Skip to main content

For five years, the Internet advertising business has revolved around the bumper-sticker-shaped ad known as the banner. Starting as early as next Monday, that's going to change.

In a rare, coordinated effort, 15 of the biggest publishers on the Internet are getting ready to release a set of standards for new types of online ad sizes and standards. Such an agreement -- the first since Net companies settled on standard banner sizes back in 1996 -- will likely make larger, more interactive advertisements more common on Web sites.

Online publishers are hoping that the widespread availability of these larger advertising units will attract more business from advertisers because they'll enable advertisers to tell more complex messages and stories than they can squeeze into banners. That new business, over time, could be a huge boost for companies dependent on online advertising. Those firms have suffered mightily over the past few months with the loss of venture-capital-funded ad dollars, and they're searching for vehicles that will reap more ad dollars than have banners, which have proven inadequate for supporting most content-based online businesses.

The industry group, coordinated by the

Internet Advertising Bureau trade association, has been meeting two or three times a week since December, and hopes to get the additional ad standards in place by next week, according to Richy Glassberg, the IAB vice chairman who's leading the effort. He wouldn't identify the companies involved, but


(CNET) - Get ZW Data Action Technologies Inc. Report





AOL-Time Warner


acknowledge they're part of the group.

In a major sign that the banner ad is fraying in the breeze, banner ads accounted for less than half of online ad revenues in the third quarter of 2000, the first time they fell below the 50% mark in the four years that


Scroll to Continue

TheStreet Recommends

has been tracking online advertising. In the third quarter of 2000, banners' share of online ad spending amounted to 46%, down from 50% in the second quarter of 2000 and 55% in the third quarter of 1999. From the second quarter to the third quarter of 2000, banner revenue fell on an absolute basis, too, dropping from $1.06 billion to about $910 million, according to the ongoing survey sponsored by the IAB.

The Great Leap Forward

"We're very close to having a great step forward for the industry," says Glassberg, who's also CEO of the Internet ad sales firm



Though that statement might seem grandiose, there's a ring of truth to it. First, it seems clear that a demand exists among advertisers for new types of advertising units that break the banner mold.

"It's not big enough," says John Skipper, general manager of

Disney Internet Group's

(DIG) - Get ProShares Ultra Oil & Gas Report

ESPN Internet Group

, about the banner. "It's not targetable enough. It's not intrusive enough." Disney has started selling a narrower, taller ad it calls the Big Impression.

Another new format that's drawn attention is CNet's new ad type, called Messaging Plus, a relatively large, squarish ad that sits in the middle of columns on sites such as the company's

news site. Though clicking on most banner ads sends users to another site, clicking on the Messaging Plus units keeps the viewer at the same spot on the original page, but brings up new information within the frame of the advertisement. Barry Briggs, president of CNet's media division, says the company is able to charge a higher price for an ad package including Messaging Plus units than it would have without them. "It's not that much higher, but it's higher," he says. "If you deliver a more compelling ad platform, you will get more money for that, yes."

In addition, says Briggs, the new ad units -- bought by charter advertisers including


(ORCL) - Get Oracle Corporation Report

-- will bring larger parts of advertisers' budgets online. Traditionally, he says, many marketers have looked at banner-focused Internet advertising as a tool to drive people to their sites, or for pushing purchases in online stores. But new types of advertising units, he says, will encourage more online advertising designed to build a company's brands, not necessarily spark immediate action. "I think you'll see an influx of branding dollars that come to the Web as people understand the efficacy of telling those stories through the Web," Briggs says.

Convenience's Sake

But the issue isn't just about having new advertising technology and new advertising units at particular sites. The real opportunity is a standardization across multiple publishers, so advertisers that run an ad across several sites don't have to do different creative work for each.

In today's buyer's market for online advertising, it's not as if publishers are close-minded about new ad dimensions. But the marketers are hoping that the convenience of common formats among multiple sites will speed acceptance of new ad shapes, sizes and technologies. Before standard banner sizes were set in 1996, says IAB Chairman Rich LeFurgy, "there was incredible frustration, wasted time and money, navigating through various banner sizes unique to individual sites. The industry was wasting an awful lot of time and money by needing to resize creative units that might have been 10 or 20 pixels off in one or two directions."

The new ad standards -- the IAB wouldn't specify what they were -- aren't a magic bullet that will cure online advertising's current ills. Nor are they solved by the IAB's recent hiring of its first CEO: Robin Webster, an advertising and marketing veteran, who the IAB hopes will open doors in the ad-buying community.

Instead, participants in the online advertising business indicate several directions in which online advertising can move to provide more value to -- that is, make more money from -- advertisers. One of these is advertising technology, something distinct from the height-and-width dimensions of advertising units, says Stacy Smollin, director of



Global Studio creative consultation unit. But it's not enough to have neat technology, she says; it has to be cool technology that's broadly accepted.

Another area for improvement is advertising research, says Doug Weaver, president of the

Upstream Group

, a consulting and training firm focused on online advertising. Rather than measuring the effectiveness of online advertising just by counting the number of viewers who click on it -- a number that's well below 1% -- online publishers need to conduct more research that's commonly done for other media. One is measuring the nonimmediate response to an ad, or the number of people who see it, don't click on it, but visit the advertised site later. Another is seeing how online advertising improves brand awareness of a company or product.

Others, like

Munder Capital Management

senior portfolio manager Paul Cook, say publishers have to do a better job at targeting messages to Web users. That means better, passive tracking of an online user's profile and surfing history, or, as he puts it, "presenting you with a customized Web environment where ads come to you and you're pleased to see them."

Or maybe the problem is on the creative side. One of the biggest problems with online advertising is that agencies haven't put enough creative effort into developing the ads, says Stephen Klein, chairman of

Avenue A's



unit, which represents advertisers in the digital media marketplace. Maybe that will change, he says, when online ads get more elaborate and allow for streaming media.