Report: Benefits, Hazards Exist for Free ISP Advertisers

Free ISPs are already proving their viability as vehicles for
advertising, reaching a wide, Internet-savvy population, according to a
report released Wednesday by online ad measurement firm Nielsen//Netratings.

However, the study also identified several factors exist that in many
instances might potentially limit the services’ appropriateness for media

One chief value-add identified by the report, which was complied using
data from June 2000, is that free ISPs allow for more flexibility in ad
delivery, as well as in their content.

As compared to the “usual button, banner, or interstitial offered at a
typical Web site or by an advertising network,” CMGI company, a B2B enabler of free ISP
services, recently began offering rich media ads that are shown to users
during dialup.

Free ISPs can also provide for more precise targeting and more complex
advertising models than advertisers can with traditional on-site means.

For instance, many free ISPs use some type of always-open window in which
ads are served. This ad can integrate into media plans some complex and
highly targeted ad models, such as “ad attacking” — selling ad space in the
ad window while the user visits a competitor’s site.

Additionally, the study’s findings suggest that advertisers on free ISPs
reach a more active Internet population than they do via traditional online
ads. Users stay online at least 13 hours a month, four hours longer than do
users of traditional ISPs. Free ISP surfers also log on 20 to 27 times per
month, four to 10 times more often than average.

The study also suggests that free ISPs tend to attract more 25-34
year-old surfers, a prime demographic for most advertisers.

Free ISPs also enjoy an innate advantage over traditional online
advertising: by dint of their requiring users’ personal data, they have more
data about their subscriber bases than most publishers do of their visitors.

Also, with users willfully providing personal information in return for
Internet access, privacy concerns are marginalized.

However, the study also revealed several negatives facing potential
advertisers on free ISPs.

For one, the ISPs’ user demographics skew toward lower-income users.
While the services do report a few high-income users, about 15 percent of
free ISP NetZero‘s
audience, for example, reports a household income of less than $25,000 —
more than 150 times the general Web-surfing population’s average.

Furthermore, gender-targeted advertisement efforts are hampered by
differences among the free ISPs’ user-bases. Only Kmart‘s
mirrors the average 51-49 percent male-female breakdown of the Web-surfing

Competitors NetZero and Juno each recorded almost 60 percent more male users, versus 45
percent female.

The study’s authors also suggest that advertisers who normally prefer to
negotiate media buys through ad networks and other intermediaries, might be
forced to negotiate with a direct sales force, since most sales are made
directly through the ISP.

Among free ISPs surveyed, posted the most active users,
with more three more hours spent online each month than competitors.
Kmart’s ISP also enjoyed the greatest number of Internet sessions per
month — 30 — ten greater than NetZero and seven more than Juno.

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