are pop-ups what make the web go round?

[Dave Farber <dave () farber net>]

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Date: Mon, 19 Jan 2004 14:22:08 -0500 (EST)
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From: Bradley Malin <malin () cs cmu edu>
Subject: are pop-ups what make the web go round?
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To: dave () farber net

(for IP if you think it's appropriate)

Hi Dave, I haven't seen much of this topic on IP.  The NYTimes article
doesn't really do much to motivate the economics of the problem, but it
does raise some interesting issues.

regards

-brad

http://www.nytimes.com/2004/01/19/technology/19popup.html?th

As Consumers Revolt, a Rush to Block Pop-Up Online Ads
By SAUL HANSELL

Published: January 19, 2004

The boom in Internet pop-up advertisement may be about to, well, pop.

The big ads that flash in separate windows above or below Web pages are
among the most intrusive, and to many people, the most obnoxious features
on the Internet. Not coincidentally, the pop-up format is also among the
most effective for advertisers and the most profitable for Web site
publishers.

But the potential reach of these ads is starting to be sharply curtailed
as major companies, like Time Warner's AOL unit, Yahoo and Google,
distribute software that blocks pop-up ads from opening. This summer,
Microsoft will put a pop-up blocking feature in the next release of
Internet Explorer, the dominant Web browser.

"There is a consumer revolt as forms of advertising get more intrusive,"
said Rob Kaiser, vice president for narrowband marketing atEarthLink, the
first big Internet service provider to distribute pop-up blocking
software. The reaction to pop-ups, he said, is similar to the rush to join
the government's do-not-call list to block telemarketing calls and the
increase in the use of video recorders to block TV commercials.

Advertising executives, in television and the Internet market, note that
consumers who block the ads are undercutting the economic model that
provides them with free entertainment and information.

"I haven't spoken to any people who say I love pop-ups, send me more of
them," said David J. Moore, the chief executive of 24/7 Real Media, an
online advertising firm. "But they are part of a quid pro quo. If you want
to enjoy the content of a Web site that is free, the pop-ups come with
it."

But even companies like Yahoo and Microsoft, which receive significant
revenue from advertising, have decided to bow to complaints from Web
users.

"We are adding a pop-up blocker based on feedback from customers,'' said
Matthew Pilla, a senior product manger for Windows at Microsoft.

Long a feature of AOL, pop-ups became widespread on the Internet about
three years ago, as Web sites sought ways to replace the torrent of ad
money that dried up after the dot-com boom. And a few advertisers, like
X10, selling wireless cameras, and Orbitz, the online travel company,
jumped onto the format early.

In December 2001, 1.4 percent of the Web ads measured by
Nielsen/NetRatings were pop-ups or "pop-under" ads, which appear behind
the main browser window. That rose to 8.7 percent in July 2003. But it has
declined since, to 6.2 percent in December.

AdvertisementBanners.com, which places pop-under ads on Web sites, has
found that 20 percent to 25 percent of Web users have pop-up blocking
enabled on their computers, double the rate of a year ago, said Chris
Vanderhook, the company's chief operating officer. Some advertising
companies say that a smaller percentage of people are using blockers, but
there is agreement that use of pop-up blocking is increasing.

In the year and half since EarthLink offered blocking software, one
million of its five million customers have installed it. AOL added pop-up
blocking to its software in 2002. Google added a blocker to its toolbar, a
small program that adds some features to Internet Explorer. Yahoo, more
recently, added a similar feature to its toolbar. And Microsoft's MSN just
added a pop-up blocker to its most recent software.

The biggest potential impact will come this summer when Microsoft releases
its Service Pack 2 for Windows XP, which will add a pop-up blocker and
many other features to Internet Explorer. For now, Microsoft says Internet
Explorer will not block pop-ups unless users enable the feature.

Still the prospect of nearly ubiquitous pop-up blocking unsettles some big
advertisers.

"I don't want to see pop-ups blocked," said Matthew R. Coffin, the chief
executive of LowerMyBills.com, a site that sells long distance and other
services. Pop-up and pop-under ads, he said, attract more people than any
other ad format. "People wouldn't click if they weren't interested."

The decline of pop-ups, he said, is all the more troublesome because it
comes after the company had to slash use of e-mail advertising in response
to the public backlash against spam. As a result, the company is moving to
older forms of marketing.

"I'm very gung-ho on TV ads," he said.

Smaller Web publishers have fewer alternatives. Many independent Web sites
are part of networks that pay them $3 to $5 for every thousand pop-ups
they display.

"These pop-up blockers, as they become too widely used, will definitely
cut into my income," said William Smith, who runs 40 Web sites from
Winnipeg, Manitoba.

He says that 10 percent to 20 percent of his income comes from pop-up ads.
Some of his sites, like thewinnipegpages.com focus on travel and others
are pornographic.

Both types of sites take pop-up ads for products like Internet Eraser,
software that eliminates records of what Web sites people visit. He said
he tries not to have too many pop-ups interfere with users viewing his Web
sites, but he does display pop-ups as they decide to leave.

"A guy has to make money," he said.

The larger Web publishers, by contrast, have reduced use of pop-up and
pop-under ads. At Sportsline, pop-ups represented 5 to 10 percent of its
ad revenue a few years ago, but now account for less than 1 percent. "We
are totally ready for the day when you can't have any pop-ups," said Mark
J. Mariani, Sportsline's president for advertising.

"Clients have started to shy away from pop-ups and pop-unders," he said.
Sportsline now sets a quota of no more than one pop-up ad for each user in
any 12-hour period. Instead, Sportsline, like many other publishers, is
emphasizing larger advertisements woven into their main sites.

The Interactive Advertising Bureau, the major trade group representing
both advertisers and Web publishers, has decided not to fight the pop-up
blockers.

"If consumers tell us that pop-ups are a bad idea and they don't really
like them, then it's time to stop doing them," said Greg Stuart, the
group's chief executive.

Yet that is not a universal view even among major companies. DoubleClick,
the big advertising software company, is developing technology that will
enable pop-up ads to evade the blocking software.

"There are advertisers who want pop-up ads and publishers that want to
serve them," said Douglas Knopper, general manager for online advertising
at DoubleClick. "Our role is to help them do that."

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