Web Company Offers To Pay Consumers To Watch Online Ads
Dow Jones Interactive--April 14, 1999

NEW YORK (Dow Jones)--A Los Altos, Calif., company wants to pay people up to $20 a month just for surfing the Web.

Well, that's not really all they want.

AllAdvantage . com has launched a new service that pays Internet users for going online. In exchange, however, the Web users must agree to download and display a view bar onto their computer screens that scrolls a constant stream of advertisements.

The view bar can be minimized, shrunk out of view and hidden on the computer screen. But for every hour it is displayed, the consumer earns 50 cents for up to 40 hours a month.

"It's been wild," said Jim Jorgensen, company chief executive, referring to the 300,000 Web users who have signed up for the service in the first two weeks.

Initially, only 30,000 people were expected to join the service this early.

"We didn't expect this level of response," Jorgensen added. "We expected a much slower ramp-up period."

The notion of using incentives, financial or otherwise, to reward Web users for viewing online advertising is hardly a novel concept.

Late last year, a small Internet service provider offered free Web service to anyone willing to download a view bar onto their computer screen.

Meanwhile, companies like Cybergold, of Berkeley, Calif., Intellipost Corp. and Netcentives, both of San Francisco, were already busy offering consumers an assortment of enticements, ranging from cash bonuses to frequent-flyer miles, as a reward for visiting certain Web sites or looking at advertisements.

In the case of AllAdvantage . com , the initial excitement may stem from the attention the company's offer has received on numerous Internet message boards. Dozens of messages have been posted on Silicon Investor and Yahoo! Finance by people hoping to cash in on a referral fee offered to members who bring in new sign-ups.

But that enthusiasm is not universal.

"Advertising has reached a new low when they have to pay you to look at it," said James Nail, senior analyst for Forrester Research, a Boston-based Internet research firm.

The tactic of financially rewarding consumers for looking at advertising is not foolproof and companies like AllAdvantage . com face numerous hurdles.

Advertisers usually require substantial memberships before they are willing to buy this type of advertising. And while the service tries to build up its membership, the company must spend considerable money paying incentives and rewards, Nail said.

In all, paid advertising accounts for about 60% of the material flashed across AllAdvantage . com 's view bar. The rest is designed by the company and includes a link to its home page and special group discounts for AllAdvantage . com members at online retailers.

The operating costs for AllAdvantage . com runs about $350,000 a month, not including incentive payments to members. Those figures were harder to tabulate, totaling about $1 an hour per member, with each member displaying the view bar from five to 25 hours a month, Jorgensen said.

The site is expected to become profitable in about three to four months, he added.

Meanwhile, AllAdvantage . com still must battle the tendency among Web users to tune out online advertisements.

Most Web users have trained themselves to ignore the ads that flash up on Web sites, Nail said. As a result, the Web's click-through rate - the proportion of Web users who click on a given banner advertisement - is about 1%, Nail said.

"Advertisers don't want blind ads like on television. They want people to click on them," Nails added. "If the people who are being paid to look at the ads aren't clicking through, ultimately the results will doom these types of offers."

For AllAdvantage . com , that means designing a view bar that is attractive and impossible to scroll off the screen. The company also plans to tailor the advertising and other content on the view bar to specific users' interest based on demographic information gained from membership registrations, Jorgensen said.

Plans are also in the works to develop more services catering to electronic commerce, such as a special bulletin that alerts members when particular items of interest appear for sale in online auction sites, Jorgensen said.

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