Thus far, advertising on the web has been a decidedly mixed bag. Advertisers initially were titillated by the prospects of advertising on the web. They thought that they would be able to track each user's preferences, tailoring their pitch to individuals. Perhaps this was the wrong attitude.
TV advertisements are sold because advertisers see an opportunity to build a brand and produce more sales. This aspect of Internet advertising has been almost entirely overlooked. The promises of advertising nirvana distracted companies from the more traditional value of advertising.
About eight months ago, I made the prediction in this space that more content sites would begin charging for their news. Companies were gradually coming to the realization that the expensive content they were producing needed to be paid for somehow at the same time the online ad-market was beginning to sag. It now seems that I was correct on this count. (Before you label me a braggart, allow me to admit that I also predicted that Napster would be a successful pay-service although there was no way I could know that eight months later, they still wouldn't have brought the service to market.)
Now Web sites are facing the simple economics of their plight: charge users, increase advertising, or fold. For many sites, the best option has been to create premium content areas accessible only to subscribers. ESPN.com, Salon.com, and Yahoo! are just three examples of sites that now offer features and content exclusive to paying subscribers.
Some web sites are attempting to shift to these branding opportunities rather than simple banner ads. One relatively new change is the use of larger, more obtrusive advertisements embedded in the text of sites like Salon.com or the online version of the New York Times. These advertise ments are often media-rich with flashy graphics and short, annoying music. Other formats have also appear such as "pop-under" ads which open new browser windows beneath the one currently being used.
When you watch TV, you have no choice but to watch the commercials; you may flip the channel or get a snack, but you can't skip straight to the sit-com or football game. People will watch the ads either because of laziness or because the ads are compelling enough to keep their attention.
Internet advertising is moving in a similar direction. Interstitial pages - a page of advertising that appears after you click a link but before you are forwarded to the article or page that you have requested - have become more popular recently. Other sites have animated sequences.
Both of these methods have much more in common with the TV model of advertising than banner ads of the past. They force the user to watch - or at least endure - the advertisement in order to get to the content. They also focus on branding a product or company rather than request a specific action; banner ads often invite the user to click through to another page.
This type of model seems more intuitive. Although the medium may still allow more targeted ad placement, the move away from ads that rely on user action will benefit everyone. After all, when you head to ESPN.com in order to read sports news, you are unlikely to be interested enough in a banner ad to click through to another site, at the same time leaving news you came to read in the first place. On the other hand, one would think that a five-second, full-page ad for Gatorade would be just as effective as it would be during Sportscenter.
Gamecube and X-Box go head to head
In the next two weeks, two companies will be launching new game consoles for the home entertainment. Nintendo is releasing its newest offering, the Gamecube and Microsoft is entering the market with its first attempt, the X-Box. Both will be competing with each other and the already available Playstation II.
Neither of these two companies lacks ambition. Nintendo has been a primary player in the home entertainment market since it launched its first console and the titles that occupied future University students with Mike Tyson's Punch-Out!!, Super Mario Brothers, and Contra.
On the other hand, Microsoft has never produced a game console. In fact, Microsoft has never produced hardware of any type on this scale before. But it does come with a long history of successful diversification into new markets. It can do this primarily because it has a lot of experience and a lot of cash. The marketing budget for the X-Box launch is estimated at $500 million and Microsoft plans on selling the console hardware for over $100 less than cost- a loss which it hopes to recoup after it has established its market.
Nintendo's system will cost around $200, about $100 less than the Playstation II or the X-Box. Along with its slate of kid-oriented games like PokŽmon, the price differential may allow Nintendo to develop a strong user base. The X-Box will compete more directly with the Playstation II and its success will depend largely on the quality and availability of game titles. Playstation II's head start means that more advanced games are now being released.
No matter who gets off to a better start, it seems likely that all three makers will survive. Game developers incur large expenses when developing for multiple platforms and will be inclined to focus on the one or two systems that seem most promising after all have been launched. In the long run, as game developers commit to one or two manufacturers, the market will probably not support three different systems.
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