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Advertising 2.0: Internet content, display ads set to change, Diller says

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New York—Internet publishers inevitably will charge for their information, and display ads must conform better to the content around them, proclaimed Barry Diller, chairman-CEO of Internet company IAC/InterActiveCorp., at the opening keynote Wednesday of Advertising 2.0 New York.

“Display ads have been completely ‘commodified,’ and that won’t change,” said Diller, whose IAC headquarters building hosted the event. The issue, he said, is that “with generic display, every day a ton more inventory arrives.”

Diller, who also is chairman of travel services site Expedia and ticketing company Ticketmaster Entertainment, said that standard banner ad formats fail to adequately conform to the context in which they are placed, and that this must change.

“We’re all at the earliest period of display advertising, which has been standardized into formats where people can say, ‘I know what to ignore,’ ” said the former head of Paramount Pictures and Fox Inc.

He said ads that are “embedded in a very deep way” and “contextual sponsorships specific for the audience” may be more effective.

Diller also predicted that the original model of free Web content is obsolete, and that publishers increasingly will begin to offer content behind walls, charging subscription fees to access it.

“I absolutely believe that the Internet is passing from its free phase to a paid system,” he said. “Consumers have expected it to be free, but it’s going to change. It’s likely publishers will have fewer readers, but that’s not a bad thing. It’s inevitable. Some people will pay and some won’t, but it will be a good thing for everybody, including the consumer.”

IAC/InterActiveCorp. owns such businesses as search engine Ask.com; dating service Match.com; local search and reviews site Citysearch; and Vimeo, a videocentric social network.

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