It came down to a $2,000 question: Would a Web site pay that sum to run a test ad for a company skeptical about the value of advertising on the Internet?
It turns out that a lot of sites would jump at that deal, even though it's an almost sure money-loser because of the expense of creating and tracking the advertisement. As part of the test, the site would measure not only the number of times the ad was seen but how many times it was clicked on, how many different people viewed it, and where they came from.
"There's a lot of desperation out there," said Charles Ardai, president of Juno E-mail, an ad-supported email service. So much desperation that a British Web publisher, whose company is bringing its electronic cafes to the United States soon, coined a response to the now-frequent request for free trial ads on Web sites: Just say no.
The $2,000 question arose during a panel discussion involving ad agency media directors, the people who buy ads, at the inaugural meeting Friday of the Internet Advertising Bureau, an organization for ad-supported Web site and online services. The proposition and the responses to it reflect the chasm of interests and understanding between Web sites counting on ad revenues to keep themselves free to users and the people buying those ads.
"They have a myopic point of view," Colette McMullen, vice president of sales and marketing for Web Publishing said of the ad agency representatives. "They think, 'It's our way or no way, but it's not clear what they'd like it to be.'"
Panelist Doug Powell, media director with Foote, Cone Belding's interactive unit in San Francisco, begged to differ. "Believe it or not, we are your biggest supporters," he countered. "But that obligates us also to be your most severe critics."
The gap between ad agencies and ad-supported Web sites, an impetus behind the new trade group's formation, carries vast implications for anyone using the Web. Many of the Web's content sites count on advertising to pay the bills and to keep themselves free to users, and ad revenues remain the dominant revenue source for most.
But today, the percentage of advertising budgets that goes onto the Net is minuscule. WebTrack says Web ad spending in the first three months of 1996 was about $26 million.
Bill Harvey, president of Next Century Media, a consulting firm on interactive advertising, said the estimated $25 million spent on Net advertising last year compared to $10 billion spent on radio worldwide and $60 billion on TV. Most ad spending on the Internet comes from big advertisers' discretionary or "research" funds, not their "media" budgets, the serious money spent to advance their corporate marketing objectives.
So new is Web advertising that there is no consensus on how to charge for ads. Today's dominant paradigm is to pay based on the number of times a Web ad is viewed--the so-called CPM, or cost-per-thousand model.
But Procter & Gamble, a major consumer brand that spends more than $1 billion a year on all kinds of advertising, now wants to pay based on "click-through," or the number of times a Web surfer actually mouse-clicks on an ad banner. P&G has persuaded search engine Yahoo, in a highly controversial move, to use the click-through approach.
Even the CPM-based charges rile some. "If the Internet tries to compete on CPM," Harvey said, "half of them [ad-supported Web sites] won't be here next year."
Adds Rich LeFurgy, vice president of advertising for Web publisher Starwave: "It still feels like it's 1995. It's the same banners, the same rates and the same questions: How do we get beyond banner measurement?"
LeFurgy, acting as chair of the new IAB's steering committee, adds a general mea culpa for Web sites. "We have made it incredibly hard to buy [ads]," he says, citing an ad agency's recent purchase of advertising on 125 separate sites, a feat that took several 4 a.m. quitting times to achieve. "It's just too hard to buy."
A lack of standards contributes mightily to that difficulty. Focalink, a technology support service for ad agencies that want to buy Web ads, reports that the 597 sites it has identified have more than 90 sizes for Web ad banners, a nightmare for agencies producing those ads.
"Just because we're in cyberspace doesn't mean the advertising and publishing fundamentals don't apply," LeFurgy said. "We have to focus on the basic blocking and tackling."
He added a caution: "We have to stop torpedoing other people's boats," a reference to back-stabbing among ad-supported Web sites. Web ad executives must turn their attentions outward, he urged, to avoid the "invective" that emerged as an undertone at the meeting.
"A lot of people are not listening to each other," he said.