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Revisiting Ads on Internet Portals

  |  June 21, 2001   |  Comments

Perspectives on the portal deal have fluctuated over the past two years, somewhat in line with market trends. So do portal deals still make sense? Depending on the advertiser's goals, good opportunities can still be negotiated.

Thought portal ad deals died last year with the dot-com slide? Maybe not.

A new study released this week by Nielsen//NetRatings indicates that every month, nearly 95 million Americans (approximately one-third of the U.S. population) are clicking onto search engines, portals, and other forms of online community. This data suggests that these Web properties potentially reach over 90 percent of the Internet population.

But do these numbers validate advertisers' costs of affiliating themselves with high-profile sites?

Perspectives on the portal deal have fluctuated over the past two years, somewhat in line with market trends.

At the height of dot-com glory, the portal deal was very fashionable and popular, and such ad placements were status builders. The overflow of cash and inflated egos had a lot to do with this, as did the novelty of the Web.

As the industry started coming down to reality, advertisers began realizing poor returns on their portal media placements. This was partially due to low response rates but also partially due to the outrageous costs demanded by publishers; those costs were hard to recoup regardless of how successful campaigns were. As a result, portal deals became less impressive, and media budgets shifted away.

I recall a few personal conversations with clients so adamant about placing ads within portals that we (the agency) were given the option to do the deals on their behalf, despite our recommendation, or they would do them directly. I guarantee that if you've worked on interactive client ad accounts in the past two years, you've experienced a similar discussion.

But it seems as though Internet portal deals have made a decent comeback in the past few months, particularly among traditional advertisers (as is the trend everywhere). The attractiveness of such deals today is less about the profile of the ad placement and more about the ability to reach a huge audience in one swoop. Such Web properties have become a regular part of people's daily surfing patterns, with approximately half of users' Internet sessions beginning with a search. The value of these placements is starting to be recognized based on reach and frequency rather than status.

So do portal deals make sense? Depending on the advertiser's goals, good opportunities can still be negotiated. However, compared with perceptions of it from a year ago, the portal deal appears to have finally gained a little more confidence and credibility.

Along the same lines, CNN released a study last week showing how only four sites account for half of Web surfing, and most of them fall into a "portal" or "community" profile. The companies are AOL, Yahoo, Microsoft, and Napster -- all of them properties that have found new ways to control the flow of Web traffic.

Although many professionals predicted Internet audiences would resist convergence due to the abundance of Web sites, the recent convergence trend has been obvious. That these properties are so highly trafficked and attract such a huge part of the online audience indicates that they have become a necessary component to any advertiser's campaign that is going for mass reach and exposure.

It appears, therefore, that interest in portal deals has made a slight comeback, mainly due to converging forces. These deals may become one of the few ways to reach a broad audience as the industry continues to mature and as traditional advertisers with deeper pockets continue to increase spending online.

Portal ad spending has been truly representative of the industry over the past few years, and the next trends should be good indicators of the direction of interactive advertising in a converging marketplace.

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ABOUT THE AUTHOR

Adam Posman

Adam Posman is a strategic planner with BAM Strategy, a leading digital agency with offices in Montreal and Toronto. BAM's core services include strategic planning, media buying, creative production, online contests, email marketing, and customized marketing technologies.

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