OK, I'm going to go out on a limb here and say yes, you should advertise on Blogs (but not mine). I think it makes sense. People who read specific Blogs are interested in very specific information. So, if you're about to launch a movie about fly fishing (made that one up), I would think that one of the safest, cheapest and best ROI-driven methods would be on all of the fly fishing Blogs (expand your nets and go for the whole fishing world - how about the camping and RV audience as well?). Here's why you won't do it:
The traffic. It's too small. It doesn't have the reach of a TV commercial or the visibility of a billboard. Valid points. But for a couple of quarters (relatively speaking) you can reach out to the hardcore fly fishing communities and turn them on to what you (and your flick) are all about.
My guess is that in this day and age of online social networking, Blogs, emails, viral campaigns, etc... you would be hard-pressed to find an easier and more cost-effective way to reach the people who not only like what you're pushing but are looking for it.
Every day I am faced with people who are best of breed. People who have built or work for a company that is doing fascinating things in their respective industries, but they do very little to let the world know.
Here's my take: a Blog is a hard thing to produce because you need to have that unique voice, that constant desire to create and the wherewithal to see it through day in and day out (or at least a couple of times per week). So, if you don't have the resources to build the Blog, the next best thing is to leverage those that do. If I had a fly fishing Blog and some hot shot movie marketing exec wanted some space, I would jump at it. It's a service to my readers.
That's where it's going. Blog advertising is (or going to be) big buck business. Don't think for a second it's not huge business and an even bigger opportunity. I remember those who thought that advertising on search engines was akin to poisoning the well. Tell that to the kind folks at Google or on Wall Street.
The Blog advertising space - watch it grow. It's where CPMs will be realistic, worth it and truly accountable.