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Is It News...or Is It an Ad?

Last month, FoxNews.com ran an article about Republican House Speaker Dennis Hastert's postelection prospects. In the story, the words "house," "speaker" and "leadership" were underlined twice.

The underlines weren't for emphasis -- they were clues that those words were doubling as advertisements. When readers moved their cursors over the underlined words, a pop-up advertisement would appear, obscuring some of the text of the article. The ad above the word "speaker," for instance, was for the search engine Ask.com. "Search Ask.com for Speakers," it said, and linked readers to the site.

This type of online advertising within the text of an article, known as in-text advertising, has been around for a while. But it used to be relegated to niche sites like the videogamers' haven IGN.com and ScienceDaily.com. Now it is appearing on some mainstream journalistic Web sites, like those of News Corp.'s Fox News, Cox Enterprises Inc.'s Atlanta Journal-Constitution and Hearst Corp.'s Popular Mechanics magazine. That marks a departure from a long-observed tradition in the print medium of keeping editorial content separate from advertising.

Journalism ethics counselors decry the trend. "It's ethically problematic at the least and potentially quite corrosive of journalistic quality and credibility," says Bob Steele, the senior ethics faculty member at the Poynter Institute, a journalism school in St. Petersburg, Fla.

But the publishers who run these ads see nothing wrong with them. They insist they are part of their continuing experimentation with different forms of online advertising to gauge which are most effective for readers and advertisers.

A spokesman for Fox News says its news department never knows which keywords are being purchased by advertisers prior to any article, "so there's definitely a firewall there between editorial and advertising." The company doesn't consider the Ask.com ads in its news sections to be advertising, he says, because they're about letting users "find out more information about a topic." Other in-text ads are restricted to its business, technology, science and entertainment sections, he says.

Hitting Targets -- and Missing

In-text ads are handled by several online-ad brokers, including Vibrant Media Inc., Kontera Technologies Inc. and MIVA Inc. These companies sign up publishers willing to run the ads, and then find advertisers interested in placing them. Advertisers pay either a fixed price to have their ads linked to specific keywords, such as "videogame," or bid against other advertisers in an auction. The ads generally run across an array of sites, and advertisers pay only when users click on the ads.

The brokers say they offer Web-site owners an additional place to sell ads at a time when prime real estate on their sites often is snapped up quickly amid a boom in spending on online advertising. U.S. spending is projected to grow to $15.9 billion this year from a record $12.5 billion last year, according to eMarketer Inc., an online-marketing research firm in New York. At this point, in-text advertising makes up less than 1% of that spending, industry observers estimate.

The in-text ads are often double-underlined, which is done to distinguish them from traditional Web links, which normally use single underlining to point users to other content. The brokers say the ads aren't intrusive because users see them only if they move their cursors directly over the highlighted words. Advertisers, meanwhile, say they are attracted to in-text advertising because it allows them to serve highly targeted ads. If people are reading about "laptop computers," for example, they may be in the market to buy one.

But sometimes the ads appear strangely out of context. For instance, a recent Popular Mechanics story titled "Worst Case Scenarios: How to Survive a Riot" advised readers to "stay away from the windows." Last month, the story contained an ad for Microsoft Windows linked to the word "windows."

Microsoft Corp. referred a request for comment to Universal McCann, a media-buying company that buys in-text ads for the software maker. Jason Tsai, group interactive media director at Universal McCann, which is owned by Interpublic Group of Companies Inc., says the ad clearly wasn't relevant to the content. But he says marketers accept that there will be some awkward matches in in-text advertising because certain words can have more than one meaning. "If we stopped buying the word 'windows,' we'd give up a lot of good placements of the word," he says. "We're also protected against stuff like this" because Microsoft pays only if users click on the ad, he says.

A spokeswoman for Popular Mechanics says the site has received no negative feedback from users and is constantly monitoring its site to make sure in-text ads aren't off-base.

In September, on the Atlanta Journal-Constitution's site, an ad brokered by Vibrant Media for Target.com ran next to the words "Anna Nicole Smith" in an Associated Press article about the death of the reality-television star's 20-year-old son. The ad said "Shop for Smiths. Save 10% to 20% online at Target.com." Target Corp. didn't respond for this article to requests for an explanation of what product or products the ad referred to.

The ad was removed within three hours, after it was spotted by both Vibrant Media and an employee at the Journal-Constitution, says a spokesman for Cox Enterprises. But before it was removed, a popular advertising-news blog, AdRants.com, captured an image of the ad and posted it for readers.

Anna Kassoway, Vibrant Media's vice president of marketing, says the company's system is designed to avoid such mishaps. "This is something we take very seriously here," she says, "and I do feel fortunate we haven't had a lot of occurrences of that." (Other pay-per-click advertising brokers, including Google Inc., have had similarly strange juxtapositions occur in recent years with ads that appear in the spaces around the text on a Web site, but the incidents are more pronounced when the ad appears right next to the keyword.)

