The Price of Payola: Advertisers Spend $50M a Year on Legal Bribes to Bloggers

Last Updated Feb 25, 2011 10:45 AM EST

How much do advertisers spend bribing bloggers to mention their products every year? About $50 million, according to a survey by PQ Media, an alternative-media measurement firm.

The fact that blog payola budgets exist and can be measured indicates that the FTC's new rule -- which requires disclosure when advertisers pay bloggers or other social media operators to mention their products -- is encouraging the practice rather than discouraging it.

Firms spent $46 million in 2009 on "sponsored conversations," a 14 percent increase from a year earlier. Kickbacks to friendly pontificators are expected to rise 26 percent this year to $56.8 million. Most of the payments take the form of gifts or free products, MediaPost notes.

The PQ report further divides social media sponsorships into "cash-sponsored" and "non-cash sponsored" segments, and estimates that the latter currently accounts for more than three-quarters (77.6%) of total expenditures. Fashion, tech and game bloggers tend to be favored recipients for gifts. Between 2004 and 2009, budgets grew at a "compound annual rate" of 77.6%, PQ reports.

That means Ann Taylor and its "special gifts" for bloggers are merely the tip of the iceberg.