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Hybrid deals growing in online ads

Web publishers are grabbing a bigger piece of the e-commerce action, no longer relegated to simply serving up ads, a new study shows.

Web publishers are grabbing a bigger piece of the e-commerce action, no longer relegated to simply serving up ads, according to an industry study.

Figures released by the Internet Advertising Bureau this week show that more than half of the online ad deals in the fourth quarter of 1998 included some kind of e-commerce kicker on top of the usual fees for placing an ad.

In these hybrid deals, which accounted for 54 percent of ad revenue, the advertisers paid lower rates for each banner but paid the Web sites a "bounty" when surfers clicked through their ads. Sometimes, the referring site shared in the sales revenue.

Payment per banner composed 40 percent of the deals, while pay-per-click deals were 6 percent, according to figures released by the Internet Advertising Bureau.

"That represents a recognition of the growth of e-commerce," said Pete Petrusky, the PricewaterhouseCoopers executive who conducted the survey for the IAB. The survey found online ad revenues reached $1.92 billion last year.

But that doesn't mean regular ad banner arrangements are going away. "We think banners will continue to be bedrock of what happens in the marketplace," IAB chairman Rich LeFurgy said.

Jupiter Communications analyst Marc Johnson said online publishers were driven to the hybrid ad model by advertisers focused on e-commerce. "The media had no way to say no, given the amount of oversupply [of ad banners]," Johnson said. "A hybrid deal has something in it for both sides."

In some ways, sharing e-commerce revenues fulfills the early promises of online advertising. By analyzing the "click stream" as users pass through Web sites, advertisers can get direct evidence of consumer interest--something that was impossible in traditional media.

"It absolutely works better on Net than other media," Johnson said, noting that one advantage of online advertising is that ads can be modified or targeted on the fly, adjusting a campaign based on the response. "It's perfectly suited for the medium."