And Now a Word From Our Internet Sponsors . . .
The Internet is often compared to radio and television, but there is one major difference: There is no way to get audio, video or other content from the global computer network without paying someone a connection fee.
NetZero, a Westlake Village start-up, is hoping to change that with today’s launch of a free Internet service. The catch: In exchange for free Internet access, NetZero customers must supply personal information about themselves and tolerate a 3 1/2-by-1-inch window on their computer desktops that displays a new advertisement every 30 seconds.
That trade-off puts the Internet in line with its media predecessors, said NetZero Chief Executive Ronald Burr. TV and radio have long relied on advertisers to pay for programming that is offered to the public without a subscription fee.
“It was only a matter of time†before a company extended that model to the Internet, said Rich LeFurgy, chairman of the Internet Advertising Bureau, an industry group based in New York. “This is a no-brainer. I think over time this will evolve so that existing [Internet service providers] that are currently charging their customers a monthly fee will probably become free.â€
The NetZero idea originated with Marwan Zebian, now the company’s vice president for network and telecommunications. Burr, Zebian and two other colleagues from Canoga Park consulting firm Impact Software--Stacy Haitsuka and Harold McKenzie--decided to turn the idea into a company about a year ago. They have raised more than $5 million in venture capital that they can draw on as the company progresses.
To set up a NetZero account, customers must answer about 30 questions about their age, occupation, income and other demographic information that is useful to advertisers. Customers are also asked about their personal interests, such as sports, finance or health.
Once the NetZero software is installed on a PC, it keeps track of the sites the user visits and how long he or she stays at each one. That data is periodically sent back to NetZero and incorporated into the user’s profile.
Part of the appeal to advertisers is that NetZero’s database can keep track of 15 different demographic categories, such as age, income and personal interests. Those categories can be mixed or matched to create a variety of target audiences. A golf equipment maker, for example, could have its ads displayed only to NetZero users who are wealthy and interested in sports.
“It’s a win-win,†Burr said. “The ad that comes to you is meaningful to you, and the advertiser is getting ads to the people who are more likely to be interested in the product.â€
With NetZero’s system, advertisers also can target certain geographic areas by having their ads posted only to users who dial in from specified area codes, Burr said. That could open up Web advertising to local companies that can’t afford to spend on ads that are just as likely to be seen by someone halfway around the world as by someone across town.
NetZero can also trigger ads to appear when certain Web sites are accessed. For instance, a bank that is promoting its auto loans may want its ad to appear when a NetZero user visits a car-shopping site. Or a company could pay to have its ad appear in the NetZero ad window whenever a NetZero user visits a competitor’s site.
This is the kind of targeted marketing that advertisers have been yearning for, said Peggy O’Neill, an analyst with market researcher Dataquest in San Jose.
Because of such targeting capability, advertisers will be more likely to pay NetZero’s higher-than-average ad rates of $25 to $65 per thousand customers, she said.
But Neil Monnens, vice president of marketing for 2can Media, a San Francisco firm that places Web ads for its clients, said he thinks NetZero’s ad rates are too high.
“The average rate right now for a non-targeted banner ad is $2 or $3,†he said. Even with demographic targeting, “No one will pay $25.â€
Monnens also questioned whether NetZero can sign up enough customers to make its targeting system pay off.
“If you can reach men who have purchased BMWs, that’s great, but if you only have five of them, it’s not worth it,†he said. “You’ve gotta have millions.â€
NetZero expects to have 250,000 users in six months and a million by the end of its first year. (The software can be downloaded from NetZero’s Web site, https://www.netzero.com, and the company will be mailing out thousands of discs.) With that many customers, Net-Zero’s average monthly cost per user would be about $5, Burr said.
NetZero users who tested the service before launch said the software is simple to download and install and that the access was indistinguishable from other Internet services that charge $20 a month. They said the permanent NetZero ad banner was mildly intrusive but a reasonable trade-off in exchange for free online access.
“It’s not much bigger than a banner ad you’d see if you were just surfing the Net anyway,†said Dennis Shaffer, a NetZero tester who manages the Family Amusement Center in Simi Valley.
Trinh Montrenes, a Garden Grove computer specialist who works for the state, said she found some of NetZero’s questions about income and marital status were “a bit intrusive.†But, she added, “on some things, you have a choice of fudging the information. You don’t have to put in the truth.â€
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Times staff writer Karen Kaplan can be reached at [email protected].
