Marketers see opportunity as RSS gains users

The fledgling RSS business is starting to attract some attention from those catering to Internet advertisers.

Google, Pheedo, Feedster and Yahoo Search Marketing are all peddling advertising options for RSS, an increasingly popular way of having a personal computer automatically retrieve information from the Internet.

For example, RSS users interested in local weather could view forecast updates on their computers without having to visit a particular Web site.

Some big companies, like Verizon, are starting to buy space in the RSS information streams, which are selected anonymously and pulled from Web sites by a PC.

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RSS may be getting bigger soon. Microsoft has announced that RSS--the abbreviation stands for Really Simple Syndication--will be integrated into its next Windows operating system. Microsoft's announcement makes it more likely that RSS, used for years only by the tech-savvy, will become more of a mainstream computer tool. RSS was helped last year when Yahoo put it on My Yahoo pages.

RSS is somewhat like TiVo for the Internet. By letting people have content pulled from Web sites and fed to their own computers automatically, they can then store it for later viewing. The growing number of RSS users has some online publishers--they are now the biggest group of suppliers of RSS feeds--starting to worry that RSS could take eyeballs away from their existing advertisements on the Web.

The Washingtonpost.com, part of Washingtonpost.Newsweek Interactive, for example, is considering ways to insert ads into its RSS feeds, which currently include only headlines and links to articles on the paper's own site. "Anytime a medium attracts a large audience, people begin to think through and figure out ways to deliver ads to that audience," said Tim Ruder, vice president of marketing for Washingtonpost.Newsweek Interactive. "RSS won't be any different in that regard than any other medium."

RSS feeds from The New York Times include headlines, a brief summary and a link. Visitors to nytimes.com via RSS feeds has soared from about 500,000 a month at the end of 2003, to 7.3 million last April, said Toby Usnik, the New York Times Company's director of public relations.

Google announced a few weeks ago that it would place ads in RSS feeds, using a computerized system to match ads to content. Yahoo Search Marketing, formerly Overture, also uses a computerized system to place RSS ads, then uses an editor to check many of the ad placements. Pheedo, a company that is placing ads in RSS streams for about 100 advertisers, allows the supplier of the feed to decide which ads will appear with its content.

Most RSS feeds--from places like Amazon.com, PBS, the British Broadcasting Corporation, and Craigslist--do not now include advertisements. The feeds themselves, which often include summaries of stories or product offerings, serve as advertisements for the sites' content, and those sites often have ads.

But research is showing that RSS users are often just looking at the feeds, and not the sites where they originate. Google is encouraging content providers to send everything they have, not just headlines, and to include ads only at the end of the feed. "We need to preserve all of the things that are good about RSS feeds right now and also introduce the opportunity for publishers to monetize those feeds," said Shuman Ghosemajumder, a business product manager at Google.

Companies placing advertisements in RSS feeds say they are still testing, trying to track how many ads are clicked and to decide how much they should pay for the ads. Advertisers are paying anywhere from 50 cents to $1.75 per click to Pheedo for ads. Niche advertisers tend to pay more per click, said Charles M. Smith, president and chief operating officer for Pheedo. The company placing the ad, like Pheedo or Google, and the publisher of the content in an RSS feed share the amount paid by the advertiser for each reader clicking on an ad.

Some RSS advertisers and content suppliers would like the pay rate to be based on how many people view their ads--not how many click on them.

But tracking ad views is difficult, since it is hard to know how many people actually read the RSS feeds they pull in, Smith said.

He believes RSS ads should be conversational in tone and provide information. "In RSS, you're in the mode of absorbing information," he said. Pheedo has tested RSS ads of various lengths and found that 500-word ads, instead of the shorter search ad length of about 100 words, tend to work better. RSS users like to read most of the pitch in their RSS screen, without having to quickly click to another site, he said.

Advertising agencies said RSS feeds attract a younger, wealthier

consumer on average. They said users were desirable because they had signed up for the feeds and want particular content.

"If they're getting the news they're interested in, because they said they're interested in it, then you have a very engaged consumer and that's appealing," said Brad Adgate, research director for Horizon Media, and ad agency based in New York. "They're very active, they're more likely to buy products online, to click on ads."

Still, ad agencies said only a few of their clients were currently buying RSS ads. About 57 percent of marketers that Forrester Research of Cambridge, Mass., surveyed this spring said they were interested in RSS advertising. Technology companies like Microsoft and Sun Microsystems jumped on board first, but companies seeking broad audiences only recently have begun to buy RSS ads.

As companies learn about advertising opportunities in publishers' RSS streams, they have begun to express interest in building their own RSS feeds, said Steve Stratz, a spokesman for aQuantive, which owns Avenue A Razorfish, an interactive ad agency in Seattle.

Consumers who want to know about certain products can opt for RSS updates on the products' Web sites. Advertisers are eager to reach these consumers, so if RSS feeds from companies become widespread, it could reduce the companies' need to advertise in traditional media, ad agencies said.

Some companies, including The Corcoran Group, a real estate company based in New York, and Continental Airline Vacations, have developed RSS feeds to keep their customers updated.

"Over time, as RSS continues to become more mainstream, we think it has the potential to compete with e-mail as an advertising medium," said Christian Romney, a senior manager for e-commerce technology at Continental Airlines Vacations. "You can bet companies will be moving into this space as providers--just as they did in the e-mail industry."

RSS has the potential to replace e-mail for information delivery, said Steve Rubel, a technology Web log writer and public relations strategist who runs CooperKatz & Company's micropersuasion practice. He said he thought that five years from now, most people would use e-mail for communications and RSS to receive news and information like shopping updates and weather reports.

With RSS, Web publishers have no way to know the identities, e-mail addresses, or computer locations of users, making RSS feeds practically spam proof, Rubel said. The RSS ad placers, like Pheedo and Yahoo, said the promise of being in control of what comes to a consumer through RSS feeds would likely make RSS appealing to a broad audience. And, once RSS is made part of Windows in the second half of 2006, computer users may find that it is simple to use.

"Anything that's done to hide the technology and just make a more relevant user experience, that will grow the RSS market and grow the advertising market," said Scott Rafer, the chief executive of Feedster, the RSS search engine and advertising network.

"Within five years," he said, "everyone with a broadband connection will be using it whether they know it or not."

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