July 1, 1996
Paying your way
By Bob O'Donnell
Warning: I'm about to break one of the cardinal rules of editorial practice: I'm going
to talk about advertising. Not the virtues or vices of advertisers and their products, but
the very nature of advertising on a Web site. As awkward as this may be, I think it's
critical for readers to understand the issues involved, especially because advertising on
a Web site is a very different phenomenon than advertising in any other medium. But first,
some background information.
Magazines exist to make money, and online publications (or information-based Web sites)
are no exception. I know this is incredibly obvious -- and perhaps overtly crass -- but
the current nature of the Web seems to have created expectations that everything on the
'net should always be free. This cannot and will not continue to be. Companies and
individuals cannot, out of the goodness of their hearts, continue to invest money in
creating and maintaining Web sites unless they see some kind of return. Somebody has to
pay for all the work being done and the dollars being invested.
In fact, despite InfoWorld columnist Bob Metcalfe's predictions of the
impending Internet meltdown because of technical issues regarding bandwidth, what will
bring the Internet crashing down faster than any technical problem is a breakdown in the
basic principles of commerce. If companies can't somehow improve their bottom line by
building a useful Web site, then they'll stop doing it. And if enough companies go through
this, the Web will start to slowly disappear. (The bottom line improvement doesn't have to
be a straight dollar contribution. In fact, the real challenge for many Web sites is
trying to translate their non-monetary value into a bottom line improvement.)
Now, realistically, I know that the Web isn't really going to disappear. However, as
anyone who follows the Internet as an industry knows, it's in the investment phase where
everyone is pouring in a lot of money, looking forward to the day they get a big return on
that money. At some point in the near future, people are going to start looking for that
return and if (when?) they don't get it, they'll start pulling the plug -- literally -- on
their servers. When that happens, sites you used to visit and services you used to use and
depend on --some of which may have relatively large names -- will start disappearing. This
scenario, I am convinced, will occur.
So, how do Web sites generate income? As with other media, there are two basic ways:
subscriptions (and their various equivalents) and advertising. Many online publications
are starting to charge for access -- or at least have announced they will soon be charging
to access-to their site. Others, such as InfoWorld Electric, are advertising-supported.
Finally, some sites are tapping into both readers and advertisers.
Advertising-supported sites are usually not a total free ride for readers of/visitors
to the site, however. The vast majority require you to register and provide some personal
information, which the site then passes along (in an aggregate form) to advertisers. This
is exactly analogous to how trade publications such as InfoWorld work. You fill
out a long qualification card that asks detailed questions about your work and in return
are given a free subscription to the newspaper. The newspaper, in turn, compiles that
demographic information about you and others like you and uses it to convince companies to
advertise.
Advertising on Web sites is different than other types of advertising, however, in that
it theoretically offers the ability to target ads very specifically. In other words, if a
site knows you are planning to buy a car in six months, they can develop an advertising
schema that ensures you see all their available car ads, while someone else visiting the
same page might see ads from airline companies or Web search engines. To marketers, the
ability to focus on their target audience is a dream come true because it saves them from
having to spend a lot of money broadcasting a message to lots people, many of whom aren't
interested.
Note that the most important word in the previous paragraph is
"theoretically," because while the technology is certainly available to do this,
people are still trying to figure out how to implement it. In fact, people are still
trying to figure out how to do advertising at all on the Web. The problem is there are no
comparable standards for advertising (like a full-page four-color ad in a magazine or a
60-second TV commercial) and everyone is trying to develop their own system. The end
result, as you can imagine, is a fair amount of chaos.
I recently attended the first general meeting of the Internet Advertising Bureau, and
it became painfully clear there that there is still a long way to go when it comes to
figuring out standards and figuring out how advertising fits into an online publication.
(The whole reason an editorial person like me attended this meeting was to try and get a
handle on the second half of that statement.) The effort we've made on InfoWorld Electric,
where we have medallion-shaped ads running along the right hand side of our pages, is
fairly unusual -- though not completely original; it came from the online version of The
Wall Street Journal -- and, we think, pretty effective. However, given the dynamic
nature of the Web and knowing that all kinds of different new schemes for presenting ads
on the Web are being developed, it may change. Regardless of what system we develop or
adopt, though, rest assured it won't detract from our core product: the editorial content.
On an unrelated note, this week marks the introduction of a new Test Center online
survey. If you want a say in how InfoWorld's Test Center performs upcoming
product comparisons, take a few moments to fill out the online form.
Finally, if you've been dying to try out audio on the Web, check out the RealAudio version of an
interview I did on the "Inside Technology with Steve Gillmor" radio show on
Charleston, N.C., radio station WTMA (1250 AM). And if you're in the Bay Area, you can
listen to my new weekly radio talk show "O'Donnell on Computers" every Saturday
morning from 10:00 a.m. to 1:00 p.m. on KSFO (560 AM).
©
Copyright 1996, by InfoWorld Publishing Corp., a
subsidiary of IDG Communications, Inc. Reprinted from InfoWorld,
155 Bovet Road, San Mateo, CA 94402. Further reproduction is prohibited.
