Ads To Drive Internet

Television Digest with Consumer Electronics, March 13, 2000

Internet conference began sounding like ad conference as new media companies tried to convince analysts at PaineWebber gathering in N.Y.C. that ad money would make them lucrative -- and soon. Most companies gave deadlines (usually 1-2 years down road) to start showing positive cash flow, and ad revenue from increasingly targeted spots accounted for lion's share of optimism. Women.com CEO Marleen McDaniel said her site now projects mature balance sheet will show 80% of revenue from ads.

Excite@Home CEO George Bell demonstrated new ad customization program that doesn't just target ads to customers, it creates new ones for them, changing images, colors and ad copy. Technology will appear in company's new broadband portal, which Bell said will launch this month. Within 3-4 years, he said, high-speed services will face same price wars as dial-up services, so broadband must have ad revenue lined up to replace monthly fees.

New ad delivery technologies created for Internet will have applications across media and telecom worlds, several speakers said. David Moore, CEO of ad network 24/7 Media, said cable and especially video-on-demand will be ideal platforms for targeted ads.

Internet holding company CMGI is "getting focused on wireless and broadband," and wireless is pulling away to become leading market for new Internet ventures, said Exec. Vp-Corp. Strategy Hans Hawrysz. Whereas last year most business plans presented to him dealt with broadband content, "wireless has clearly taken over," he said. Hawrysz said his company's MyWay subsidiary will launch wireless content venture with BellSouth, which owns 10% of MyWay, in "middle of this month." He said CMGI is talking to all major wireless manufacturers and carriers and "you can expect in the next 3 months a number of announcements."

He said ad-supported media "will be true global phenomenon" in next few years, repeating predictions other companies made day before. Internet now has "11% of eyeball time and 2% of the ad dollars," he said. "That's an arbitrage opportunity." Hawrysz said CMGI "will be taking a stronger position in the next couple of months" on why privacy regulations shouldn't be allowed to kill targeted ads, although he said CMGI has better record than many other companies, with most of its information-gathering on opt-in basis. So far, company has been working behind scenes on issue, talking with privacy advocates and industry councils working on standards, Hawrsyz said.

Tribune Co. said it will be lead investor in iBlast Networks, which will aggregate broadcasters' DTV spectrum for use nationwide. L.A.-based iBlast plans to use portion of stations' DTV spectrum to deliver broadband video, data and other services to consumer PCs. iBlast said it already has spectrum agreements with 143 local TV stations in 102 markets, covering more than 80% of U.S. households. Service is to launch in early 2001. Other iBlast investors include Cox, Gannett, Lee Enterprises, Media General, Meredith, McGraw-Hill, N.Y. Times, Northwest, Post- Newsweek, E.W. Scripps, Smith Bcstg. Post Newsweek Stations Pres. Alan Frank said iBlast is "a very significant, significant development... [It's] one specific answer about what to do with the digital spectrum. A number of companies worked very hard to make it happen." iBlast said even "aggressive" estimates indicate only 1/6 of Internet users will have broadband access by 2002, leaving opportunity for its broadcast broadband service.

In wake of Tex. Gov. George W. Bush's overwhelming victory in Republican Super Tues. primaries, speculation about who Bush might put on FCC next year has centered on Tex. PUC Chmn. Pat Wood. Wood, at last week's NARUC meetings, had no comment about possibility of his appointment as FCC chmn., saying Nov. is long way off and first priority for Republicans is getting Bush elected. Wood, whom Bush appointed to PUC, has been enthusiastic backer of Bush's presidential bid. He is strong believer in market solutions and is highly regarded in regulatory community.

FCC Chmn. Kennard has been away from office since March 6, "taking time for a family matter," FCC spokeswoman said. He canceled several scheduled appearances, including speech in Boston on March 6 and NARUC keynote speech March 8. Spokeswoman said there may be rumors as result, but it's family matter, he's not ill and was in N.Y.C. March 10 participating in financial conference.

Senate Banking Committee approved S-2097 by Chmn. Gramm (R- Tex.) March 8, helping Gramm keep his promise to deliver to floor by March 30 $1.25-billion loan program to provide local broadcast signals to rural areas. House Agriculture Committee already has passed similar legislation (HR-3615) by Rep. Goodlatte (R-Va.), and Senate Agriculture Committee has bill pending (S-1980) by Sen. Baucus (D-Mont.). While Goodlatte bill backs 100% of loan, Gramm capped backing at 70% to provide additional incentives to pay it off. He said measure is "aimed at maximizing the chances that we will have access to local television signals in our more rural areas and doing it in a way in which we preserve the taxpayers' money that will be invested." All bills are technology-neutral, meaning DBS is not only possible method that could receive loan guarantees.