A Target spokeswoman says the company was pleased that Vibrant Media "took quick action," but apologizes "to anyone who may have been offended by the ad." In part because of that mishap, the company currently isn't running any in-text ads and has no immediate plans to do so, the spokeswoman says. If improvements are made to the technology for delivering such ads, she says, Target may consider running them again.

Restrictions and Rejections

Hyde Post, vice president for the Internet at the Atlanta Journal-Constitution, says the paper restricts in-text ads to soft-news sections such as entertainment and sports. The paper hasn't received any reader complaints, he says. "You have to try new things," Mr. Post says of the paper's decision to start running in-text ads earlier this year. "I look at the medium as very evolutionary."

Some major news organizations have rejected the ads. Forbes.com, owned by Forbes Media LLC, tested in-text advertising on its site in the summer and fall of 2004. But the publisher pulled the ads after its reporters complained. "While the general feedback from [users and advertisers] was more positive than negative, our editorial staff was very uncomfortable with the concept," a Forbes.com spokeswoman said in a statement.

News Corp.'s New York Post also experimented with in-text advertising. But when the newspaper redesigned its Web site in September, it decided against running the ads because they didn't perform well enough "from a business and an editorial perspective," a spokesman says.

(Dow Jones & Co., which publishes The Wall Street Journal Online, Barron's Online and other Web sites, in addition to this newspaper, won't run in-text ads, a spokeswoman says. The ads blur the line between advertising and editorial and "interrupt the reader's experience," she says.)

Gaining Traction

Still, in-text advertising is gaining traction, in part because it appeals to many sites on the Web that don't focus on hard news, such as feature magazines, trade publications and blogs.

New York-based Vibrant Media launched its in-text ad product, IntelliTXT, in 2004. Revenue at the closely held firm rose to $26 million last year from $12 million a year earlier. It has signed up more than 1,200 publisher sites, up from 500 last year, and its roster of advertisers includes such major brands as Sony Corp. and Ford Motor Co. Last year, Vibrant received a $30 million investment from private-equity firm ABS Capital Partners.

Roughly half of the in-line ads delivered by Vibrant now feature short video clips, such as movie trailers, rather than only text, says its chief executive, Doug Stevenson. Advertisers pay from $5 to $20 per click for video ads and less than $5 for text ads, he says.

Closely held Kontera, based in San Francisco, launched its product, ContentLink, last year and has signed up more than 1,000 publisher sites, says Yoav Shaham, chief executive. The company received $7 million in funding earlier this year from Sequoia Capital, an influential Silicon Valley venture-capital firm, and Lehman Brothers Holdings Inc.'s venture-capital arm.

MIVA, a publicly traded online-marketing company based in Fort Myers, Fla., added its in-text advertising system, MIVA InLine, to its mix of products in September. It declines to say how many publishers have signed up.

One of the biggest advertisers in recent months has been IAC/InterActiveCorp's Ask.com, which has been running ads using Vibrant's and Kontera's services on sites ranging from American Media Inc.'s MensFitness.com to News Corp.'s IGN.com, which covers music, movies and videogames. In a recent review by IGN.com of the movie "Man of the Year," Ask.com paid to run an ad linked to the keywords "Robin Williams." The ad urged users to search Ask.com for more information about the actor.

In-text ads are particularly well-suited to Ask.com because, as a search engine, it can persuade users to look for more information about the topic on its site in real time, says Greg Ott, vice president of marketing for Ask.com. "We can advertise that Ask is a better search engine for you to go deeper on any of these topics," he says. Mr. Ott declines to say how effective the ads are and how much Ask.com is spending for them, but says it is pleased with the results.

The Learning Channel has run in-text video ads on sites such as iVillage.com, a popular site for women, for some of its new television programs. For "Shalom in the Home," a prime-time show in which a rabbi counsels families, it ran a 15-second clip linked to the keyword "parenting" on iVillage.com. "It gives us a way to communicate with parents in a way we haven't before," says Chris Schembri, senior vice president for media planning at the channel's parent, Discovery Networks, which is a unit of Discovery Communications Inc. He adds, "We're getting positive response from users," but declines to share details.

But several publishers and advertising-industry executives are skeptical that in-text advertising will emerge as a major part of online-ad budgets. "Right now, when you're in an editorial article, users are trained that they're going to be linked to something that is going to further explain that article, not necessarily an ad," says Caroline Little, chief executive and publisher of Washingtonpost.Newsweek Interactive, the online publishing arm of Washington Post Co.

The online-marketing industry and venture capitalists are "on a collective hunt for the next search, and this isn't it," says Jeff Lanctot, vice president at aQuantive Inc.'s Avenue A/Razorfish, a large buyer of online ads for marketers, referring to the boom in search-related advertising in recent years. The success of paid-search advertising is based on users looking for something specific, and then finding related ads. "In this case, the user has nothing to do with which words are linked," he notes.


David Kesmodel and Julia Angwin, The Wall Street Journal. November 27, 2006

Copyright © 2006 Dow Jones & Company, Inc.. All rights reserved.