their hands.