February 13, 1996
Start-Ups Plot to Make the Web
Comfortable for Advertisers
By LAURIE J. FLYNN
or advertisers, the Internet represents an opportunity that often seems as unmanageable as it is vast. True, the World Wide Web can place an advertisement instantly in front of thousands of eyes, but how do you know how many different eyes have seen your plug for the Wondrous Widget -- and, just as important, how do you know whose eyes they are?
Just as the online industry, advertisers and privacy advocates are debating what Internet marketers should be allowed to do with the personal information they collect about Web consumers, several competing approaches are already emerging to automate the process of placing and tracking Web advertising campaigns.
Focalink Communications Inc., a year-old start-up company in Palo Alto, Calif., has begun offering trial runs of a service called Smart Banner, designed to help advertisers make sure an ad for Jeep Cherokee gets seen by as many male thirty-somethings as possible.
And last week, Poppe Tyson Advertising announced the formation of an independent company with a similar goal, called Double Click. Today, an online advertiser decides where and when to run a particular ad by analyzing reports supplied by individual sites about the amount of traffic to that site. Demographic information is generally limited to the visitors' domain name or to only that information visitors agree to reveal about themselves when they register for the site.
Once they begin running ads on various sites, advertisers analyze the number of times somebody clicked on their ad, then change the placement or timing of their ad to try and improve the "click rate." In order to compare the effectiveness of one site to another, the advertiser must contract separately with each site - and then expect just as many separate reports.
As the size of some sites has swollen to thousands of pages, the industry has outgrown manual techniques for managing the ads that run on them and for comparing one campaign to another.
"It's confusing to an agency and an advertiser," said Mark Thomas, vice president and media research manager at Hal Riney & Partners, the agency for Saturn of America. "We're working to make sure we're all reading from the same rule book."
From an advertising standpoint, the Web, despite the frustrations of getting good demographics on its users, appears to be a game worth playing. Last year, revenues from Web advertising reached nearly $43 million.
Both the Double Click Network and Focalink's SmartBanner provide centralized services for determining the success of ads placed throughout thousands of pages within a site and across multiple sites, including statistics on the number of impressions -- times a page that contains a particular ad is visited -- and mouse clicks a particular ad banner receives. In each case, the ads themselves reside on a central server, which can then automatically rotate ads based on traffic levels.
At the same time, SmartBanner serves a clearinghouse for both ads and demographic information, providing an independent method of verifying site traffic and demographics, something many Internet businesses say is desperately needed.
"It's really a fundamental question of whether the industry is better served by centralized control," said Josh Bernoff, a senior analyst with Forrester Research Corporation. "And if you look at history, it shows you don't want an NBC to tell you who its viewers are."
Of course, SmartBanner's success depends on gaining a large following among both advertisers and Web site publishers. Microsoft, Saturn of America and the Intel Corporation are among the advertisers that have signed up to test it.
SmartBanner won't be in final form for another three months, but companies can use a beta version, available from the Focalink Web Site, on a trial basis, then pay for it when the technology is finalized. Companies that have agreed to test it on their Web sites include Netscape, TechWeb and Global Network Navigator, said Ron Kovas, president of Focalink.
"Their big challenge is to get critical mass," said Ariel Polar, founder of the Internet Profiles Corporation, developer of a leading program for measuring traffic on Web sites. "On one side, they have to get enough advertisers working through them, and on the other side, they have to get enough sites."
Double Click faces a similar challenge in signing up as many content sites as possible. Its goal is to have 200 sites on board by the end of the year.
In the meantime, Focalink may have to battle it out with another start-up venture trying to bring order to advertising on the Internet. Last month, NetGravity of San Mateo, Calif., introduced AdServer, a technology that offers much of the same services but through a different approach. Whereas SmartBanner is a service for Web advertisers, AdServer is a technology for the publishers of Web sites.
Like SmartBanner and Double Click, AdServer attempts to automate advertising management and inventory control, including optimizing ad placement and scheduling according to the whatever demographics are available for a particular site. Yahoo!, for example, uses AdServer to schedule and track 12,000 ad spots across its 200,000 Web pages, a feat company executives say it could not have achieved using manual ad management techniques.
AdServer offers Yahoo! several features for targeting ads to specific visitors. For starters, when a visitor to the Yahoo! site conducts a search by inputting a keyword, advertising related to that keyword appear on the screen. A visitor might, for example, conduct a search for Web pages related to cars. The server would then display an ad related to cars when it displays the results of the query.
While AdServer provides advertising management and site analysis, it is unable to provide the level of site-to-site comparisons that SmartBanner offers. But Bradley Husick, NetGravity's vice president of sales and marketing says that what sites and advertisers might be giving up in the way of comparative data with his product, they make up for in retaining control of their content and ads. In the NetGravity model, advertisers can store their ads on their own server or the site's server.
There's little argument that new media advertisers want the kind of comparative analysis that these start-up technologies can provide, as well as the automation. But it's by no means clear which, if either, will eventually win over a critical mass of customers.
Many content providers have already developed their own methods for managing ads and analyzing their effectiveness. HotWired, c|net and The New York Times on the Web, for example, already conduct proprietary traffic and ad-performance analyses using information gathered through their registration processes and provide these data to advertisers.
Such sites are likely to resist handing over control over the placement and monitoring of the ads placed on their sites, as required by SmartBanner. But that leaves plenty of other content providers that will probably be eager to hire out an ad management system.
"There are content sites that feel it's a core competency of theirs," Bernoff said on data gathering. "But as new content sites come up this a way to off-load something they're probably not going to be very good at."
Focalink Communications, Inc. NetGravity (At the time of our publishing, this link was not working. The URL is http://www.netgravity.com.)