"Lil' Pimp," an Internet animation series chronicling the adventures of a nine-year-old red-headed street hustler, shows several signs of success: It has a growing, young audience, an award from a dot-com publication and a deal to become a full-length feature film for theatrical release. What it doesn't have, though, is ad revenue.
"Not yet," says Austin Harrison, chairman and chief executive of MediaTrip.com, the Web site that creates and runs the "Lil' Pimp" series. "We're working on it."
Entertainment is pushing onto the Web, but so far it hasn't brought too many big advertisers along with it. Some of the Web sites specializing in cutting-edge short films, animation and other forms of online programming have managed to secure paying sponsors. But many companies that spend millions of dollars on ads in print media and on television and radio are still largely holding back support of Web-based content.
One major reason is that image-conscious blue-chip sponsors are unwilling to back the often tasteless fare many entertainment Web sites offer. "A tremendous amount of the content is of a bizarre nature," says Doug Jaeger, interactive creative director at Omnicom Group's TBWA/Chiat Day in New York. "A lot of our advertisers don't want to sponsor that kind of program."
Online entertainment sites are trying hard to reverse the situation. PepsiCo Inc. and Coca-Cola Co. both have repeatedly refused offers of free ad placement on such sites. "Generally, you get what you pay for," says David Cohen, a director at Interpublic Group's Zentropy Partners, Coke's main agency for interactive media planning and buying in North America.
Coke considers the programming on some sites "inappropriate" for its brand, Mr. Cohen says. The company "is very sensitive about where its trademark is used," he adds. "Coke is a lightning rod for people to call into the consumer hotline and say, 'How can you associate yourself with this kind of content?' "
There are a few hopeful signs for the sites. Atom Corp.'s AtomFilms, a Seattle-based Web site showcasing short films, has landed sponsorships from big advertisers including Volkswagen AG and Sony Corp. Other big companies, including Ford Motor Co. and Nissan Motor Co., say they're seriously considering deals with selected original-entertainment sites - within limits. And MediaTrip.com's original film "George Lucas in Love" attracted sponsors including Microsoft Corp.
"There's obviously a threshold for controversy," says Steven P. Silver, director of e-business for Nissan North America. "If it is so edgy and out-there that the upside pales in comparison to the overall risks of the content, I'm not going to make that decision."
Entertainment sites, including a range of film, music and theater sites, draw a tiny 4% of online advertising revenue, according to a study by PricewaterhouseCoopers' Internet Advertising Bureau. That portion compares with 36% of online ad revenue that flowed to less glamorous but far more heavily used search engines and portals, such as Yahoo! Inc. The balance of the ad revenue was largely split among sites devoted to technology, business information, news and classified advertising.
Overall, online ad revenue is growing. In the second quarter, Web advertisers spent $2.12 billion online, more than double the $934 million they spent during the same period a year ago, according to the survey. Revenue flowing to entertainment sites has grown even faster, as the number of such sites has grown: For the second quarter, ad revenue to entertainment sites totaled $84.96 million, a threefold increase over the same period a year ago, when ad revenue totaled $28 million.
Still, there are some signs of trouble. According to data from Jupiter Media Metrix's AdRelevance unit, the number of banner-ad impressions - another measurement of ad volume - on a sample of music and streaming-media sites fell 25% for the period from May to August, while the figure for the Web as a whole rose slightly. The fall-off was even sharper for the small number of original-film sites in the study sample.
For start-ups that draw tiny audiences, any hint of softening in the ad market could be a big problem. "It's hard enough to get advertising to support regular programming that delivers big numbers," says Bill Cella, executive vice president of broadcast and programming at Universal McCann, the media arm of McCann-Erickson, another Interpublic unit.
Some advertisers focus their online ad spending with the Web affiliates of traditional media firms where they already spend a lot of their ad budgets. Northwest Airlines, for example, has been approached by some original entertainment sites but has focused its spending on Web sites such as Walt Disney Co.'s ESPN.com. The audiences for Web entertainment programs are too narrow, missing the airline's target demographic of middle-age, well-educated business travelers, says Craig Braasch, Northwest's managing director for world-wide advertising and sponsorships.
Contributing to big advertisers' caution online are the recent failures of high-profile online-entertainment start-ups such as Pseudo Programs Inc. and Digital Entertainment Network. Pepsi, one of DEN's original sponsors, these days says it has allied its massive "Pepsi Stuff" online promotion with the far more well-established Yahoo. "We look to Yahoo as a solid partner," says John Vail, director of digital media and marketing for Pepsi. "They have all their ducks in a row."
It's clear, however, that for big advertisers weighing ads on the Web's fledgling entertainment sites, a major barricade is content that frequently pushes the boundaries of taste.
Pfizer Inc., the maker of Viagra, buys ads under guidelines that seem unlikely to allow a sponsorship of such would-be Web franchises as "Booty Call," an animated game on Web site Romp.com. A spokeswoman says Pfizer avoids placing its brands near "content that glamorizes negative social behaviors." The company also steers clear of anything that "features a gratuitous amount of violence, sex, nudity or profanity," she says.
Web sites aimed at college-aged audiences say they're narrowly targeting advertisers with a higher tolerance for their edgy content. Romp Inc., a Los Angeles online company that offers the animation series "The Tardz" in addition to "Booty Call," says it is keeping ad-sales efforts focused on categories including entertainment, liquor and apparel. Icebox Inc., of Los Angeles, which operates the animation site Icebox.com, says it isn't seeking sponsors for "Mr. Wong," a series that has attracted criticism for its portrayal of an Asian-American servant. It does, however, expect to land corporate support for other programs, the company says.
"We have to create content that has credibility" to a young, marketing-savvy audience, says Tim Nye, chairman and chief executive of New York online company Alltrue Networks Inc., which has posted short films of a cow defecating and a pigeon vomiting on its Web site. "I don't think Procter & Gamble is ever going to be an Alltrue sponsor."
Ultimately, online entertainment may simply need more time, advertisers and Web sites say. Over the next few years, as fast Internet connections spread and advertisers get more familiar with new online formats, ad revenue is likely to grow at even faster rates. And the online advertising landscape may be reshaped by nascent forms of interactive TV.
Of course, it's possible many of the current Web entertainment start-ups won't live that long, as advertisers and investors winnow out preferred sites. In television, says Kevin Wendle, chief executive of Ifilm Corp., a Los Angeles film Web site, "80% of the dollars go to the top ten companies. The same certainly will be true on the Internet."
Anna Wilde Mathews, The Wall Street Journal. October 11, 2000
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