November 2000   

Banner ads have become a standard of Internet advertising for most e-tailers. They find prime locations on Web sites, hang out their banners, and wait for customers to come to them. But recent surveys by Forrester Research and Kiplinger Business Forecasts suggest that click-through rates for banner ads hover around one or two percent and some industry experts believe that that number will decrease to about one-half percent by the end of the year. Even when people do "click through," many don't buy. They've become immune to the dancing monkeys and flashing dollar signs. While people are making purchases online, it's not because of banner ads.

Opt-in Advertising

There are several types of opt-in advertising -- advertising that is, in a sense, sanctioned by the consumer -- and many of them pay the consumer to use their products by offering them coupons, points, and even cash. People can sign up to receive emails that pay them dollars to click through ads, or they can agree to fill out surveys in exchange for frequent-flyer miles or points that can be converted to electronic cash at their favorite store. They can even agree to have an advertising bar placed at the bottom of their computer screen which tracks their every move online in exchange for interest-targeted advertising and a few bucks to boot. These "pay to surf" services seem to be gaining in popularity with consumers and advertisers alike.

How They Work

Web surfers agree to let companies attach an advertising bar to their Web browser and they are paid either in dollars or in points every time they go online.

AllAdvantage.com is the first and best-known vendor of ad bars. Its spokesperson Alex Gourevitch explained the benefits of the company's product to advertisers, as follows: "Most Web sites can only collect a small amount of information about a consumer by observing what the person does while on their own Web site. For example, if you are a bookseller and you have a customer who regularly buys cookbooks from you, then all you know about that person is that he has an interest in cooking. But with the view bar you can follow the person as he surfs and discover he has an interest in sailing. So you can offer him books about sailing as well as cookbooks."

The view bar, which the customer has agreed (opted in) to place on his browser, records where a customer has been and where he goes after leaving your site. It also provides instant access, so if a customer starts to buy a book at another site you can let him know you have that book on sale and invite him back to your site. Can your banner do that?

Other companies offer variations on the AllAdvantage theme. Netflip uses what it calls a "Dynamic Offer Engine" based on targeting technology that allows marketers to define the exact profile of the users they want to target. Customers are driven to participating sites with free offers, big discounts, or coupons. FreeRide pays points for purchasing certain products and gives customers an online "wallet" to store their points. MyPoints has it all, from opt-in email advertising to Cybergold. Their Cybergold goldbar sits on the consumer's desktop and pays for every hour they are online.

Each of these services offers more money or points for referrals; so not only does the surfer have the potential to "earn" more, so does the advertiser in the form of more customers.

What Users Think

Epinions is a Web site that offers user-generated reviews of a variety of products. Under the category heading, "Get Paid to Surf Web Services," there are nearly 50 companies listed. Reviews are from the consumer (i.e., one who is "paid to surf") point of view. Most reviews are usually favorable, but there was a recent flurry of unfavorable comments when AllAdvantage switched all participants over to contest-only rewards. The option for payment-in-cash was still available, but it had to be requested. Some users run several programs at once in an effort to supplement their income, and they want real money, not contests.

So do consumers purchase anything from these ads they are paid to look at?

Many of the Epinion participants said they ignored these ads just as they ignored other forms of advertising, but some said they actually looked forward to the next product pitch because they knew it was something they would be interested in.

Privacy Issues

Most of these programs allow the consumer to turn them off whenever he or she wants to surf "in private," but people who run several programs at once don't seem to be bothered by the intrusion. All the sites mentioned in this article display their privacy policies onsite.

What Advertisers Think

Press releases from several of the sites list testimonials from advertisers. Andy Grider, e-commerce manager for HickoryFarms.com says of FreeRide, "FreeRide.com offers us a great way to increase initial and regular visitations to our site and therefore increase customer retention."

On AllAdvantage, Valerie LeBan of Cars.com says, "I'm impressed with getting our messages on competitors' sites. It's like McDonald's being able to advertise on Burger King cups."

What Does It Cost?

Gourevitch says that AllAdvantage's costs are comparable to the cost of banner advertising; the price breakdowns are similar. Clients have the option of paying at a rate of CPM (cost per thousand), CPC (cost per clicks), or CPA, which is paid for only after a member has clicked and registered or made a purchase. Gourevitch states, "The CPM return is better than with banner advertising. We offer more for the same the price."

Think Green Stamps

MyPoints.com calls these loyalty programs, and states on their Web site, "Loyalty programs are relatively new to the Internet but have existed for decades in the off-line world. Green stamps, frequent-flyer programs, and various points-based programs have kept customers loyal for years."

When you think of it that way, it really doesn't seem so new. So what are you waiting for? Step up to the bar.