Pointcast nets $3 mil in fourth-quarter sales
The PointCast Network is making a big splash with advertisers.
The service, which delivers news and information to computer users via a screen saver, has signed 26 marketers for the fourth quarter, for a total commitment of more than $2.4 million in gross revenue. Additionally, six marketers will commit a combined $575,000 to be corporate sponsors, giving them prime positioning on six PointCast content areas.
To put that in perspective, that's more ad revenue than such major Web brand names as USA Today, HotWired and Time Inc.'s Pathfinder generated in the entire first half of this year, according to Jupiter Communications' WebTrack AdSpend data.
It's an overwhelming vote of confidence for a fledgling ad medium known as "offline" content delivery because it delivers information directly to a user's computer. PointCast ads appear on-screen as animations, enticing users to jump to an advertiser's Web site.
ADS SIMILAR TO TELEVISION
"I think PointCast has done a heck of a job," said Bill Bass, senior analyst with Forrester Research. "The ads are much more like television."
Marketers committing to a three-month contract on PointCast represent the breadth of the Web: Johnston & Murphy Shoes, FTD, Vanguard Group, United Airlines, Wall Street Journal Interactive Edition, Broadvision and others. MCI Communications Corp., Fidelity Investments, Quarterdeck, General Motors Corp.'s Saturn and EDS all committed to larger corporate sponsorships. PointCast is still negotiating with a sixth sponsor.
AD PACKAGES: $100K PER QUARTER
A standard fourth-quarter ad package costs $100,000; with the exception of five marketers, all paid rate card, said Anna Zornosa, VP-sales. The marketers that bought corporate sponsorships paid an additional 15% premium for their positioning.
PointCast users download the free software via the Internet (http://www.pointcast.com) and set up their screen saver to update news and information periodically throughout the day. PointCast has a slew of content partnerships, ranging from Time Inc.'s Pathfinder to CMP Media to The New York Times. CNN takes over the news channel on Oct. 1. (Individual content providers sell their own advertising.)
The free service is designed to work best for computer users connected to a corporate online network. Dial-up users must manually download content, while corporate users' content downloads automatically.
EXPECT 1 MILLION SUBSCRIBERS
PointCast claims 500,000 users now and predicts it will ramp up to 1 million during the fourth quarter. In October, the company will start selling $19.99 kits for those who don't want to download the software themselves.
Its presence in the corporate environment is one of PointCast's strongest selling points with advertisers.
"Our objective was not so much to get people into our Web site but to talk to a captive audience and one that we believe buys a lot of Johnston & Murphy shoes," said Peter Shelton, account director at Bayless & Partners, Atlanta, agency for the shoe marketer.
WorldPages, a San Francisco-based online directory launching in October, has signed a three-month contract to advertise on PointCast. Although the cost of the buy was undisclosed, Mike Knaisch, managing partner at WorldPages agency DDB Interactive, Dallas, said "we negotiated a pretty good deal with PointCast."
"PointCast is really the first of a new wave of technology because it uses the ability of the computer to harness all the info on the Web," Mr. Knaisch said.
SIX TIMES THE CLICK-THROUGHS
Marketers that use PointCast say their ads generate higher click-through to their Web sites than banner ads placed on other sites. A study commissioned by PointCast and monitored by Web tracking company Internet Profiles Corp. showed that a marketer Web site got six times as many click-throughs from a PointCast ad as a banner on a search engine.
A POTENTIAL THREAT: MICROSOFT
PointCast will face its biggest challenge in the coming months as other companies like Microsoft Corp. enter the market.
Microsoft is expected to unveil Active Desktop, a way of linking Web content with documents such as Microsoft Word files and spreadsheets, late this year.
"Microsoft is a pretty brutal competitor, and they're going to try to build this [capability] into the desktop. And then it's a battle to find who can have the best content," Mr. Bass said.
Contributing: Kim Cleland.
Copyright September 1996 Crain Communications Inc.