RSS ad network Pheedo will announce a new service tonight – advertising widgets powered by RSS and incorporating several social media tools.  Readers familiar with Techmeme’s advertising program will recognize the ideas here – companies today are producing creative content to drive visitors to their websites and that content can be leveraged explicitly as advertising.  Pheedo hopes to make this approach scalable and widely deployed.  The widgets can be placed on any web page and in many other ad networks.

It’s a gamble, but it could prove a very smart one if the advertising world picks up the pace on producing compelling social media content.

The widgets, live examples of which can be seen on the Pheedo home page, can be populated by any RSS feed.  Items in the feed are followed by buttons to tag those items in third party social bookmarking sites of the advertiser’s choice.  Opera ad items in Pheedo, for example, can be tagged in Furl, Del.icio.us, Digg or Technorati – Expedia ads can be tagged in Del.icio.us, Reddit or Google Bookmarks.  Any of the items can be emailed from inside the widget.  

Video feeds can be served up in the widget as well, for now a linked thumbnail is displayed.

Do you often see advertising content you want to tag into Reddit or Digg?  The first obstacle Pheedo will face is that few of its advertisers are likely to produce sufficiently compelling content to make those tagging buttons (and perhaps the whole widget) appear legitimate.  It’s a great vision – advertisers joining conversations in an intelligent, creative way.  Perhaps we’ll see it happen more in the future.

Opera is an interesting example, Pheedo says they’ve got 1000 subscribers to their ad widget’s feed after a month of testing.  That’s impressive.  If an increasing number of companies can start producing such desirable advertising content online – Pheedo’s ad widget could be well positioned to provide the infrastructure for that market shift.

Company: Pheedo
Launched: 2004
Funding: Series A from Fastlane Ventures on May 4, 2005
Location: Emeryville, California (bay area)

Overview:

Pheedo is a network that brings advertisers to blogs. I spoke with Bill Flitter, Pheedo’s Chief Marketing Officer, earlier this week to get a better understanding of the business. Bill joined Pheedo as part of their Series A financing.

Advertisements are inserted into feeds and/or the blog itself. Today, ads are text-based, with graphical ads being rolled out in the near future.

11,000 blogs are currently part of the Pheedo network, some of which are very large. Pheedo classifies blogs as “premium” or as part of a category (basically a group of similar blogs). Traffic is one metric for determining if a blog is “premium” or not, but Bill emphasized that it is not the only factor. Many of their smallest publishers, serving a specific niche, get the best performance, he said.

Advertisers can target specific blogs and/or categories (topic based). Bloggers have control over whether or not they allow a specific advertiser to place ads on in their feeds and/or on their blogs.

Pheedo started as a simple idea to help thousands of bloggers, micro-publishers and large media outlets in need of a flexible advertising solution. Our aim is to provide publishers and advertisers alike the tools needed capitalize on the business opportunities surrounding weblogs and syndicated content feeds.

We are rethinking online advertising and delivering new tools to address the opportunities and challenges of this 100% opt-in, consumer-controlled, syndicated content and blog medium. We are excited to deliver the service you expect.

And most importantly, your feedback is always welcome. Link

For bloggers, getting set up through Pheedo is relatively simple. They will set up a new feed URL for you. Alternatively, if you have a current feed with subscribers, they have tools to assist you in redirecting the URL to flow through Pheedo. There are no minimum traffic requirements to work with them.

Pricing of Advertisements:

Advertisements are generally priced on a cpc (cost per click) basis. Advertisers also have a choice of offering a sponsorship – which is a set price on a blog or category to have an advertisement shown for a specific period of time.

Click through rates on feeds is fairly high – 5-15% on average according to Bill. See their case study here comparing feed click through rates to email marketing. Pheedo currently serves their own ads, and uses Kanoodle to back-fill unsold inventory.

Pheedo gives 65% of advertising revenue to the blog publisher.

Management:

Charles Smith, President | COO
Adam Kalsey, Chief Technology Officer
Bill Flitter, Chief Marketing Officer
Link

Pheedo has 30 employees worldwide, including Japan. Their corporate blog is here.

Additional Links:

Will Pate (compares Pheedo to other solutions for generating advertising revenue for blogs), RSS Blog