When it comes to advertising for blogs, there is Federated Media for the biggest ones, and for everyone else there is AdSense (or some other low-paying ad network). Jared Kopf thinks there is room for a better alternative in between the two. His startup, AdRoll, (see our earlier coverage) brings together niche publishers into self-selecting communities that, when rolled up, are big enough to attract brand advertisers. Today, AdRoll is coming out of private beta and introducing new economics for bloggers who join.

Blogs who join AdRoll can set their own bare minimum price that acts like a private reserve on eBay. Advertisers bid for that ad inventory, and whenever the AdRoll price is higher than what the blog can get from AdSense, AdRoll swaps in one of its ads in the same spot normally occupied by AdSense (or Glam or Pubmatic or whatever ad network the blog uses). But AdRoll only gets to show its ads if it can beat the price that the blog is getting from AdSense (after AdRoll takes its 30 percent cut). And the pricing decays with time as ad inventory gets closer to expiring, so that an ad for tomorrow is cheaper than an ad for next month.

But where AdRoll becomes interesting is when blogs join communities of like-minded blogs. For instance, there is a community for surfing blogs, car blogs, sports blogs, and book blogs. By joining forces, 6 to 12 blogs with similar readerships can offer half a million to a million readers a month that share a common interest. During the private beta, about 600 publishers created 140 different communities. In order to motivate blogs to join a community, AdRoll only takes a 20 percent cut from ads that run across these groups, leaving more ad dollars on the table for the blogs. Says Kopf:

It is really about designing the right compensation structures and incentives to encourage sites to work together and sell more.

This is co-op economics at work. The idea is that small blogs should be able to band together to command a higher price for ads than they would be able to on their own. The effective CPM (cost per thousand impressions) that blogs are getting on AdRoll is about $1.50 (which is much less than the $10-plus that Federated Media is getting for the blogs in its network, but it is better than AdSense).

Anyone can create a blog community. That person becomes the leader of that particular community, and he or she can set the minimum price for ads on that community. The leader can also set a commission rate for participating blogs who bring in their own advertising to the group. That way, the bloggers themselves can sell ads for their network. (More details on Adroll’s economics here). Kopf hopes all of these incentives will be enough for community leaders to assemble the best audiences possible.

This is a classic Long Tail business. Roll up the niches and sell targeted advertising. Repeat 10,000 times.

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Jared Kopf thinks that ad networks should be more like social networks. A member of the PayPal mafia (he also helped start Slide), Kopf is now CEO of Adroll, a social ad network that launched in private beta last week. (The first 100 TechCrunch readers to register and type in the promo code “Crunchroll” will get a beta invite).

The last thing the Web needs is another ad network, but Adroll is at least trying something new. It lets niche publishers self-organize into communities of interest so as to have a better shot at attracting advertisers. For instance, in the “Surfing Ad Community,” there are currently eight surf sites that collectively attract an audience of half-a-million per month. There is also an “Alt Music Community” of music blogs. Any publisher can create their own community or ask to join an existing one. Kopf explains this to me in an e-mail:

(Communities can be a) Open, b) Members Can Invite, and c) Only Leader Can Invite)

This actually allows publishers to form communities that are exclusive, or semi-exclusive. So you could form the TechCrunch Ad Community that is made up of smaller tech-focused blogs that you rep. Or a community of “Breaking News Sites.” Sites can join by “friending” you…and you approve (or deny) their admission.

The big point of differentiation for us is that we . . . use a “social-networking”-style matching system to enable publishers to create their own networks, and help publishers to sell more, at higher CPMs by working together.

Well, that’s the idea. You create your own adroll, just like a blogger would create a blogroll with other related blogs. Except that advertisers can buy ads across that blogroll. They can also buy ads across a tagroll. When publishers set up their profiles they choose tags to describe their site, like “surf,” “celebrities,” or “web 2.0.” And advertisers can buy those tags. Advertisers also have their own profiles, with their own tags. So publishers interested in attracting a certain advertiser need only look at its tags, add them to their own profile, and hope for a match. Thus, the tagrolls could end up being so easy to game as to render them useless.

The bigger question for Adroll is whether advertisers will bite at all. Do they actually want to reach the Long Tail of surfing sites, or just stick with the most popular ones they already can get through other ad networks? The bigger the adroll, the more appealing it will be to advertisers. But become too big and generic, and the communities lose their targeting advantage. Also, most advertisers are used to spraying ads at certain demographics, but Adroll communities are organized by interests. That could be another problem.

The bulk of advertising still goes to the top handful of sites on the Web. So anything that gives niche sites more of a fighting chance is worth trying. Adroll is offering them a new way to band together. Whether advertisers will care depends on how cool the publishers can come across. The same as any other social network.

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