INTERACTIVE FEATURE: PORTALS Web advertisings’ Holy Grail? - Portals are growing in both size and importance as they provide advertisers with the web’s most valued commodity: people. In a special focus, Gordon MacMillan predicts the future

A little over a year ago, I bet most of my savings account on a couple of internet push technology companies that had just filed for public flotation.

A little over a year ago, I bet most of my savings account on a

couple of internet push technology companies that had just filed for

public flotation.



In retrospect, with push already yesterday’s technology, it doesn’t

appear the smartest of moves.



But this year I’m confidently betting everything I have left on portal

companies because portals, unlike push, are here to stay. Believe

me.



Portals are the new holy grail on the web, both for internet users and

advertisers. They’re sites that purport to offer everything a surfer

could want in one place - content, communication and community - and

which can deliver the sort of audience numbers advertisers can’t find

elsewhere on the web.



Small wonder that any website once described as a start page, a search

engine or a directory service is now calling itself a portal. The cult

of reinvention has never been so big.



In the past, sites such as Yahoo!, Excite, Infoseek and Lycos were

places that surfers only visited in order to be taken somewhere else.

However, their new incarnations are sprawling virtual malls that offer

everything from news and weather to travel services, banking, shopping

and entertainment.



In addition they offer a plethora of free services, including e-mail,

chat and personal home pages.



The race to supply the best of these services as part of the package has

kicked off a number of acquisitions: Microsoft has bought Hotmail, the

free e-mail company; Excite has paid dollars 35 million for Netbot, an

online shopping technology; and Yahoo! has bought the free e-mail

company, Four11, while also taking a dollars 5 million minority stake in

Geocities, the hugely popular US online community.



All these elements are designed to keep surfers coming back, time after

time. In fact, most modern portal owners would be happy if you never

went anywhere else.



This is certainly true of Charles Walker, the UK managing director of

Lycos. ’If you want to know what the weather is like, to find out what’s

on TV and to check the news, you can do all of that on Lycos,’ he

boasts.



’The same is true if you want to chat and get free e-mail.’



Lycos is developing co-branded areas with its content partners within

the Lycos portal. The ad revenue is split, but the surfer never leaves

Lycos.



Walker believes this provides ’a more satisfying user experience’ as

well as making it more likely that the user will develop brand loyalty

to Lycos, and therefore use more of its services (and see more of its

ads) than if they were taken from the site after clicking on a

particular feature.



This, however, is still what happens at Microsoft’s portal, MSN. It has

signed-up more than 60 content partners, including CampaignLive, with

the aim of providing users with the top line of that day’s news. But if

they want to get the full story, users must click through to the site

concerned.



Tom Bowman, the advertising sales director at Microsoft Online, believes

that this ’best of’ approach is what users find most helpful.



’The web can be confusing, and for new users even more so,’ he says.



’There is so much stuff out there that information overload was sure to

come to the fore on the web. Microsoft’s mission is to make the web more

useable and more efficient. I want people to stay until they get what

they want - checking the sport, weather and e-mail.



’Ultimately you might go through to someone else’s site, but you go

through us to get to them.’



If the exact strategies differ, though, the prize they’re all after is

the same: online advertising revenue.



While adspend is small at the moment, the research specialist, Jupiter

Communications, predicts that it will be as high as dollars 8 billion

globally by 2002.



For portal owners, the maths is pretty straightforward: the more users

they can attract to their site, the bigger the slice of that cake they

can call their own.



The potential gains are big enough to turn the portals themselves into

hot properties. Disney’s recent acquisition of 40 per cent of Infoseek

for dollars 70 million and Intuit’s purchase of 20 per cent of Excite

for dollars 40 million only underlines their attractiveness.



The basis for these investments is that portals will be the chief

providers on the web of what advertisers need most and can find least

easily - volume.



It’s certainly one side of the equation.



It would be hard to imagine Procter & Gamble, for example, fulfilling

its own forecast that it will spend 80 per cent of its global ad budget

on digital media by 2002 without being satisfied by the mass reach of

those media.



And it would hardly make sense for Unilever to have signed wide-ranging,

three-year agreements in July with AOL and Microsoft, under which it

will develop interactive marketing and new-media programmes for many of

its key brands.



In the short term, portals bring other advantages for advertisers.



As Andrew Walmsley, head of digital media at Bartle Bogle Hegarty,

points out: ’Because of the increased size of portals, advertising sales

are running in a more effective and consumer-focused environment and

that will be good for the industry.’



But for portals to be a real success in the long term, they must hang on

to surfers after initially catching them.



At the moment many people are still in too much of a hurry to move on,

according to Benjamin Ensor, an analyst at Fletcher Research.



’The click-through rates are lower on portals than they are on

destination sites, like ZDnet or ESI, and that is a problem. What this

shows is that, as portals get bigger, specialist content sites in areas

such as IT or financial services should continue to prosper.’



Portals argue that, as people get the hang of the net, they stop just

surfing for fun and go in search of specific information - be it a stock

quote, a currency rate or the day’s news - which they wish to find with

the minimum of effort.



After all, why go to three places when you can get them all in one?



In any case, the next generation of web consumers who will come online

are unlikely to use the web in the same way as those who have been

surfing since its early days.



The new consumer audience will have different habits and is going to be

more mainstream, predicts Nigel Sheldon, a managing partner at

MindShare.



