I’ve noticed a number of discussions on the subject of using blogs to advertise suggesting the influential blogs will help to push your products. Robert Scoble thinks its fine as long as the blogger declares that they are advertising. Marc Canter and David Weinberger are having a discussion as to how unbiased a blogger can afford to be when someone else is paying the freight.
Following the Cluetrain Manifesto concept that markets are conversations, then the value of blogs is that they present honest personal opinion – something other people trust. Regardless of how pure you remain, if you take money from a company there will certainly be some level of perception that your honesty my be less than total. And if you are brutally honest, yet not supportive of the company paying you, then that relationship may not last.
To reuse the Kryptonite example that Robert suggested, it would have been really intelligent for Kryptonite to buy space on an influential blog even if they were being portrayed negatively, and used that to get their solution out to the public. Unfortunately there are very few companies who are willing to be honest about themselves. And until companies start to take themselves less seriously, then ads on blogs may suggest a lower reality quotient, even if the advertisement is clearly identified. Halley Suitt calls it a very slippery slope.