NetZero aims to be a free Internet service provider with an ad-supported model.
The company plans to use the Internet backbone of Detroit-based AGIS to offer services in all major U.S. markets when it launches today, said CEO Ron Burr.
Demographic data will be collected from all users so targeted ads can be sent to specific groups. Ads will be served in a movable window that stays on the screen, whether someone is surfing the Web or reading their e-mail.
"Each ad will stay on the screen for 30 seconds, then change," Mr. Burr said. While users can move that window to reach commands that may be behind it, they can't get rid of it, as they can get rid of pop-up ads. This increases chances that ads will be seen, he said.
NetZero is funded by IdeaLab Capital Partners, a Pasadena, Calif., venture capital company that has also provided funding for Web companies such as GoTo.com, CitySearch and eToys.
Mr. Burr said GoTo.com and eToys are among initial advertisers on NetZero, but Peter Brine, director-online marketing at eToys (www.etoys.com), said while they're in discussions no decision had been reached on NetZero advertising.
"Right now they have a few thousand [people] in their test audience and they'll ramp up over time," Mr. Brine said. It will be "very intriguing when they have hundreds of thousands, but at low volume it doesn't make a lot of sense."
AD AGENCY SUPPORT SOUGHT
NetZero has also been talking to ad agencies seeking support for the rollout, either free or at deeply discounted rates. Dan Harley, a media supervisor at Organic Online, New York, has heard the pitch but has yet to commit. He said being able to target an ad to a specific audience is very appealing.
Targeting is one way NetZero said it will distinguish itself from earlier free ISPs. In July 1997, Hypernet pulled the plug on its ad-supported Cyberfreeway online service. Officials said user doubts about free access being too good to be true never were overcome.
In addition to collecting data when users sign up, VP-Sales Robert Pack said, NetZero also will track their behavior on the Web, building user profiles that can be used to verify data on the sign-up forms. Clicks also will let NetZero track ads against specific URLs so companies' ads will appear next to competitors' Web sites via NetZero's ad window.
Advertisers will get reports on impressions and click-throughs through NetGravity's ad server software.
NetZero is using AGIS, but in the 20% of the U.S. for which AGIS doesn't provide Internet connectivity, it's partnered with GTE Corp. to cover those areas.
NetZero hopes to get 100,000 users by yearend by mailing CDs with software to homes and bundling the disks with computer hardware products sold at retail. Bundling deals are still being negotiated, Mr. Burr said.
SIX-FIGURE CAMPAIGN PLANNED
NetZero will also be courting users online with a six-figure ad campaign, which breaks Oct. 26 and was created by its agency, Ryan Partnership, Los Angeles. A consumer print campaign is also in the works.
There are risks to the plan, however, Mr. Burr admits. Users might try to send unwanted mass e-mails, known as spam, from free accounts.
He said it has built-in security features so that anyone who's traced to spam will automatically be disconnected from the service.
Copyright October 1998, Crain Communications Inc.