As the internet shifts from information utility to marketing vehicle, ads are beginning to make their way onto intranets, companies' private computer networks.
This transition poses serious questions to businesses, which may not want employees viewing ads on company time, while presenting opportunities for marketers. But don't expect Nike's "Just do it" on your company's network soon.
Instead, advertisers will try to build brands--and protect themselves against potential criticism--by integrating pitches into business functions served by intranets, such as purchasing and providing competitive information.
The most intricate yet of these efforts comes from Electronic Data Systems Corp., which features targeted banner ads and animated commercial spots on its intranet-based procurement network, the Renascence Channel, officially launched in November.
McAfee Associates, Wall Data and nearly 70 additional companies have paid up to $150,000 to advertise on Renascence for a year. They will reach a market of 75,000 EDS employees and 9,000 EDS corporate customers who currently have access to Renascence.
Bill Doyle, senior analyst at Forrester Research, believes sponsorship of content such as market research and business news will become more widespread than Renascence-type programs. Intranet managers are looking to distribute such information to 80% of their work forces by the year 2000--leading to an intranet content market of $1.2 billion, Forrester reports. "Intranet managers, however, are unwilling to pay the current prices for this information," Mr. Doyle said. "Prices are going to have to come down, to less than $1 per month per user for unlimited access."
Several information suppliers are already taking this approach. PointCast has launched a version of its push software specifically geared toward intranets.
MODEST SPONSORSHIP RATES
Individual Inc. offers Newspage Networks, which brings headlines to a business' intranet or extranet. When a user clicks on a headline, the full story is delivered to the user's desktop, complete with a banner ad.
Corporations, including IBM Corp. and AT&T Corp., are paying a fairly modest $600 to $1,000 monthly for companywide access to five to 10 narrow topics on the Newspage service. Prices are kept in check because Newspage's ad revenue, with costs per thousand of over $50, offsets low subscription fees. Microsoft Corp., 3Com Corp. and BMW of North America are among Newspage's largest sponsors.
While business information and purchasing may add needed zest to often limp corporate networks, many intranet managers are questioning the wisdom of using advertising.
"Like communism, [intranet advertising] is a great idea, but it doesn't take into account the reality of the situation," said Evan Neufeld, online advertising analyst at Jupiter Communications. "Companies are not very ad-friendly spaces. They're already worried about their workers using the Web to goof off at work. The time you see ads on the Procter & Gamble [Co.] intranet beyond blurbs for the company picnic will be a cold day in hell."
RESISTANCE TO ADVERTISING
Several corporate information providers, which potentially have the most to gain from intranet advertising revenue, are also skeptical.
"We focus on helping workers become more productive. And ads are, by definition, a distraction. Our customers are saying that they do not want to pay for, or subsidize, business information through advertising," said Peter White, president of WavePhore Newscast, a push technology service.
"[But] people have begun to realize that advertising in the corporation has become a fact of life," said Jaleh Bisharat, PointCast senior VP.
"Corporate librarians used to give out business information to only the company's top 10%. Now this information is affordable enough to be given to the rest."
That puts PointCast and other information providers in a tricky position: assuring their sponsors, who pay up to $61,000 for monthlong carriage of a 30-second commercial, that users are swayed by the ads while telling their business clients employees will ignore the sponsor's pitches.
Copyright December 1997, Crain Communications Inc.