Have Web pop-ups peaked?

Sept. 4 — Pop-ups and pop-unders, the pesky Web ads surfers love to hate, seem like they’re everywhere online. In reality, only 2 percent of all online ads employ pop-up technology, according to a study from Nielsen/NetRatings. But does that mean pop-ups have peaked?

JUST 63 COMPANIES account for 80 percent of all pop-up advertising, according to the report from online measurement firm Nielsen/NetRatings.

The names of the top pop-up marketers are familiar to anyone who has surfed the Web in the last year: the ubiquitous X10 Wireless; airline ticket seller Orbitz; Cassava Enterprises, parent company of CasinoNet; and real estate giant Cendant Corp.

But beyond those frequent purveyors of pop-up promotions, more than 2,100 advertisers, or about 10 percent of all online marketers, take advantage of pop-up technology, the study found. The majority, or 84 percent, of all pop-ups were used for direct marketing — driving traffic to a Web site or trying to generate a sale — compared to the industry’s average of 64 percent.

In the first seven months of 2002 Web surfers saw more than 11.3 billion pop-ups ads, a seemingly staggering figure and a reason for the anti-pop-up movement that’s been gaining ground in recent months.

After receiving complaints from their customers, women’s Web site iVillage and Internet provider Earthlink became the latest Internet companies to ban pop-ups from their services. In August Earthlink began offering free pop-up blocking software to its 4.8 million customers.

An Earthlink spokeswoman wouldn’t comment on how many subscribers have downloaded the pop-up blocker, but said it has “exceeded early expectations.” The pop-up blocker will be incorporated into the next version of the Internet provider’s software.

Other Web sites “cap” or place limits on how many pop-unders a visitor sees.

Nielsen/NetRatings defines a pop-up as any ad that launches a new browser window without a user’s input, including both the small boxes that appear in front of a Web page and the more surreptitious ads that linger behind the main browser after someone has clicked away from a site.

Yet despite their notoriety, or maybe because of it, pop-ups make-up only a fraction of all online advertising and they aren’t expected to gain market share in the next few years as software companies, ad agencies and online publishers develop newer, more effective, forms of ad messages, said Charles Buchwalter, vice president of Nielsen/NetRatings.

“We don’t see that the pop-up numbers are going to change dramatically, maybe growing to three or four percent in the next couple of years,” said Buchwalter. “Web publishers want advertising that brings in more revenue.”

“Consumers dislike them, but they’re not a major focus for online advertising,” said David Hallerman, analyst with eMarketer, an online research firm.

Although cheap to produce, Web publishers can’t charge as much for pop-unders compared to other forms of online marketing such as sponsorships or large-sized banners.

The controversial ads began proliferating just as online media fell into a punishing recession and more Web publishers began relying on them to stay alive. In 2001 Web ad spending dropped 12 percent to about $7.2 billion, according to the Internet Advertising Bureau. Although industry analysts expect some growth in the online ad market in 2002, in the first quarter spending dropped about 20 percent compared to the first quarter 2001.

While pop-ups bring in less than two percent of total Web ad revenues, according to industry research, they make up a high percentage of income at gaming, community and yellow pages sites.

“Pop-ups served a very interesting purpose in the midst of the ad downturn,” said Buchwalter. “If the pop-up hadn’t existed what would have kept the online industry going?

Looking ahead, standard pop-ups will likely give way to rich-media technologies that incorporate animation, audio and video into online ads. These ads can come in forms that dance or zoom across the computer screen, momentarily cover a Web page, or “interstitials” featuring streaming audio or video that appear in-between pages.

For example, in July, AOL introduced animated ads into its proprietary service, with rich-media messages becoming a prominent part of AOL 8.0, the next version of its software.

Also in July Yahoo! signed deals with rich-media technology companies Eyeblaster, Eyewonder, Point.Roll and Unicast to include their software into its online ads. Recently Yahoo launched a 3D banner campaign for HP which featured different camera angles to show off a new Compaq notebook.

Allie Savarino, vice president of marketing for Unicast, a technology firm that licenses its rich-media software to Web sites, says ad agencies are now spending about 25 percent of their online budgets on so-called rich-media campaigns.

“We’re seeing an increase in the use of interstitials as sites move away form pop-ups because of negative consumer feedback,” she said.

But Safa Ratschy, Internet analyst with US Bancorp Piper Jaffray insists that pop-ups are not only here to stay, but are a positive trend for online advertising.

“Pop-ups are, by nearly every account, highly effective,” he wrote in a note issued this week.

While acknowledging that many consumers hate them, he added that mainstream Web surfers would rather see ads than pay for content.

“We know of no Web site that suffered a decline in audience traffic or time spent because of these pop-ups,” he wrote.

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