As the World Wide Web comes closer to being mainstream, publishers are reaching into a familiar toolbox to entice advertisers. And that's sparking a debate likely to transform the way advertising is bought and sold on the Internet.
Leading Web publishers like Netscape Communications Corp. and InfoSeek are introducing ad rate structures based on cost-per-thousand impressions, or CPMs-standard measurements for print, TV and other traditional media.
That's a clear departure from the flat monthly or quarterly rates charged by many popular Web sites. Under that model, prices are set according to what the sellers deem "fair," with no audience guarantees.
Translation: Rates are fixed at levels likely to meet minimal resistance from agencies and marketers with limited new-media budgets and a willingness to experiment.
Although CPMs are a standard measure for passive media, some argue that a new set of tools is needed to track the Web.
"Today, people are looking at models based on existing media, when in fact what evolves will build off of existing media but be unique to this medium," said Bruce Judson, general manager for Time Inc. New Media, the division responsible for the popular Pathfinder site (http://pathfinder.com). "This is the launch of a new era."
Time Inc. charges marketers a quarterly fee of $30,000 for a logo on Pathfinder and a link to the sponsor's site.
Existing media models are just fine for InfoSeek (http://www.infoseek.com), a Web search service promoting the CPM model as a way to sell Internet advertising. InfoSeek guarantees sponsors 1 million impressions for $15,000 and 500,000 impressions for $10,000, CPMs of $15 and $20, respectively.
The site's seven sponsors include Sun Microsystems and Internet Shopping Network.
Browser king Netscape (http://www.netscape.com) also switched recently from flat fees to cost-per-impression. For $30,000, sponsors are guaranteed just under 1.5 million impressions, a CPM of about $20.
"Agencies weren't getting it. It didn't fit in," Bill Peck, InfoSeek director of interactive advertising, said of the flat-fee model. "I don't think people are looking into the strength of the medium in terms of its reach."
Others argue that CPMs as defined by InfoSeek and Netscape are meaningless, since they count the number of people exposed to the sponsor's logo, not the sponsor's Web site.
"Measuring how many people see a banner is, to me, fairly irrelevant," said David Shnaider, VP-general manager, Ziff-Davis Interactive. Ziff charges Web sponsors monthly and quarterly fees (http://www.zd.com). Because most sponsors maintain some pages on the Ziff site, the service can track traffic to those pages. "We tend to look at this as much more akin to direct mail."
In other words, how many people open the envelope (or enter a Web site) is more important than how many people get the mail piece (or view a logo).
A controversial new report from the media director of San Francisco ad agency Woolward & Partners is adding more fuel to the debate. Ed Gotfredson's white paper measures Web site CPMs by counting how many people actually click on a sponsor's logo.
Using that approach, he calculates that Web advertisers are paying 40 times the CPM of equivalent print vehicles.
"It's 40 times more efficient to advertise in Wired than in HotWired," Mr. Gotfredson said. But HotWired (http://www.hotwired.com) "is not 40 times more impactful."
"The core to any media efficiency analysis is how much does it cost to reach a person," he added. "It's more efficient to advertise in print to promote your Web site."
He cited The Wall Street Journal's new Internet Directory, a section of the newspaper featuring ads promoting 'net sites, as a way to build Web traffic through print ads. But even the Journal has developed a companion Web site (http://www.adnet.wsj.com) with links to section sponsors' home pages.
Sellers of Web sponsorships blasted the white paper, saying it's impossible to compare magazine advertising with Web marketing. "It's a bogus analysis," said one media executive, who asked not to be identified.
While magazine readers see ads as they turn pages, Web users must click on an ad. Web sites can also offer feedback and in-depth information.
"The person that clicks on a site has made an active decision to investigate a product," said Time Inc.'s Mr. Judson. "That's a much more valuable potential buyer than a typical CPM buy based on a forced exposure."
Some popular Web sites are sticking to the flat fee on the surface, but have begun guaranteeing audiences until new measurement tools are in place.
"We've been getting ad guarantees from popular [Web] publications for months," said John Nardone, director of consumer products at interactive agency Modem Media, Westport, Conn. If sites fall short of guarantees, they offer make-good ads-another tool borrowed from traditional media.
HotWired still sells sponsorships based on a monthly fee of $15,000. But Rick Boyce, director of advertising, said the Web is approaching a new phase that will require tools familiar to agency media departments. HotWired recently cut a deal under which Nielsen Media Research will verify the site's audits and eventually track its traffic.
"Phase one of selling HotWired was talking to early adopters within the agency community," Mr. Boyce said. "Now we're moving into the mainstream agency culture. To succeed at that level, we need to bring in as many traditional tools as they're used to."
One thing is sure: Hits are not a hit with Web ad buyers. Hits count the number of files accessed on a site, not the number of visits, making them a virtually meaningless measure.
Eventually, flat-fee and CPM models may be tossed aside. As better audience measurement tools evolve, the Web will add a high-tech gizmo to the old media toolbox.
Debra Aho Williamson contributed to this story.