Sites experiment with advertising to offer free service

By Published on .

A few Internet sites and services are building a business model based on giving people free e-mail services in exchange for their willingness to read advertising messages.

  • HotMailhas signed up 3.25 million free e-mail accounts that support full HTML, offering advertising banners that display in frames -- so they won't scroll off the page -- when users are reading or writing messages.

    Says Steve Douty, HotMail's VP-sales and marketing, "I can lift the source of a Web page, write a text message suggesting you check it out, input the HTML block and up pops the Web page. All the links, boxes, any kind of multimedia is fully enabled."

    The company's registration database lets marketers target those banners. "If you tell us you're male, 37, and live in Texas, we can offer that targeting to advertisers," he says. The company delivers 4.5 million ad banners per day.

    "The other thing I can do is limit the number of times any individual sees a banner," Mr. Douty says, so the advertiser can limit the number of times its banner is seen per user.

    The one thing HotMail doesn't offer is direct access to its customer lists. "That's antithetical to our mission," Mr. Douty says.

  • Mercury Mail sends more than 2 million e-mail messages a day, which President John Funk says makes it "the largest e-mail publisher on the Internet."

    Mercury, which launched fall 1995, uses its registration file not only to deliver ads, but also to deliver content from an editorial staff of 20. The staff culls information from Web sites and wire services, delivering reports once or several times a day.

    Each delivery is an advertising opportunity, Mr. Funk says, and each one has a sponsor. "An ad may in fact may be content -- if we tell you Schwab has a special deal, that can be a great thing for you. It's not junk mail."

    Mercury Mail offers both text and HTML mail opportunities. "We charge a rate card of $60 per thousand for HTML mail," he says. "About half our subscriber base, 300,000 individuals, get that. The plain text mail, with another 300,000 recipients, is $40 per thousand" because it's less capable.

  • Juno Online Services gives away a text-based e-mail service and lets advertisers offer text-only ad messages to 2.1 million members, many of whom have no other Internet access, says President Charles Ardai.

    "We carve a portion of the screen out for our own use," he says, rotating ad banners for 15 seconds each. Juno online sessions deliver the ads and keep statistics on their use as e-mail is received.

    As with HotMail, new users complete a marketing profile and ads can be targeted. Advertisers can buy general access to Juno members at 3 cents per impression, access basic demographic groups such as women and families at 5 cents per impression, or target areas like ZIP codes or pet lovers at 7 cents per impression.

  • GeoCities, which offers free "communities" on its Web site, where users can create their own home pages, recently began selling commercial e-mail to advertisers, says Karl Sowa, marketing director.

    GeoCities already offers free e-mail from its server with "postage stamps," a small GIF graphic, with text ads sent to mailboxes that don't support HTML, says Mr. Sowa. The price is similar to its ad banner rates, about $30 per 1,000 impressions, with volume discounts available.

    The marketing e-mails will cost advertisers about 15 cents each, he says, with all deliveries done by GeoCities itself. "We will not send e-mails to those who don't want them," Mr. Sowa says. "Most say they're interested, however, because they haven't been deluged."

  • CommTouch Software has recently begun a NetVertising program, offering free software and e-mail services through Internet service providers in exchange for giving advertisers access to users' e-mail boxes.

    As with HotMail, Juno and GeoCities, CommTouch users complete a registration profile that lets advertisers target their messages, displayed within the e-mail application as clickable banners and printable coupons. User response is automatically tracked and delivered to CommTouch.

    CommTouch promises to split advertising revenue with Internet service providers that push the bundle.

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