As media companies try to understand what ad models make the most money and generate the most user interest, they're experiment-ing with banners, content sponsorships, custom publishing and co-branded areas.
EAGER TO PLAY
Marketers, seeking to do more than just drive traffic to their Web site, are eager to play along.
Procter & Gamble Co. last week announced an Internet venture with Time Warner, covering parenting issues. Robert Mondavi Winery is co-branding an area on CondeNet's Epicurious. Kraft Foods' Maxwell House is sponsoring a "coffee break" on The New York Times' Web site. Dow Chemical Co. underwrites Hearst HomeArts' Handy Home Adviser.
Although initiatives like these threaten the legitimacy of content and could corrode consumers' trust of the brand, most media outlets and marketers are moving full steam ahead. Publishers are willing to challenge that once-sacred line that divided the two camps in the name of realizing something that may be more important to them-profits.
"Everything feels a little blurry online because we have conventions established in other media and everyone already knows what's an ad and what's editorial," said Susan Russo, general manager at Rodale Interactive, whose parent company publishes Prevention and Men's Health. "Traditional media companies will go through some growing pains trying to establish a profitable model on the Web. And they will know immediately if they've gone too far over the line-we're just not sure where that line will settle yet."
Although most publishers and media companies sell banner and logo ads, many are currently crafting deals that in some way combine editorial content with an advertiser's product or service. Content sponsorship deals currently represent a small portion of Web ad revenue, but the figure is definitely rising.
"Many sites are offering what we call `commercially underwritten brand contracts' to advertisers," said Rishad Tobaccowala, president of Giant Step, the new-media unit of Leo Burnett USA, Chicago. "Content providers need to find a way for users to click into them because they can't click out to users. Advertisers are searching for elegant ways to appeal to users who came to a particular site in the first place."
At the root of many of the deals is a simple fact: They represent a commitment and bring in more money.
While banner ads are booming, they're also easy for fickle marketers to pull from one site to the next. A sponsor that commits to a serious project with a Web site is practically money in the bank.
In a deal described by its agency as "facilitating the use of New York Times content," Kraft's Maxwell House is sponsoring an online "coffee break" that utilizes the Times' crossword puzzles and book reviews (http://www.nytimes.com).
"This does blur the line, but it's a different strategic use of the medium-not better, not worse," said Andrea McDonald, senior partner and director of non-traditional media at Kraft agency Ogilvy & Mather, New York. "We couldn't do something like this in the newspaper; it's a function of being on the Web, and only there could it exist."
Although sponsorship price is not disclosed, the deal was much more lucrative than even a handful of banner ads would have been.
"Ultimately, all that matters is if the consumer knows from where the information is coming and what biases if any have been introduced into the creation of that site or that area," said Martin Nisenholtz, president of The New York Times Electronic Media Co. "A line should be drawn and the consumer should be aware of the source. Something masked as unbiased shouldn't be framed as such. Period."
CROWN COMES ABOARD
The Washington Post's online edition (http://www.washingtonpost.
com) also has signed a sponsor, Crown Books, for its book review area called Chapter One. Crown sells books on the site, sometimes offering a special price for books reviewed on the site.
"The Web is a very different medium and so the sensibilities and the product and the business models need to be very different," said Ralph Terkowitz, VP-technology at The Washington Post Co. and acting publisher of the Web site.
On Conde Nast Publications' CondeNet, which touts sites Epicurious (http://www.epicurious.com) and Swoon (http://www.swoon.com), advertising is viewed as an extension of the editorial experience. A mixture of content from Conde Nast magazines including Conde Nast Traveler and Bon Appetit, Epicurious has signed Mondavi as a sponsor for an area offering tips on serving wine with food.
"If content on our sites doesn't come from our editorial staff, then it's marked as such," said Sarah Chubb, director of CondeNet. "We don't want to trick users into thinking something is our editorial product, when it really isn't."
`NEW WAYS TO SKIN THE CAT'
At the same time, however, Ms. Chubb said the most challenging aspect of establishing an online brand is "fighting your way out of thinking in parallel to the traditional medium."
"There are so many smart, creative people out there finding new ways to skin the cat. .*.*. We're looking at new types of ad units that are a bit more intrusive but are still very user friendly," she said. "The more involving the advertising element, the more money everyone is going to make."
CondeNet is also in discussions with P&G to become a content provider for the package-goods giant on the Web. Ms. Chubb declined to comment on any details regarding the discussions.
"Every medium in its infant days had marketers underwrite or sponsor its programming. It's an evolutionary process," she said.
ADVERTISERS KEPT IN MIND
Warner Bros. Online actually builds content and environments with advertisers in mind. As part of its Insomniacs Asylum (http://www.
warnerbros.com), Starbucks Coffee Co. sponsors the Cafe.Com area, which offers chat and games. While the site does sell banner ads, Warner Bros. is focusing on premium advertising placement and sponsorship deals because they are more lucrative for the site and more worthwhile for the advertiser, said Julie Kantrowitz, senior VP-Warner Bros. media sales.
Not every Web publisher is willing to work so closely with advertisers, however.
"Once we start doing that we prostitute the whole medium," said Dan Stone, exec VP of Turner Interactive Marketing and Sales, which manages ad sales for CNN (http://www.cnn.com) and other Turner networks online.
SPONSORING SPECIFIC AREAS
In addition to banner ads, CNN does offer sponsorship of features such as the golf report or ski report. But he said CNN's news integrity would be jeopardized if an advertiser were to supply content to the site or if the site would create content for the sponsor.
"Advertising and editorial relationships need to be responsible when franchising online. Publishers need to know exactly what it is users look to you for. If it's authority and credibility, then you have to be extra cautious about crafting deals," said CondeNet's Ms. Chubb.
HotWired-a Web native and one of the first sites to accept advertising on the Net-has started to develop channels of programming that can be sponsored by a sole marketer.
Earlier this year the online zine launched an area called Dream Jobs (http://www.dreamjobs.com) and later signed Levi Strauss & Co.'s Dockers as its sponsor. Although price is undisclosed, Hunter Madsen, HotWired's VP-commercial strategy, said HotWired is indeed making money from the deal.
OLDSMOBILE ON BOARD
HotWired last month launched a similar sponsorship channel with General Motors Corp.'s Oldsmobile and hopes to sell several more sponsorships.
"What will determine traditional media companies' success online boils down to what marketers will accept, not just what content providers will offer," said Mr. Madsen.
"Advertising has a tendency to become routinized-the 30-second spot; the four-color spread, etc. .*.*. The question is whether or not the publishing community will have the creativity, flexibility and energy to fully exploit the Web, which is a medium so pliable that its potential as an ad medium is inexhaustible."
Contributing: Debra Aho Williamson