RSSAds.com, operated by Chad Williams of SF, recently opened its doors (sources: Tim Marman, Mike Gunderloy) and is looking for publishers of premium syndicatable content. Will RSSAds.com make money? Maybe. That's maybe as in “I hope they succeed but don't expect me to make a bet…yet.” Can advertising in feeds make money? Yes, but it will be difficult to pull off.
Here are some problems to consider:
It's too easy to filter ads out at the receiving end, meaning news aggregators.
Since retrieval and processing of the feed is fully under news aggregators' control, identifying ads is much easier than trying to intercept ads-laden content flowing to a browser. Ads can be identified by URL, words, dimensions, etc.
News aggregator developers have no incentives to not filter ads.
Fierce competition among news aggregators developers means ad filtering features will be widely implemented within a few weeks. They are also mostly individuals with wide range of interests, so it'll be like trying to appease a barbarian horde with glass beads even if you had some incentives to offer.
To solve these problems, premium content publishers need to require use of news aggregators capable of protecting ads from being filtered. While at it, billing and tracking capability is needed as well to support payed content. Yes, I am sorry to say, blogosphere will have to embrace DRM before it can support revenue models worthy of pursuing.
I am out of time for now, so I'll have to continue in another post.