Those questions appear more difficult to answer. Free ISPs claim their targeting services and mass reach attract advertisers like bees to honey. But free ISPs are hard-pressed to offer examples and, when they do, references tend to be smaller advertisers that have picked free ISPs as a cheap alternative to America Online.
NetZero, for example, said its advertisers include PharmaSee.
com, an online and in-store TV network from RMS Networks, which provides in-store video content for pharmacies. True, NetZero also snared General Motors Corp. as an advertiser. But GM entered into a four-year strategic alliance with NetZero -- including warrants to buy stock -- early this year during the heady days before tech stocks crashed. NetZero refused to disclose additional advertisers, though financial filings show Idealab, a major investor, bought advertising accounting for about 8% of NetZero's revenue in the first quarter.
CONSIDERED AOL FIRST
Before it decided to advertise on NetZero, PharmaSee considered advertising on AOL to avoid ad clutter on free ISPs. "But we found there is just as much advertising on AOL, if not more," said Jason Kates, president of RMS Networks. "We did a side-by-side comparison [with AOL]," he said. The company ultimately decided to advertise PharmaSee on NetZero during the second quarter using the free ISP's full-motion video platform. RMS paid NetZero a rate of $22 per thousand impressions.
The in-house-produced, 30-second commercial PharmaSee ran on NetZero "had phenomenal success in terms of unique visitors," Mr. Kates said. "In the first 10 days we had 1.4 million unique visitors, up from maybe 15,000 to 20,000 a day. . . . We picked up a lot of new eyeballs."
That is a high reach considering NetZero ended the second quarter with 2 million active users.
Like other free ISPs, NetZero's proposition to advertisers is the opportunity to target ads to specific consumers based on demographic and psychographic information users submit when registering for the free service. Ultimately, RMS chose to run PharmaSee ads on NetZero because it was cheaper than AOL, but also because of NetZero's "targeted nature," Mr. Kates said.
Advertisers seek Juno Online Services also because of the targeted nature of its platform, said Charles Ardai, Juno CEO. "In return for providing a free service, [we] require that the user fill out a profile," he said. "We have 20 questions; we know if they have kids, how many, what kinds of magazines they read." As a result, Juno "has the ability to target at a level of detail the typical ISP can't."
A BIGGER INVENTORY
Mr. Ardai also said that Juno has a bigger ad inventory. A typical paid ISP such as EarthLink, he said, only shows ads on its home page, while Juno can deliver ads to its Web portal and its proprietary service.
Juno's advertisers include such smaller players as Homestead.com, a personal home-page builder site, and Parlo (parlo.com), a language and culture site.
Exile on 7th, a San Francisco-based i-shop, meanwhile, is running campaigns for AutoTrader.
com, a used-car site, and People PC, a PC-and-ISP venture, on free ISPs developed by Spinway. AutoTrader and PeoplePC are running both cost-per-click banner ads and full-motion commercials on Spinway ISPs. Spinway-developed ISPs include Kmart Corp.'s BlueLight.com, Ace Hardware's OurHouse.com and a soon-to-be released service from Spiegel's catalog.
"Both of those clients have
offline campaigns; we repurposed the existing campaigns [for the Web]," said Scott Symonds, buying supervisor at Exile on 7th. Doner, Southfield, Mich., created the spot for AutoTrader, and Ogilvy & Mather Worldwide, New York, created the PeoplePC spots.
"We got some great results from AutoTrader tests," Mr. Symonds said, referring to click-through rates of 1% to 2% for the ads running on Spinway ISPs; the positive test results convinced Exile on 7th to place the ads.
Mr. Symonds said the agency chose to run clients' ads on Spinway's free ISPs because many users -- 40% -- have never been online before, and the clients were trying to reach new users. Spinway's other advertisers include Bio-Wash, a line of paint hardeners and deck stains.
BIG-NAME ADVERTISERS LACKING
Despite their claims of being attractive vehicles for advertisers, free ISPs have failed to attract a lot of big-name advertisers.
"I think the big advertisers will want to go with a bigger brand-name site initially," Mr. Symonds said. "Plus, you need a lot of inventory to satisfy them."
Many free ISP users log on from home, not work. For some advertisers, however, this audience is just as attractive. "It can be a benefit," Mr. Symonds said, noting that, for instance, Exile on 7th found that many car shoppers surf the Web on the weekends from home. Juno's Mr. Ardai said the fact that Juno users are primarily at home "hasn't fazed any advertiser."
In addition, free ISP users tend to earn less, free ISP executives and advertisers said, but even that doesn't necessarily bother smaller advertisers.
Bio-Wash ran ads on Spinway, taking advantage of Spinway's TV-like ads as well as banners. "We are targeting the consumer, and consumers go where the value is," said Peter Palkovsky, president of Napier International Technologies, creator of Bio-Wash. "Spinway is a better service for consumers because of its value -- it's free. In the long term, Spinway will be dominant [over] AOL."
Exile on 7th research revealed Spinway users' incomes were not "overwhelmingly" low. "We thought about it from a value standpoint," Mr. Symonds said, noting that AutoTrader targets a slightly lower-income market anyway. "We didn't find a drastic difference between paid ISP and free."
CONFIDENT ABOUT AD SALES
Free ISPs are confident their services will continue to attract advertisers. "We have the best coverage, the best targeting technology . . . to give advertisers what they are looking for," said Charles Katz, CEO of CMGI-owned 1stUp, which runs ISPs for AltaVista Co., Lycos and others.
DealTime.com, an online comparison-shopping site, chose to advertise on free ISPs powered by 1stUP with favorable results. "1stUp delivers quality users to DealTime," said Diana Scott-Monck, VP-business development at DealTime. "1stUp, a fast-growing ISP service, has an impressive list of top-quality partners which we believe places our shopping message in a successful environment that attracts quality brand-loyal users to DealTime."
Mr. Ardai stands behind Juno's audience as a good target for advertisers. While average users have slightly lower incomes than paid-service users, the incomes are "still higher than the national average because you've still got to own a computer," he said. "It's a demographic that advertisers find attractive because they at least have the money to buy a computer." And maybe enough money left over to buy a used car.
Contributing: Patricia Riedman