Terra Lycos Tweaks Design to Lure Advertisers

Web portal player Terra Lycos is aiming to weather the current downturn in advertising revenues with an extensive site overhaul, designed to increase its appeal to major brands.

The redesign of its Waltham, Mass.-based Lycos.com portal and its affiliated sites is intended to make the properties more attractive to advertisers by creating large ad units, and by limiting the amount of sellable inventory.

The company is gambling that by reducing the number of ads on Lycos.com, and by making those ads larger and more suited to eye-catching rich media creatives, it will convince advertisers — who will also benefit from less messaging clutter — to pay a premium for inventory.

Meanwhile, the Madrid, Spain-based company said its new technical architecture, which borrows heavily from sister site Terra.com’s setup (the two sites merged last May, in a $12.5 billion stock deal) and allows for greater publishing flexibility — and theoretically, greater customizability for advertisers.

Increased customizability for advertisers’ large-scale ads already has proven to be big business for competitors. Yahoo, for instance, to date has created “takeover” ads and site redesigns for Ford Motor Co., Compaq and PepsiCo. Other portals, like Ask Jeeves and Primedia’s About.com have also launched major custom ad campaigns.

“Terra Lycos partners with our advertisers to create an uncluttered environment where innovative ad products are encouraged and deliver better performance,” said Rich Gotham, who is vice president of sales for Terra Lycos U.S.

Lycos added that the changes also group similar content together — making it easier for users to navigate, and for advertisers to target based on content. For example, Terra Lycos said it plans to sell inventory on the redesigned Angelfire site, its Family Zone and Lycos Holidays areas as a way for advertisers to target different so-called “life stages” — teens, families and holiday planners.

“Terra Lycos conducted extensive user testing and then created an entirely new advertising platform that delivers dramatically improved ad performance,” said Terra Lycos U.S. president Stephen Killeen. “As we strengthen the emotional bond with our customers through rich content presentation and aggregation, we can then offer our advertisers the opportunity to contextually target key demographic groups in ways that benefit both advertisers and users.”

Although the oft-derided banner ad still appears throughout much of the site, Lycos said its new design makes even them effective. (Banners now appear about an inch below the top of the screen, below the portal’s navigational toolbar, but above actual content.) Indeed, the company says that new eye-tracking studies show that its banners are as noticeable as the larger skyscraper ads — 200 times’ more noticeable than the typical banner placement. Users also spend seven times longer viewing banners, it said.

Whether the changes will pay off remain up in the air, however. Despite having seen a 4 percent increase in media sales during second quarter, Lycos and its peers continue to be plagued by dwindling online advertising spending — and heated competition for ad dollars as a result. In recent weeks, the situation prompted Yahoo and Microsoft’s MSN into a public relations battle over differing traffic figures.

But according to recent figures from Jupiter Media Metrix, Terra Lycos’ Web sites receive far less traffic than the industry leaders — about 38 million visitors each month, or just over half of Yahoo’s monthly traffic and 49 percent of AOL Time Warner’s. And, at least according to the three portal leaders, it’s their scale and audience diversity that’s become a major factor in their success in attracting national brand advertisers.

How much business Lycos will be able to drum up with its new ad offerings will also depend on how it’s continuing to weather the current sales climate — especially following the Sept. 11 terrorist attacks. The company is slated to report earnings next week.

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