June 15, 2005

Aiming for the Sun

Continued from page 1

By Jon Burke

Online Advertising Is on a Roll

Advertising is dead. Long live advertising. Rich media ad delivery companies are all the rage for traditional media outlets... and other alarm:clock news from the land of private venture funding.

When news emerged that old-media newspaper giant Gannett had reportedly paid upwards of $100 million for a small new-media online advertising firm -- Fort Washington, PA-based PointRoll -- many media sources scrambled to learn about the latter company.

PointRoll sells advertising delivery technology to both advertisers and agencies that take advantage of rich media. Indeed, if you spend any time on the Web, you've probably come across their technology without knowing it. For instance, their Badboy is an online ad that floats across computer screens for a set period of time, then disappears. With billions being spent on online advertising, small improvements in ad performances are rewarded. And PointRolls' products in ad campaigns have generated higher click-through rates based on industry benchmarks. Like many other online advertising space peddlers, PointRoll was bootstrapped (in 2000) and has grown on its own profits. The company claims revenue growth of 163 percent last year and projected revenue gaining of at least 125 percent in 2005.

In another recent noteworthy online advertising move, the New York Times Company, The Tribune Company, and Knight-Ridder bought a majority stake (for an undisclosed sum) in tiny Topix.net. Although the three newspaper giants already have a huge share of print and online ad activity, Mountain View, CA-based Topix.net, founded in 2002, was doing something that caught their attention. It was culling news from thousands of sources and organizing it into categories such as "New Movies” or "St. Louis Cardinals." Of particular interest to Topix's new investors is the company's ability to deliver local news. If a user submits a zip code, Topix continually offers weather, sports, local politics, and the like  to areas as small as La Porte, Indiana. Now a hardware store in La Porte, which doesn't want to spend money promoting its goods throughout the state, can advertise locally via Topix.

Given that online advertising has solidly emerged from its slump -- Merrill Lynch recently predicted that revenues for the sector will grow by 29 percent in 2005, to $12.4 billion, while print advertising appears on the decline -- many companies will thrive in this sector, and other little-known gems will strike big deals and grab headlines.

Jon Burke is a technology writer based in San Francisco.