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February 19, 1996

Companies to Offer Ad-Sponsored E-mail

By LAURIE J. FLYNN
Taking a cue from broadcast television, beginning next month Juno, a year-old venture of the Wall Street investment company D.E. Shaw & Co., L.P., will offer free electronic mail to anyone who wants it -- that is, if they're willing to hear a word from their sponsor.

Only a year ago, even a less aggressive effort would have incurred the wrath of many Internet users. But while some people will surely object, many analysts say the time is now right for an advertising-supported e-mail service that will allow more people to communicate without having to subscribe to an on-line service or Internet provider.

Prototype Juno mail screen:

Credit: D. E. Shaw & Co., L.P.

While Juno is the first service to take such an approach, it's by no means alone. Freemark Communications, a venture capital-backed start up based in Boston, plans to launch a competitive service called Freemark Mail in April. And other companies are certain to follow their lead, having apparently decided that Internet users are not as averse to electronic advertising as they once were, particularly if it enables them to get a service they want for free.

For both services, the target is the 80 million or so personal computer users out there who are not so-called "early adopters" and who spend as little as six hours a month in front of a computer but as many as 140 hours per month in front of a television, said Robert Young, president of Freemark. At the same time, free e-mail may also be an attraction for the 10 million or so subscribers of on-line services like America Online, Compuserve and Prodigy, which charge anywhere from $100 to $200 a year for basic services.

For many users of these services, e-mail is the number one attraction. According to a recent survey by the Yankee Group, a market researcher in Boston, 35 percent of on-line service users named e-mail as their No. 1 reason for subscribing. The second most popular feature of on-line services was chat.

"We will get to the point where if you don't have an e-mail address you won't be a full participant in the social fabric of the country," said Charles Ardai, Juno's president. Both company's initial software releases will run only under Windows.

For advertisers, the lure is a targeted audience. Both services will require subscribers to fill out an extensive registration that will ask for information including gender, income level, family status, hobbies and shopping habits. The services will then use that information to serve up only those ads that are relevant to that consumer. That way, only someone with young children will see an ad for disposable diapers, while only women will see advertising for pantyhose.

Advertisers will be get a detailed log of just who saw their ad, for how long, how many times they viewed it and whether they clicked on it for more information. That way, the advertiser can be assured of the most appropriate audience, while the viewer isn't bombarded with ads for products that don't interest them.

The strategy, Ardai says, "will benefit both the advertiser and the consumer."

In chasing the market for e-mail have-nots, Ardai says he is hoping to attract schools, nonprofit organizations and associations, as well as businesses and individuals. But in doing so, some analysts say, he could be opening his service up to criticism, recalling the experience of Channel One, the ad-supported television network targeted at schools. Many educators and parents have complained that students should not be captive audiences for commercials shown during programs they are required to watch.

Prototype Freemark mail screen:

Credit: Freemark Communications

"There are going to be issues because there are going to be parents who don't like it," predicted Richard Spense, an on-line analyst at Dataquest, a market research company in San Jose, Calif.

But Ardai defends the approach, insisting that unlike television, Juno's advertising isn't disruptive, instead appearing on a small part of the same screen as the electronic message.

So far, Ardai has signed on Stanley Kaplan, Columbia House, Quaker Oats and Smithkline Beechum as advertisers in the service's trial run. He declined to say which ones had committed to participating in the final version of the service.

Unlike full-fledged services like America Online, Compuserve and Prodigy, neither Juno nor Freemark will offer much content at the start. But both services clearly intend to beef up their offerings once they reach a critical mass of subscribers and enough advertisers to support expansion. Both services will most likely offer full Internet access eventually, though just how they'll do this and how much it will cost remains to be seen.

Freemark is already out making deals with content providers. Last month, the company announced a deal with ESPN, the sports network, to get access to scores and other sporting news. That way, for example, someone who has indicated on their registration that they like tennis will receive the latest tennis tournament news when they check their e-mail.

But Dataquest's Spense predicted that while many people will be willing to view ads and news items related to their favorite hobbies in order to get the service for free, others are going to prefer to pay not to be bombarded with marketing.

"I think people will be willing to spend a little money to be left alone," Spense said.


Related Sites
Following are links to the external Web sites that complement this article. These sites are not part of The New York Times on the Web, and The Times has no control over their content or availability. When you have finished visiting any of these sites, you will be able to return to this page by clicking on your Web browser's "Back" button or icon until this page reappears.

  • Freemark Communications' Home Page, with screen shots of its beta software, descriptions of its service and a sign-up link.
  • Juno's Home Page, with screen shots of its beta software, descriptions of its service and a sign-up link.


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