Road Runner beefs up advertising push
In its first serious attempt at garnering revenue from the Web, high-speed Internet access provider Road Runner announces it has formed a new advertising and e-commerce sales unit.
The nation's second-largest cable modem-based Net service developed the Road Runner Power Media Service, or RPM, to sell online advertisements and help advertisers target specific demographic segments on its "broadband" service.
The company, which in the past year has devoted time to adding content partners, revamping its technology, and searching for senior executives, has made little effort to sell online ads until now.
"Ad sales hasn't been a real proactive push. Now it's becoming a much higher priority," said Road Runner spokeswoman Sandy Colony. "In the past our first priority was to enhance the service to attract customers."
Broadband advertising stands to be a large segment of the online ad market. One-third of all online ads will be rich media by 2002, according to a November 1998 report by market research firm Jupiter Communications.
The company, which has more than 320,000 subscribers, offers high-speed Net access using the cable TV wires of its partners Time Warner Cable and MediaOne Group.
Because high-speed Net connections allow complex multimedia content to be delivered quickly to users, many advertisers are anxious to test the broadband market. These types of connections allow for so-called rich media ads capable of various interactive features and, coupled with specific targeted demographics, allow high-speed service providers to charge higher ad rates.
A recent report by Merrill Lynch Internet analyst Henry Blodget indicated that the Excite@Home Digital Marketing Division charges significantly more for ads than its competitors--typically $7 to $8 more per 1,000 ads than average Web sites. Excite@Home's Digital Marketing Division consists of MatchLogic, a demographic database and ad measurement technology acquired in the Excite merger, and Enliven, advanced multimedia technology acquired as part of its merger with Narrative Communications.
Executives have suggested that the Excite@Home marketing unit could be worth about $2 billion if it were spun off as a separately traded entity, according to analysts.
By comparison, DoubleClick, a similar online advertising company, has a market value of about $3 billion. Excite@Home's Digital Marketing Division's $15 million in second quarter revenue is not far behind DoubleClick, according to Blodget.
Road Runner hopes to have similar success with its first foray into online ad sales.
The new RPM unit has more than 15 initial clients including a multiyear deal with First USA, a large credit card issuer. The First USA deal could be worth "multi-millions in revenue," according to Road Runner.
Road Runner also signed a partnership yesterday with Discovery Communications to provide nature, science, history, technology, and health news and information to Road Runner users.