Intrusive ads a sign of Net advertising evolution

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By Brian Sullivan

(IDG) -- Pop-up ads, lay-under ads, blanket ads, little bugs that fly across a browser window -- they're all symptoms of an evolutionary shake-up that has hit the online advertising world, analysts say.

And there may be even more intrusive ads hitting Web screens before the industry finally settles on a standard.

What's happening, according to Michael Goodman, an analyst at Boston-based The Yankee Group, is that the online advertising world is in the middle of a period of intense experimentation. Initial theories about Web advertising relied on static banner ads, which apparently didn't work well. And the industry is pretty much in agreement that banner ads don't provide the revenue needed to run most sites. Even advertisers are doubtful that those ads work, Goodman said.

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Advertisers want ads that can be proved to work, or they won't advertise. And if Web content is to remain free and not subscription-based or underwritten in some other way, ads will have to be created that can demonstrate their effectiveness, said Michael Zimbalist, executive director of the New York-based Online Publishers Association.

"There is a desire on the part of advertisers to create messages that create an impact," Zimbalist said. "There is a lot of experimentation going on. It's far too early to say how much is too much."

Goodman said the desire to create an impact is behind the use of advertising that seems to take over a user's computer screen at times.

"It means that you are creating different forms of advertising, and [right now], there are a whole lot of different models being tested," Goodman said. "I think there is a lot more evolution that needs to occur before we find a model that works."

It's not just the ads that are undergoing a period of testing and evaluation, said Tom Wolzien, an analyst at New York-based Sanford C. Bernstein & Co. A major shakeout is coming in the online advertising world, he noted -- resulting in changes that won't likely become apparent until the economy picks up steam.

At that point, Wolzien said, computer users will find out whether businesses consider the Web a successful advertising vehicle or a castoff. He cautioned that the amount of money companies spent online during the dot-com bubble of the late 1990s can't be used as an indicator of what they will spend in the future.

"The period from 1995 to 2000 was sort of a rehearsal," Wolzien said. "[From] 2003 to the second half of this decade, we're going to see the real thing."

While the online ad evolution takes place, Web site owners will continue to develop other ways of generating revenue, said David Card, an analyst at New York-based Jupiter Media Metrix Inc. "In an ideal world, there would be a mix of revenue streams," he said.

Subscription services, partnerships and advertising will all play revenue-generating roles -- if companies can successfully develop them as sources of income, Card said. He noted that subscriptions face a major hurdle because people are now used to getting Web content for free. Partnerships aren't guaranteed revenue generators either.

That leaves advertising -- meaning that until someone figures out how to do online advertising successfully, Web users are likely to be bombarded with a variety of ads that they might not always like.