is a privately held company in which CMGI (Nasdaq: CMGI) has a majority stake.
As an online advertising network, Adsmart's function is to bring advertising
to websites. Adsmart has experience serving websites that are too small to manage
their own advertising, although it does have many large brand name sites on
their client list. Part of the company's added value is to match advertisers
with websites whose surfership is likely to respond to the advertiser's banners.
Besides relying on the overt content of the site, Adsmart, like other networks,
uses various technologies for capturing information about surfers' previous
behavior to ensure they get served appropriate ads. In particular, Adsmart has
access to (and uses) the AudienceNet tool from CMGI's subsidiary Engage (See
TEC Technology Research Note: "Engage
AudienceNet Brings Users the Ads They Want To See" January 3rd, 2000).
is now setting up a special network with vertical categories that concentrate
on business-to-business websites. It has already recruited sites in the area
of law and intellectual property. One advantage that Adsmart expects is more
predictability of its revenue stream, because business-to-business sites are
believed to be less likely than consumer sites to grow to the point where they
can handle their own ads .
the expected growth of business-to-business E-commerce, Adsmart's move is a
natural one, and the company will soon be only one of many doing this. Business-to-business
advertising is somewhat different from its consumer cousin. Some business-to-business
sites see advertising as only a secondary revenue source. Some prefer to sell
sponsorships rather than rotating ads. Most want to be sure that their visitors
see the ads on their site as adding content. While a site specializing in truck
equipment would probably be happy to get the revenue from a Pepsi ad, they would
see more benefit from showing ads from vendors of truck parts, sellers of fleet
management software, and other related products.
are also differences in what advertisers expect from business-to-business sites.
Whereas advertisers of consumer products are used to the shotgun approach of
advertising in print magazines and on television, many business-to-business
advertisers are more accustomed to advertising in trade magazines, which typically
offer controlled circulation and many opportunities - such as reader response
cards - for the readership to request more information. Such requests serve
the purpose of providing the advertiser with the user's name and address for
later follow-up, and sometimes the subscription lists can also be culled for
readers to whom the advertiser would like to send mailings.
challenge for Adsmart and others in this space will be to craft an offering
for advertisers that provides the marketing information those advertisers want.
While there will be many that are happy to pay only for banner ads, at least
when they first begin advertising on the Internet, in the long run most will
want to see more tangible results than impression and clickthrough counts. (Of
course a clickthrough does bring a surfer to the advertiser's site, but the
advertiser would like to be able to maintain a relationship with this surfer
through a later sales call.) They will learn from some of the larger business-to-business
sites that such payback is possible, and will demand it from smaller sites.
This will not be as much of a hurdle as it might seem, since business-to-business
sites often collect identifying information from their visitors through registrations.
Registrations may be associated with access to parts of the site, to e-mail
newsletters or to promotional offerings. Merging such registration data with
advertising records is difficult even for websites that do manage their own
ads. To do this typically requires merging information from advertising logs,
web server logs and registration databases. This is difficult even with commercial
ad servers. To make it work with an advertising network is technically possible,
but will require careful design and programming, and custom tailoring to the
individual websites that serve ads.
predict (probability 85%) that some ad network will announce this degree of
visitor identification within 9 months. Adsmart is among the best positioned
to do this, since it has access to the resources of all of CMGI, and especially
to Engage, which has been dabbling with technologies to identify individual
surfers since its founding.
For an advertiser or a website in a vertical industry this announcement is excellent
news. There is every reason, if advertising is within your strategy - or has
been rejected only because of the complexity, to watch for Adsmart or someone
else to create an ad network within your vertical market. Our only caveat, given
the rapid influx of competitors that we expect if Adsmart is even marginally
successful, is to sign a short-term contract, so that you can jump to a competitor
with a stronger offering when one becomes available.