PRIME-TIME HANDYMAN TIM ALLEN is on the cover of a magazine again. This time it's A Man's Life, a new title that makes for perfect couch-potato reading: redo your budget; fix your wardrobe; jump-start your sex life. But you probably won't take this magazine to bed with you--unless you sleep with a computer. A Man's Life appears on the World Wide Web, the Internet's most user-friendly area. And the publisher isn't Conde Nast, Hearst or Hachette. It's Toyota.
This is the state-of-the-art of advertising on the Internet -- a soft sell to a niche market. The Web is still tiny compared with newspapers, magazines and TV, but that hasn't stopped dozens of ad agencies from creating "new media" divisions to explore its potential. Scores of start-up companies do nothing but create Web advertising. Many, like Organic Online in San Francisco, are a motley collection of defectors from advertising, publishing and technology firms. Organic has developed sites for companies like Levi Strauss & Co., Saturn Corp. and Colgate-Palmolive.
That's a lot of activity for a medium that has yet to prove an effective marketing tool. By all indications, advertisers are coming on to the Web slowly. According to Forrester Research, Inc., a high-tech research firm, in 1995 U.S. companies spent about $37 million on advertising on the Web--a minuscule fraction of the $60 billion that American corporations spent last year on advertising. "For AT&T, the Web budget is a rounding error," says Josh Bernoff, a senior analyst at Forrester.
Web-based pitches come in two forms: a company can set up its own Web site (those clunky Internet addresses that start with http://www) or buy an ad on someone else's. Online publications, for instance, carry ads just as their print counterparts do. But the real marketing potential is in the more elaborate corporate Web sites--multipage electronic brochures. Since May of last year, more than 500 corporations have put up Web sites to promote their products, according to WebTrack, an Internet research firm in New York. Most traditional advertising, like television or freeway billboards--is in broadcast mode. What happens on the Net is narrowcasting: one-on-one, highly targeted marketing. And on the Web, it's even interactive--click on a picture of a car, and a more detailed description appears.
Problem is, no one really knows how many people see an ad. It's true that about 6 million souls surf the Web regularly. But while a traditional broadcast ad can reach a passive audience of millions, a narrowcast pitch on a dedicated Web site is seen only by those who make the effort to go there. For that reason, Web advertisers have to be more calculating in their efforts to attract interest. Many companies are finding that a good place to start is with a $15,000 or so investment in an ad banner--a graphical link to the advertiser's Web site--posted on a more popular site. Luxury automaker Lexus has found that the biggest source of visitors to its Web location is its ad banner on Yahoo! (box).
Dollar for dollar, Web advertising is expensive. Compared with television, magazines and newspapers, an ad on the Web costs more per thousand consumers (chart). But the ultra-niche nature of the Web is what has companies intrigued. Web users tend to be either students, or highly educated white males in their late 30s with median incomes of about $55,000.The most successful sites offer customers reasons to keep coming back, without seeming too commercial. Molson Breweries' Web advertising begins on its bottles: the label lists the company's Web address. But click on the site and you get a National Hockey League betting pool and an online magazine about the art of brewing. "Ninety-nine percent of our site is not about our beer," says Brian Flanagan, Molson's supervisor of Internet Projects. "We provide something so somewhere down the line maybe you feel compelled to buy a case of Canadian."
As part of the effort to create a place people will return to, some advertisers are becoming their own publishers. The Toyota site, for example, features The Hub, a group of six different electronic magazines put out by eight full-time staffers and two dozen contributing editors. The Levi's Web site has a magazine about deejays, clubs and other cool Web sites. Selling blue jeans seems beside the point. L.L. Bean offers a database of national parks. Black & Decker's site offers home-improvement tips.
Gathering hard demographic data on Web users is difficult. It's possible to count the number of times a Web page has been accessed, but that tells you nothing about who stopped there and for how long. PC-Meter Service of Port Washington, N.Y., one of several new companies tracking Web use, enlists households as volunteers to allow software to track every user's "click stream," including the number of minutes they spend on each Web page.
Information gathering doesn't need to be intrusive. The Gate, the online service of the San Francisco Chronicle and Examiner newspapers, runs a monthly raffle where entrants fill in questionnaires. "We're working to know as much as we can about our readers and who they are without violating their sense of privacy," says John Coate, manager of The Gate. One thing is certain: the technology will grow up. In a few years, the Web could turn into a big hit for Madison Avenue--or, just another intrusive distraction for us.
Compared with TV and print, Web ads are pricey. But for some companies the ultra-niche targeting is worth it.
Cost per 1,000 Cost Audience consumers Television[a] $65,000 12,000,000 $5.42 Magazine[b] $135,000 3,100,000 $43.55 Newspaper[c] $31,000 514,000 $60.31 World Wide Web[d] $15,000 200,000 $75.00 ..MR.-