Netscape Communications Corp. will begin offering Real Media's Open AdStream advertising management software package as an optional addition to the Netscape PublishingXpert System later this quarter, the companies will announce today.
PublishingXpert is a content management and personalization system for online publishers, commerce sites, corporate extranets and Web hosting services.
Industry analysts have for months been predicting both Netscape and Microsoft Corp. would bundle ad serving solutions into their Web publishing systems. Microsoft officials were unavailable for comment as to whether they were planning a similar move.
Evan Neufeld, an analyst with Jupiter Communications, said he was surprised by Netscape's choice of Real Media's software over competitors such as Accipiter and NetGravity, which Mr. Neufeld said he believed were selling a larger volume of software packages than Real Media.
Mike Micucci, Netscape's senior product manager for PublishingXpert, said it chose Real Media for a few reasons. "First, the product fit well with [PublishingXpert's] technical architecture."
USED BY EXISTING CUSTOMERS
He said Open AdStream is already being used by many of PublishingXpert's customers, including The New York Times Online and The Washington Post's Web site, "so, we already knew the software [products] work well together. It was an easy integration . . . Another big reason was their ability to do targeting based on user preferences, which fits well with our future plans around targeting."
Accipiter CEO Chris Evans said, "I'm happy for Real Media." But Mr. Evans suggested his company's product would have been a stronger choice for Netscape. "Netscape obviously made a calculation about the willingness to work with something simpler up-front against a possible need for scalability with those customers down the road. Time will tell whether they made the right bet."
John Danner, CEO of NetGravity, the leading ad management software, said, "We talked to [Netscape's] publishing-side people quite a bit and it's been real difficult to form a good relationship there, and we've just never done it."
Ad management is a more central application for businesses than some of the features the publishing system provides, Mr. Danner said, citing site functions like user registration and personalization.
"So, I doubt a lot of the big customers will go with whatever's bundled in the publishing system. They're more likely to chose an ad management system independently," he added.
Netscape's Mr. Micucci said that PublishingXpert will continue to work with other ad management software packages, but that the functional integration will be tightest with Real Media's Open AdStream. Netscape had yet to settle on a price for the ad server software upgrade, above the $75,000 starting price for PublishingXpert, but Mr. Micucci indicated the inclusion of Open AdStream would run "in the ballpark" of $30,000.
GOES AGAINST THE TREND
Jupiter's Mr. Neufeld reacted to that price by saying, "That is way too much. The market is getting commoditized," referring to competitive ad management space. As a result, many of the leading competitors are looking at models such as service bureaus or transaction fees to be more affordable to smaller publishers. "Microsoft is probably going to come out with an ad management tool they'll give away for free in six months to a year. So what the hell were [Netscape and Real Media] thinking? I don't know."
Real Media President Dave Morgan said the deal with Netscape heralds a new direction for the company, which has until now mostly given away its software for free as a component of its ad management and sales representation network.
The bulk of the more than 300 sites in the Real Media Network are local newspapers. The other large newspaper network, New Century Networks, became a client of Real Media's Open AdStream software late last year. New Century was previously a customer of NetGravity's AdServer product. Mr. Morgan said Real Media would increasingly partner with New Century.
INDEPENDENT SOFTWARE UNIT
"We're now going to be operating our software division as more of an independent business unit," he said. "We're also focusing our ad network business more towards event-oriented sponsorship opportunities."
With strategic backing by Swiss media conglomerate PubliGroupe, Real Media has significant penetration of the European and other foreign markets, a competitive advantage it will continue to exploit, particularly in light of the Netscape deal, Mr. Morgan said.
Copyright January 1998, Crain Communications Inc.