InfoSeek didn't set out to be the biggest advertising venue on the Web. In fact, it didn't even think about ads when it began in January, 1994, as a subscription service: For $9.95 a month, Internet users could browse various online publications and databases. But it turned out few were willing to pay, so InfoSeek ( made searches free and kept a ``professional'' subscription service. That was killed last month. ``You have to continually modify your business model because the Internet is just getting established,'' says President and CEO Robert E.L. Johnson III.

That willingness to adapt paid off. InfoSeek is now one of the most popular free ``search engines,'' attracting millions of surfers looking for goodies on the Web--and lots of advertisers hoping to reach them. Ad revenue was $1 million last year and leaped to $5 million in the first half of 1996. Profits are a different story: InfoSeek spends heavily on promotion to attract new surfers, including $5 million a year for a coveted slot on the opening screen on Netscape Communications Corp.'s home page. So far this year, InfoSeek has racked up $8.3 million in losses.

Yet the company continues to write new rules for Web advertising. It was the first to charge per impression, the way other ad media do. And it was the first search engine to sell ads linked to the keywords that surfers type in. If you search for ``diamond,'' for example, the results will likely come back with an ad from a jeweler. InfoSeek charges advertisers $20 per 1,000 impressions for regular pages; spots linked to keywords are $50.

DETAILED DEMOGRAPHICS. Now, InfoSeek is further refining its technology to produce better searches and more targeted ads. It's using new software to track where a cybersurfer goes. That helps predict what a consumer will want from the next search. In the process, InfoSeek gathers detailed demographic data from which it can build lists of consumers with specific traits--and charge advertisers a premium to reach them.

Eventually, InfoSeek will start looking less like a search engine and more like an intelligent clipping service, gathering information tailored to each consumer. It figures surfers might pay for more high-value data. And that could be InfoSeek's next adaptation.

By Larry Armstrong


Updated June 14, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.
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