By Joann Greco
Network World, 5/25/98

Product marketers in 1996 earmarked $300 million for Internet advertising. By the year 2002, that figure is expected to swell to $8 billion, according to market research firm Jupiter Communications.

Combine this Web advertising phenomenon with the intranet build-up and you get . . . what? A match made in heaven? Not exactly.

In theory, the idea is delightfully, temptingly simple: Sell valuable banner space to an internal or external advertiser that wants to reach a target audience. Then use the cash to better fund and build the intranet.

But in reality, it's just not happening. Some companies have toyed with the idea of accepting or selling ad space on their intranets, but few have actually gotten beyond the notion.

"No one has even asked me about advertising on an intranet," says David Leveen, a principal at Cognitive Communications, Inc. (CCI), an intranet developer in New York.

And that's good - Leveen doesn't like the idea. "An intranet is there to accomplish many things. These include building a knowledge base, building communities of practice, helping smooth work processes and establishing thought leadership. When you look at these factors, you have to ask: 'Where does advertising fit in?' "

Some say the answer depends on the advertising itself. "If the idea is to get a packaged goods advertiser like Coca Cola buying ad space, then, no, companies don't really want employees distracted from productive endeavors," says Jim Nail, a senior analyst who covers Internet advertising for Forrester Research, Inc., in Cambridge, Mass.

Even if such ad sales might result in revenue, a company would need to consider the work needed to pursue and manage an effort that is not part of the core business, Nail adds. Also a consideration: How would such ads impact intranet traffic? Coupons, contests and the like might serve as an incentive to visit a site. On the other hand, Web users often consider the presence of ads annoying, intrusive and something to be avoided at any price.

When private Webs become more like their public counterpart, indications are that the first banner-type ads will come from within the company. Mark Gallagher, vice president of technology administration at First Chicago NBD Corp., in Chicago, has mapped out a three-phase process.

In the first phase, certain departmental sites get preferential treatment, by size or positioning of relative links, on the upper-level directories of the bank's intranet. These directories get the most traffic.

On the most popular pages, links to new departmental intranet offerings are prominently featured, often by virtue of a small banner ad. One example is HR Connection, a new site that lets employees access information about their 401(k) balances, pension values and medical plans.

IT hasn't levied any fees on its constituents, nor is it likely to do so. "What I'm seeing is that the process of intranet advertising is becoming more formal. We're starting to limit, for example, how long a banner will remain on the home page," Gallagher says.

Amoco Corp., in Chicago, takes a different approach. The intranet team has allotted space on the corporate home page for internal ads. The ad spot gives business units the opportunity to promote their products and services to peers, says Betty Henry, a communications consultant at Amoco.

The advertisers pay for their spots based on the number of hits, says Henry, who discussed the strategy at a recent conference on intranets and corporate communications. "Any money we [earn] goes toward developing the intranet infrastructure," she says.

Others balk at the idea of such fees. "Hello? I thought we were on the same team. Information should not have a price tag attached to it," Leveen says.

At First Chicago NBD, IT is content waiting for fees that will come with phase two, Gallagher says. Here, the bank would let vendors advertise on the intranet or, more likely, an extranet.

Many experts agree the fee-for-ads model that might work lays somewhere between selling ads to fellow workers and accepting big dollars from the moneyed product makers that fill our bellies and satiate our fantasies. That in between place will likely be an extranet.

"Advertising makes a ton of sense for extranets," says Dan Fine, a principal of Fine.com Interactive, a Web developer in Seattle. "I can see it being used for products and services that approved vendors, franchisees and customers might be interested in."

"Sponsored" intranets follow a similar model. Dave Russek, senior vice president of strategic development at US Interactive, a digital marketing agency and Web developer in New York, advocates this scheme.

For example, a software firm developing HTML authoring tools might underwrite the cost of US Interactive's intranet because it wants to reach programmers and designers. The ideal sponsorship should reflect the culture of the hosting company. In US Interactive's case, appropriate sponsors would be youth culture marketers such as Coca Cola or a game magazine publisher, Russek says.

It's a revealing lineup that's pretty far removed from more workplace-friendly, information-based marketers such as technology and healthcare providers. It remains to be seen how employees will take to yet more ads. Will they regard them as good information, time-wasters or, worse, crass salesmanship?

At First Chicago NBD, external advertisers would come in phase three, admittedly a ways off. Gallagher uses the example of Marshall Field's, a downtown retailer. "I can see showing Field's hits per page, descriptions of employee demographics and information on the range of incomes," he says.

And then what?

"We could sure send Field's a lot of buyers of blue suits," Gallagher laughs.

Greco is a freelance writer in Philadelphia.