New Portal Asks, Who Needs Ads?

One portal has found a way to beat the sluggish online ad climate: Don’t
take ads… at least not the types of ads drawing complaints from Web
users.

On Monday, sweepstakes portal iWon.com’s parent company launched an ad-free
portal, MyWay.com. The portal resembles Yahoo! with its
customizable
interface, full array of news, information and search, but MyWay.com comes
without any banner, pop-up or pop-under ads. MyWay.com isn’t charging site
users, either. Instead, the site’s revenue
comes from the one interactive advertising sector showing strong growth:
paid
search.

With its search engine powered by Google, Irvington, N.Y.-based MyWay.com
will rely on Google’s AdWords sponsored links to provide revenue. Daugherty
said the site would add classifieds, real estate and travel listings to the
mix over the next few months.

“We see this as a tremendous opportunity,” said MyWay.com Co-CEO Bill
Daugherty. “We’ve got all the established partnerships and we see an
opportunity, particularly as it relates to disenfranchised Yahoo! users.”

Daugherty pointed to the increasingly ubiquitous pop-up and pop-under ads,
which have led to a backlash from Web users. Pop-ups have featured
prominently in the sparring between AOL and MSN in their ISP war: AOL has
touted the fact that that AOL 8.0 will not
take third-party pop-up ads. Another ISP, EarthLink, has offered users
free
pop-up-killing software, while iVillage announced this summer that it
would stop
serving third-party pop-ups in an effort to appease fed-up users.

“We’ve done the research,” Daugherty said. “This is going to attract Yahoo!
users.”

While intrusive ads have gotten a bad rap, targeted advertising through paid
search listings has been a silver lining in the otherwise dark cloud hanging
over the Internet ad industry. Overture , the leader in
the space, recently
announced that users of its affiliate sites had clicked on 500 million paid
search results in the third quarter. Those clicks equal revenues, both for
the likes of Overture, Google, and LookSmart and their distribution
partners.

Daugherty is not new to trying to the portal game. Along with Jonas
Steinman, he launched iWon.com in 1999, after gaining $200 million in
backing from CBS and investors like Bain Capital and JP Morgan Partners, and
engineering a “secret” launch that was documented by Nightline.

In December 2001, iWon.com added to its portal assets by scooping up the
remnants of early portal star Excite for just $10 million, taking on the
Excite name and operating the Excite.com portal.

Like MyWay.com, iWon.com promised to pick off Yahoo! users by combining all
the functions of Yahoo! with a gimmick — in iWon’s case a sweepstakes in
which visitors accrued jackpot entries for each page visited.

The site gives away $15,000 per week, with an annual $1 million grand
prize — a bit less than it intended before the economic downturn. Still,
since its
founding three and half years ago, iWon.com users have won $54 million.

IWon.com’s sweepstakes gimmick enabled it to attract a mass audience
quickly, but it hasn’t kept up with the big shots. According to Nielsen/Net
Ratings, the site had 7.5 million unique
visitors last month, paling in comparison to portal giants like Yahoo! and
MSN, which both had over 75 million visitors in September.

Unlike iWon.com, which launched with a $70 million ad campaign, Daugherty
said scale was not necessary for MyWay.com to turn a profit, thanks to an
easily transferable technology infrastructure and partnerships with content
partners in place. Daugherty said MyWay.com would be profitable from the
get-go.