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Minus Ads, Web Sites Can Make Tidy Sum

SMALL BUSINESS

September 03, 1997|JACLYN EASTON | SPECIAL TO THE TIMES; Jaclyn Easton hosts the syndicated radio show "Log On U.S.A."

Attention, small-Web-site owners: You have something the big guys don't--a niche audience.

And that means your site can be a moneymaker, even if its small size and narrow appeal may limit your opportunities to attract banner advertising.

"The Internet is not a mass market, it's a one-to-one medium," says Rosalind Resnick, editor of the Digital Director Marketing Letter (http://www.netcreations.com/ddm), which tracks trends in online marketing. "The sites making money are the active matchmakers putting buyers and sellers together."

Two cutting-edge alternatives to banner advertising are software demo downloads and online classified advertising. Even small Web sites can take advantage of them.

These options have distinct benefits over banner ads. First, they don't put pressure on you to deliver a minimum number of people to your site to justify the cost of the banner to your advertiser. Second, unlike traditional banner ads, which are sold at a flat price, these revenue streams theoretically have unlimited profit potential.

Downloadable demonstration software is extremely popular because consumers can try before they buy. These programs are not shareware: Shareware is fully functional software offered on a payment honor system. Demo packages, from commercial software companies such as Microsoft Corp. and Symantec Corp., allow limited use until the consumer pays for the full program.

This is how it works: Your site links visitors to the download area of a software manufacturer's Web site. The software company then compensates you for each download.

This model benefits both parties. The referring Web site doesn't have the pressure to deliver a certain number of visitors, as it does when selling banner ads for a flat fee. Meanwhile, the software company pays only for qualified activity.

The Jumbo Download Network (http://www.jumbo.com), a Web site devoted entirely to shareware, freeware and trial software, was one of the first to participate in a pay-per-download opportunity, with a program called Freeloader. For every download, Jumbo was paid $1. Will Margiloff, Jumbo's vice president of advertising and marketing, said the site earned $3,800 in six weeks.

Last spring, Jumbo launched its Demo City Channel, which links people to more than 1,500 commercial trial versions of software. As an experiment, for a flat fee it sold the top link in its business section of Demo City to Symantec (http://www.symantec.com) for Symantec's product ACT 3.0, a well-regarded business-contact manager.

Symantec was thrilled with the results. According to marketing programs manager Kevin Murray, within two months more than 20,000 people had downloaded the trial version and 50% had converted to the $89.95 product. Symantec said it's now considering other arrangements with Web sites on a pay-per-download basis.

Kevin O'Connor, president and CEO of DoubleClick (http://www.doubleclick.com), one of the first Internet advertising networks, is convinced that demo downloads can be profitable. According to O'Connor, a referring Web site should be able to get a commission of $5 to $20 per download.

Apparently there is no shortage of software companies that want to offer their products on a pay-per-download basis. O'Connor's company has created a division called DoubleClick Direct that is testing this pay-per-action model with a dozen companies. Three hundred more are ready to join.

"We are deluged with interest," O'Connor says.

In addition to the pay-per-download model, Web sites can profit from classified advertising, a publishing industry staple.

This is an area where the Web excels, because the more niche-oriented the site, the better the fit between visitor and ads.

Though many Web sites offer the ads for free to build visitor traffic, two revenue models predominate. Sites are giving away the ads but charging for enhancements, or selling them at a flat price for an unlimited run.

Winnetka-based Focused Presence, publishers of the online business directory ComFind (http://www.comfind.com), have been working with the enhancement model for the last 18 months. Basic listings are free, with upgrades averaging $100 apiece. For the additional fee, the ad gets loads of extra features, including priority placement, bolding and "hit & click" reports.

"We find that the percentage of people who upgrade is equivalent to direct-response marketing at about 2% to 5%" says Debra Shatford, ComFind's president.

Many Web sites, however, are dropping their free-classifieds policy and moving to a flat-fee system. While postings can drop off as much as 90%, many online publishers say they're glad they made the switch.

"The time necessary to maintain free classifieds was prohibitive," says Tom Moor, co-owner of Truckworld (http://www.truckworld.com), an online magazine based in Thousand Oaks. "Also, people were submitting items not on subject, like Schwinn bicycles."

Truckworld now charges $10 for a text ad and $25 for a text and picture ad. It has far fewer classifieds but likes the revenue.

There is yet a third model, which, though risky, is paying off for one site. Miata.net (http://www.miata.net), an official Web site for the Mazda sports car, offers non-car classifieds on the honor system. When an item sells, the poster is asked to send a check for 10% of the final selling price or $50, whichever is less.

Gary Fishman, the owner of Miata.net, says he's happy with the 60% rate of compliance.

"Ten percent of my revenue from the entire site comes from these classifieds," Fishman said. "I may have deadbeats, but if I made people pay upfront, there would be less ads."

*

Jaclyn Easton hosts the syndicated radio show "Log On U.S.A." She can be reached at easton@easton.com

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