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February 19, 1996
Companies to Offer Ad-Sponsored E-mail
By LAURIE J. FLYNN
Taking a cue from broadcast television, beginning next month Juno, a year-old
venture of the Wall Street investment company D.E. Shaw & Co., L.P., will
offer free electronic mail to anyone who wants it -- that is, if they're
willing to hear a word from their sponsor.
Only a year ago, even a less aggressive effort would have incurred the wrath
of many Internet users. But while some people will surely object, many
analysts say the time is now right for an advertising-supported e-mail service
that will allow more people to communicate without having to subscribe to an
on-line service or Internet provider.
Prototype Juno mail screen:
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Credit: D. E. Shaw & Co., L.P.
While Juno is the first service to take such an approach, it's by no means
alone. Freemark Communications , a venture capital-backed start up based in
Boston, plans to launch a competitive service called Freemark Mail in April.
And other companies are certain to follow their lead, having apparently
decided that Internet users are not as averse to electronic advertising as
they once were, particularly if it enables them to get a service they want for
free.
For both services, the target is the 80 million or so personal computer users
out there who are not so-called "early adopters" and who spend as little as
six hours a month in front of a computer but as many as 140 hours per month in
front of a television, said Robert Young, president of Freemark. At the same
time, free e-mail may also be an attraction for the 10 million or so
subscribers of on-line services like America Online, Compuserve and Prodigy,
which charge anywhere from $100 to $200 a year for basic services.
For many users of these services, e-mail is the number one attraction.
According to a recent survey by the Yankee Group, a market researcher in
Boston, 35 percent of on-line service users named e-mail as their No. 1 reason
for subscribing. The second most popular feature of on-line services was
chat.
"We will get to the point where if you don't have an e-mail address you won't
be a full participant in the social fabric of the country," said Charles
Ardai, Juno's president. Both company's initial software releases will run
only under Windows.
For advertisers, the lure is a targeted audience. Both services will require
subscribers to fill out an extensive registration that will ask for
information including gender, income level, family status, hobbies and
shopping habits. The services will then use that information to serve up only
those ads that are relevant to that consumer. That way, only someone with
young children will see an ad for disposable diapers, while only women will
see advertising for pantyhose.
Advertisers will be get a detailed log of just who saw their ad, for how
long, how many times they viewed it and whether they clicked on it for more
information. That way, the advertiser can be assured of the most appropriate
audience, while the viewer isn't bombarded with ads for products that don't
interest them.
The strategy, Ardai says, "will benefit both the advertiser and the consumer."
In chasing the market for e-mail have-nots, Ardai says he is hoping to
attract schools, nonprofit organizations and associations, as well as
businesses and individuals. But in doing so, some analysts say, he could be
opening his service up to criticism, recalling the experience of Channel One,
the ad-supported television network targeted at schools. Many educators and
parents have complained that students should not be captive audiences for
commercials shown during programs they are required to watch.
Prototype Freemark mail screen:
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Credit: Freemark Communications
"There are going to be issues because there are going to be parents who don't
like it," predicted Richard Spense, an on-line analyst at Dataquest, a market
research company in San Jose, Calif.
But Ardai defends the approach, insisting that unlike television, Juno's
advertising isn't disruptive, instead appearing on a small part of the same
screen as the electronic message.
So far, Ardai has signed on Stanley Kaplan, Columbia House, Quaker Oats and
Smithkline Beechum as advertisers in the service's trial run. He declined to
say which ones had committed to participating in the final version of the
service.
Unlike full-fledged services like America Online, Compuserve and Prodigy,
neither Juno nor Freemark will offer much content at the start. But both
services clearly intend to beef up their offerings once they reach a critical
mass of subscribers and enough advertisers to support expansion. Both services
will most likely offer full Internet access eventually, though just how
they'll do this and how much it will cost remains to be seen.
Freemark is already out making deals with content providers. Last month, the
company announced a deal with ESPN, the sports network, to get access to
scores and other sporting news. That way, for example, someone who has
indicated on their registration that they like tennis will receive the latest
tennis tournament news when they check their e-mail.
But Dataquest's Spense predicted that while many people will be willing to
view ads and news items related to their favorite hobbies in order to get the
service for free, others are going to prefer to pay not to be bombarded with
marketing.
"I think people will be willing to spend a little money to be left alone,"
Spense said.
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Freemark Communications' Home Page , with screen shots of its beta software,
descriptions of its service and a sign-up link.
Juno's Home Page , with screen shots of its beta software, descriptions of
its service and a sign-up link.
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