Flycast communications pumps up its local Web-ad sales today when it rolls out a three-year agreement to sell its inventory through U S West Dex, the regional telephone company's Yellow Pages division.
Flycast says it's the only ad network that has agreements with three telephone companies. Since September, it has signed similar deals with BellSouth Intelliventures, the online advertising and electronic commerce division of BellSouth Corp., and SBC Interactive, the online publishing company of SBC Communications.
The deal, in which U S West Dex salespeople will sell Flycast's inventory in their 14-state region, also follows a $17 million round of financing for Flycast, in which all three telecommunications companies are strategic investors. The ad network said it would file for an initial public offering of stock soon.
"The only way to sell a local merchant on interactive advertising is through a one-on-one relationship, not through a telemarketing call," said Peter Nicas, VP of Flycast's Local Market/VAR Division.
MERCHANTS WANT TRAFFIC
Mr. Nicas also sees a strong affinity between Flycast's focus on return on investment and direct-response advertising and Yellow Pages ads.
"Typically those merchants are not interested in branding," Mr. Nicas said. "They're interested in having people walk through the door" via direct-response ads.
U S West will charge $250 a month for packages of 5,000 ad impressions, which can be targeted by category and region.
While this is an important move for Flycast, the ad network is far from conquering the local marketplace. DoubleClick has a similar selling agreement with U S West Dex, which it introduced in September. Its inventory also costs $250 a month for 5,000 ad impressions, a pricing plan that Chad Roffers, director of business development and e-commerce at U S West Dex, says was easier to sell to merchants than a cost-per-thousand rate. DoubleClick also said it's close to introducing more local selling agreements.
Similarly, 24/7 Media, which is in a quiet period before its IPO, is also said to be in final negotiations to expand its local sales channel. Executives close to the company said its strategy would take a different tack from the Yellow Pages model, possibly exploring its relationships with local online newspapers, such as Real Cities, the online network for Knight-Ridder newspapers.
TAPPING EXISTING EFFORTS
Building a local sales channel is an expensive proposition for most national Web sites. Flycast's attempt to squeeze into the Yellow Pages market is an indication that it believes tapping existing Yellow Pages sales efforts is the best way to go. "It certainly beats anything else in its breadth," said Charles Laughlin, analyst with the Kelsey Group.
By selling Web impressions for DoubleClick and Flycast, U S West is "trying to provide more solutions," for its advertisers, he added, noting advertisers would have the option of buying more expensive branded sites through DoubleClick, or category buys across a network of Flycast sites, which tends to cost less.
NOT EVERYONE NEEDS THE WEB
Jim Nail, senior analyst at Forrester Research, wonders whether the Yellow Pages route is the best way to go.
"The Yellow Pages guys are getting down to every dry cleaners" and companies that don't necessarily need a Web presence, he said.
Whereas, newspapers, which are still trying to figure out how to get a piece of the online action, tend to have closer ties to local retail partners, such as banks, restaurants and stores, he said.
Copyright March 1999, Crain Communications Inc.