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9.24.98  
Can Cyber-Ads Work for Your Company?
Ad agencies strive to pinpoint niches and local markets

Talk about no respect. Small companies have so much trouble attracting attention in the vastness of cyberspace that Web ad agencies have barely bothered to pitch their services to them.

In the Web's early days, small companies were slow to get on the Net, and online-advertising companies were content courting huge advertisers. But now cyber-ad companies are so hungry for new markets -- and taking a belated cue from phone companies, banks, accounting firms, and computer makers -- that they've begun paying attention to the potential of the small-business market, which this year will spend a paltry 2% of the $1 billion budgeted for online ads.

DIFFERENT STROKES. Each ad company has its own twist on the online-promotion game. Some sell space for your banner ad on networks of sites, while others offer to swap ad space on someone else's Web site for space on yours. Adapting telecommunications technology, some are able to target Web-surfers in specific geographical areas, a key issue for most small, local businesses for whom advertising broadly to the cyber-cosmos is a waste of money.

Of course, some ad executives still say online ads may not be the best use of a small company's limited publicity budget. But if your services or products are purchased mainly online, or you believe that many potential customers are heavy Web users, online advertising may be right for you.

A few explanatory notes: Online advertising is most commonly priced in "cost-per-thousand" page views, or CPMs in the industry lingo. That means that for every 1,000 views of your ad, you pay a set price, which can range from $2 to $120, depending on the desirability of the site and how precisely the ad is targeted. The more precisely the ad is targeted -- accomplished through technology that pinpoints the location of the viewer -- the more it will cost. Advertising that is scattered widely to an array of unrelated sites is generally cheaper.

Here, Business Week Online takes a look at small-business offerings of three well-known companies, chosen because they represent a range of the Web's advertising services: DoubleClick and Flycast, both of which sell advertising on networks of sites, and LinkExchange, an ad-swap service.

DoubleClick is the most expensive, appealing to companies hoping to reach the best-traveled and most-established Web areas. Flycast's somewhat cheaper offerings target less-prominent sites, which may attract fewer visitors but cater more to special interest groups and, as such, may be better venues for small-business ads. The free-ad network LinkExchange is huge and, of course, the price is right. But members are frequently small, obscure businesses that don't have high-power graphics designers to create their sites -- and may not draw much traffic.  

DoubleClick (doubleclick.net) Publicly held DoubleClick is one of the most-established agencies in online advertising, selling in eight countries for 170 Web sites. Its U.S. network links 70 of those sites, including search engine Alta Vista, Major League Baseball, and the Dilbert Zone. It divides sites into 10 separate categories -- from business and finance to women and family. You can buy advertising that's targeted to packages of sites based on interest, or you can specify the individual sites you want. Certain interest categories -- technology, for instance -- are more expensive than others, such as health.

The company's new "DoubleClick Local" service for small businesses is available in 14 Western states and sold through US West's Yellow Pages unit. Essentially, the system customizes banner ads based on a Web surfer's location. How does the system know that? It reads the user's telephone area code, and it may even extrapolate a Zip code from the Internet service provider's number. Thus, a Las Vegas travel agent could contract with DoubleClick to serve banner ads to all Las Vegas-area Web surfers who visit the network's collection of travel sites.

Cost: For the local service, you have to buy a minimum of 10,000 impressions, either at a $35 CPM (the basic service) or a $50 CPM (for better targeting.). That puts monthly minimums at $350 or $500 -- though there is also a three-month minimum, which means the least you'll pay is $1,050. Ad experts point out that online campaigns work best with heavy exposure. But online advertising is relatively cheap. A one-eighth-of-a-page ad in a local newspaper could easily cost more than $1,000 for one issue.

Strengths: DoubleClick's network is a solid collection of brand-name sites that, it claims, reaches more than 35 million viewers monthly. Its targeting software might also appeal to companies that want to sell to other businesses, because it can tell whether a visitor is logged on from a corporate domain name and can tailor ads accordingly, for an additional fee.

Weaknesses: The geographic targeting can miss its mark in a big way: In fact, the company promises that only 73% of the viewers will get correctly targeted ads. For example, DoubleClick's computers register America Online's 12 million members as having logged on from AOL's Dulles (Va.) headquarters. That's why DoubleClick doesn't serve local ads to these users.

Flycast Communications (Flycast.com) Like its rival DoubleClick, Flycast strings together a collection of sites. It buys space across a much larger universe of 566 Web sites in 13 categories. However, Flycast claims to reach only 10 million users a month. Advertisers can buy space across a package of sites or specific sites.

Flycast's local-advertising initiative uses BellSouth's Yellow Pages sales force to solicit Web ads from small companies throughout the South. Flycast also zeros in on a user's Zip or area code.

Cost: CPM averages around $30 for a minimum buy of approximately $2,000 spread over a year, which translates to close to 67,000 page views at the $30 rate.

Strengths: Although reaching a much smaller network than DoubleClick, Flycast does tap a diversity of sites -- many with a narrow focus. As Net visitors tend to be looking for something very specific, that might be a plus if you want to reach a highly refined market niche.

Weaknesses: Many of the sites on the network don't look professionally designed and maintained. That creates an image problem that can rub off on the site's advertisers.

LinkExchange (linkexchange.com) This is the bargain-hunter's dream. Billed as the largest ad network in the world, LinkExchange works on the premise that for every two advertising slots you volunteer on your home page, you get one somewhere else for free. LinkExchange makes money by selling the additional spot to big corporate advertisers. LE (as it's known) has a network of some 250,000 Web sites, the vast majority of which are run by small businesses hungry for traffic. Who sees them?

A recent RelevantKnowledge study found that LE advertising reaches nearly 40% of people on the Web, making it the top-rated ad network. Once you allot space to the LE ads, you can then target your own offering -- in one of 3,000 categories or geographic areas, as well as in 30 languages. Ads appear on your site based on how you categorize it. LinkExchange also provides free, continuously updated statistics on how many people see the ad and click through to your Web site. In addition to the free service, LE also runs LinkExchange Express, which allows small businesses to pay for advertising in increments of $50 to $2,000.

Cost: Free. Of course, you're giving up digital real estate and running the risk that your site may have to cohabit with unattractive advertising that clashes in design or purpose.

Strengths: The electronic reporting is a handy tool. The LE concept, while dismissed early on as another form of pyramid marketing, has become a more credible vehicle, helped by the arrival of its new chief executive Mark Bozzini, the well-regarded former head of microbrewer Pete's Wicked Ale.

Weaknesses: Although there are some general standards -- no pornography, for example -- you don't have much control over what appears on your site. Many LE members' ads are poorly designed. The ads you host may make your site look like a roadside crowded with billboards, and your own ad may get lost in the clutter as well.

"This is the difference between advertising on Bob's Web site and on the American Express Web site," says Evan Neufeld, an analyst for the market-research company Jupiter Communications. As is true in the real world, you get what you pay for.

By Dennis Berman in New York
dennis_berman@businessweek.com


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