’One of the joys of the web since its inception has been the delights of

going off and finding those fanzine-type sites,’ Sheldon says.



’There will always be people who do that and visit news groups and

discussion areas. But for mainstream consumers, I think it will be

enough for them to go to trusted portals.’



But even if portals grow into mega sites with audience figures to match

TV ratings, some advertisers will still not be satisfied. Volume, while

important, is hardly unique in the media marketplace and is not

necessarily the best selling proposition for the web.



Jason Goodman, a business director at BMP Interaction, is more

interested in the other side of the equation. ’It is not merely about

aggregating large amounts of users. The real opportunities of online

advertising are not about broadcast marketing. They are far more about

one-to-one marketing.’



So is the strategy adopted by portals a mistaken one? Will large

audiences be enough to attract the biggest slice of ad revenue? Or will

sites offering highly targeted audiences prosper more?



Clearly, the site that offers both will be the best-placed of all, and

Evan Rudowski, director of European operations at Excite, says that is

precisely what his company is doing.



’Portals aggregate a large audience and then organise it and segment

it,’ he explains. ’This creates the unique characteristics of one-to-one

marketing and one-to-one interactivity. I think Excite is the only one

of the portals that is focused on one-to-one marketing.’



Rudowski says part of the way this is done is through online

communities.



These are the latest ’must have’ add-on features for portals. They allow

users to set up their own home pages, which are built around their

common interests.



Neighbours chat online, and find people with similar interests. For

advertisers, these interest groups are self-selecting target

audiences.



Excite may be furthest down the line at the moment, but you can be sure

that its rivals will soon be making similar moves. I hope they do, or my

second bet might start to look as dodgy as my first.



CASE STUDY MSN



Microsoft’s recently redeveloped portal, MSN.co.uk, has a very good

chance of success not least because it is the default home page on the

popular Internet Explorer web browser, also made by Microsoft.



The first thing you will notice about MSN.co.uk is that it does not look

like a typical search engine portal. MSN is presented in much more of an

ezine style, opting as it does for a news-led front page.



With its 60-plus UK content partners, it clearly stands as the most UK

focused of any of the portals.



The idea is that everything you want is within easy reach of the home

page, with a search engine to your left, the news in the middle and an

array of MSN services to the right.



The MSN idea is to bring the ’best of’ everything on the web

together.



It is split into a number of main channels, each of which has a wide

array of sub-categories, ranging from business to computing to chat,

news and football supplied by partners including ZDNet, the Electronic

Telegraph, Teletext and Megastar.



MSN is a little light on the personalisation front and has not ventured

into online communities, which Lycos, Yahoo! and Excite are currently

big on. But like most other portal services, Microsoft does offer free

e-mail, via its Hotmail subsidiary, though it is not fully integrated

within MSN.



In addition to Hotmail, there is an array of services on offer from

other MSN partners such as Scoot, DHL and Cellnet’s Genie.



THE REST



Netscape



(www.netcenter.com)



Pretty much the original portal, it’s really an all-American affair,

with no UK content. News comes from ABC.com and is held on ABC’s

site.



Has free e-mail available, Webmail, a pretty good message board area and

an instant messaging system. Looks very much like Yahoo!.



Yahoo!



(www.yahoo.com/.co.uk)



News provided by the Press Association and Reuters, and a strong finance

section. Also offers e-mail, chat, message board services and a good

degree of personalisation through My Yahoo!.



Alta Vista



(www.altavista.com)



Entirely a US service, with free e-mail, but nothing in the way of

personalisation or community. Major relaunch plans in the pipeline.



Lycos



(www.lycos.com/.co.uk)



Recent tie-up with Bertlesman has given birth to 12 European Lycos

sites.



UK site lacks local news, which is provided by Associated Press. No

personalisation on UK site but Tripod communications have been a big

success in the US.



AOL



(AOL.co.uk/.com)



UK site is not much more than an ad for joining AOL. Recently redesigned

US site has usual shopping list of services but AOL is really about its

members.



Infoseek



(www.infoseek.co.uk/.com)



Strong in continental Europe, there is very little going on at the UK

site. No free e-mail, no personalisation and no news. US site much more

comprehensive with news from Reuters, and a good finance section.



CASE STUDY EXCITE



Excite easily stands out from the portal pack with its high degree of

personalisation, content and community features and well-assembled

navigation.



At the moment, a lot of this is only available on excite.com but should

be on excite.co.uk within the next six to nine months. To some degree it

really does not matter. A lot of UK users surf US sites and invariably

choose one as their home page.



What excite.com does so well is allow a high degree of

personalisation.



One thing about going to a search engine type site is the look of

it.



They all invariably look the same. What Excite does, to a far greater

degree than MSN or Yahoo!, is not only choose what you have on the site,

but what order it appears in.



This allowed me to create a page that carried the top news stories and

movie listings news, with stock watch, favourite links and services

below.



There is a lot of content to choose from. It will even integrate company

news with the companies in your portfolio.



It also has excellent chat and message board features and the new

service, Excite communities, which offers surfers the chance to connect

with a like-minded group of people. It’s the first service of its kind

on the web, combining traditional web publishing tools with community

building capabilities.



Community topics range from poetry to the Volkswagen Beetle.



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Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).