Pay-per-view ads get new twist

AllAdvantage, which pays users to view ads online, isn't the first company to shell out for consumer eyeballs on the Internet. Cybergold and others already offer discounts and other incentives to get users to look at ads. AllAdvantage is different: While Cybergold emphasizes click-throughs, AllAdvantage is relying on passive viewing of ads.

The company has already signed up more than 5,000 participants since its site went live today. In several weeks, the company will launch its business with a software download that rotates ads through a window, known as a view bar, on the computer screens of participating consumers. Participants receive 50 cents for every hour they keep the bar open, up to $20 per month.

In something of a twist, the company is relying on multilevel marketing to bring in more users: Participants can earn more money by referring others who also agree to view the ads. For every hour that a participant views the ads, the person who referred them receives 10 cents.

The difference between AllAdvantage and other network marketing companies like Amway is that there is no direct selling involved, said Jorgensen, the chief executive.

"We don't have any soap, perfume, or vitamins to sell," he said. "Nobody pays anything."

Those paying, if AllAdvantage's business goes as planned, will be the advertisers, who won't have to pay the high rates charged by many Web sites. By eliminating the middleman--the content provider--and going straight to consumers, AllAdvantage hopes to provide less expensive advertising with the same value. "Our economics are such that we don't have to charge Yahoo rates to pay our members," Jorgensen said.

Because AllAdvantage does collect some personal information from users, including their name and address, it can target the ads to user in specific geographic areas and or other demographic groups, Jorgensen said.

"If an advertiser only wants people in the United States, we know which ones are there," he said. The company can also track how many ads it delivers to each person to avoid repetition.

But what AllAdvantage won't be delivering is the Holy Grail of Net advertising: transactions. In fact, it won't even require that participants click on the ads to get more information about a company or product, and that isn't likely to please advertisers, according to analyst Jim Nail of Forrester Research.

"Advertisers do not want another medium like television, where you have no idea if anybody is seeing your ads or if your message is having any impact," Nail said. "On the Web, the only thing that works is a very tight linkage between a product and content."

Cybergold CEO Nat Goldhaber said advertisers, who can track the performance of their online ads, are demanding more than click-throughs. "Advertisers want consumers to take an action," he said.

AllAdvantage could potentially veer into controversial territory with privacy advocates as well, because its software can tell where participants go on the Web.

According to Jorgensen, the company won't track users' browsing habits, but will know only where the member is at a given time. "If it really disturbs someone, then they shouldn't sign up for programs like this, or they can turn it off and it won't follow you," he said.

With people signing on faster than AllAdvantage hoped, Jorgensen said he's ready to take on the skeptics, the same way he did with the Discovery Zone.

"People said nobody will pay to go to a playground, because parks are free," Jorgensen said. "But parks aren't safe, they're not padded, and you had to watch the kids like a hawk. I get the same feeling about AllAdvantage."