IQ News: IQcooltool: Attention, Please




Tiny apps go after eyeballs.
Just when you thought there was no more ad real estate to be found, those canny technical types have scrounged up some new space. Following the lead of Real Networks, whose branded “jukeboxes” deliver steady streams of music and ads, a spate of new companies are angling for a place on the desktop for their free Web applications.
These desktop assistants come in the form of toolbars or little windows that sit on the computer screen, offering one-click access to files or Web sites. Most promise a different way to find and organize one’s Web experience. Some even let users create their own personal portals.
These apps are free to the user, although most companies require that users fill out a short profile form that enables makers to target advertising. At the same time, they provide publishers and marketers with users’ “desktop attention,” a phrase coined by Francis Costello, president of EntryPoint, one of the first companies in the newest e-gadget race. With any luck, the thinking goes, a person composing a memo in a word processing program will let her glance slide away from the document as she ponders the proper phrasing, sucking her into the ad on her customized toolbar for, say, E-Stamp or NordstromShoes.com.
While these latest e-gadgets have their critics–some see them as a novelty that will quickly lose their luster–boosters claim there are advantages for advertisers and users alike. For instance, it could be a way for advertisers to wrest power away from the portals. (Placements on Internet launch pad sites are expensive, and frequently require years-long commitments for top placement.) And when designed well, they may free users from the constraints of browsing.
The advertising component of these desktop assistants works in a variety of ways. Some show ads in a little window within the applications’ interfaces; these ads may be cached on the user’s hard drive, so they can show up whether or not the user is online. Others deliver ads from their own or third-party servers, while some depend on paid placements on menus for revenue.
Ads usually are targeted using a combination of the “five basic questions”–age, gender, Zip code, connection speed and e-mail address (asked for when the user signs up)–and contextual information, or what the user is doing when utilizing the app.

USE ME, PLEASE!
The first goal, of course, is getting users to download these freebies. Different strategies are used for initial distribution; some work directly with computer manufacturers, for instance, or make co-branded versions and let content partners distribute them. The desktop is getting undeniably cluttered, what with all those AOL Instant Messenger windows, to say nothing of the icons computer manufacturers have taken to sprinkling across the field of vision. And gaining critical mass is the make or break for these products, says Michele Slack, an analyst in the Online Advertising Group at Jupiter Communications, New York.
“If there are not enough consumers interested in the offer, it doesn’t matter how wonderful the quality of those consumers is,” she says. “Reach is critical for these companies to even have any interest from advertisers.” Slack pegs that critical mass at “tens of thousands.”
IWare, based in Scotts Valley, Calif.–and, like most of these companies, founded last summer–lets users mix and match. Its app sits within the Windows taskbar. Users can drag anything they want into the taskbar; icons for a Word document, Web pages and applications can co-exist there, ready for one-click access. IWare starts with five buttons. The iShop and iChoose buttons open menus leading to advertiser-paid-for Web links. Search, Help and Customize buttons do what one would expect. As people use the application, iWare keeps track, building a profile. IWare estimates it will have 45 to 55 hours per month per user of ad time to sell, something CEO Tim Glass calls “the dream of all marketers.”

HEFTY HYBRID
ELiberation.com Corp. is going all out to get users for its ePilot application. EPilot, launched Dec. 7, combines the greed factor of multilevel marketing, the pay-for-attention model of Cybergold, the bid for search results placement of goto.com and a Yahoo!-style directory. EPilot waits on the desktop, looking like a button until it’s clicked, at which time it opens the first in a series of standard cascading menus.
“Think of it as a very powerful favorites folder with added functionality,” explains Heath Clarke, president of eLiberation.com.
Perhaps its biggest lure is that users can earn cash by using the application. Advertisers pay the Irvine, Calif.-based company to place text links to their Web sites within categorized sub-menus in ePilot; how much they’ll pay users per click is listed right there. For example, if a user were looking for information on life insurance she could drill down from the category Net Guide through Business to Insurance, then finally to Life, where she has the choice of choosing from the nine listed sites that pay, such as Survivorship Life (26 cents per click-through) or scrolling down to links that aren’t paid placements, and therefore pay the user nothing.
That doesn’t mean, however, that the user actually gets that 26 cents. How much she gets paid depends on a formula much too complex to be explained here. The key to making decent money is signing up others for the service; they’re then “downstream” from you, to use Amway-type terminology. Heath says the first checks went out at the end of December, and the largest was $139.
IHarvest, launched last July by iHarvest Corp. of Palo Alto, Calif., offers an application that lets users grab Web pages or parts of them and organize them with key words into graphical databases, called WebBases, on a hard drive.
Rich Buchheim, president and CEO of iHarvest, says targeting advertising to files that a user has saved to disk and is using is a step above tying them to Web surfing activities. The app has gotten placement on Compaq’s My Presario site, where owners of the Houston-based manufacturer’s computers can get updates and software.
Buchheim said ad sales have just begun; right now, the company is signing up for affiliate commerce programs to generate revenue.
Yet another company, EntryPoint of Sunnyvale, Calif., has users sign up to receive such information as sports, news, stocks and weather from a choice of content partners, all customizable. Clicking on an icon displays the latest news, plus an ad. It has plenty of features, some of them inherited from PointCast, which it acquired last May, such as a foreign exchange calculator and a scrolling ticker. A Shop icon is where things get interesting, thanks to its links to merchants, starting with those who have paid for premier placement. An e-wallet lets users automatically fill out payment and shipping information and comes with several credit-card offers installed.

DESIGNED WITH SMARTS
In competing for eyeballs, offering the user substance is key. “When we talk to most users,” says Dennis Moulton, vice president of marketing for Pleasanton, Calif.-based Snippets, which beta launched in December, “they tell us that everything they want from the Web is at least three pages in. Then, the browser takes over your entire screen–it’s time-consuming and frustrating.”
Moulton describes Snippets as a “smart browser.” Each Snippet is a Java-based toolbar application that could be downloaded individually, or as part of a group. The applet reads HTML and XML documents, and can pick out predetermined information, such as a quote for a particular stock or the weather for a certain city, so one can find out whether it’s snowing in Detroit without opening a browser and going to weather.com.
The info is updated regularly as long as there’s a persistent Net connection; a user also can set the app to dial up and update itself as often as she wants.
Alejandro Levins, a Snippets user, is a busy man–he’s COO, CTO and CFO of SF Interactive, a San Francisco shop that handles design, advertising and media. He says applications like these are similar to the proliferation of apps and content for handheld devices like the Palm Pilot.
“I think in a sense it’s the future of advertising and content on the Web,” he says. He believes that as people become used to instant hits on organizers or wireless phones, they’ll balk at having to troll through several Web pages to get to the information they want.
Brainpaste, another desktop app not yet released, claims it will take targeting to extremes. The application includes an “observational profiling engine”–meaning it “learns” about you as you go about your Web business and carries that information along in a sort of identity e-wallet. The user is in control of that identity; it lets users wipe out cookies and other secret files some Web sites leave behind. Users control how and whether brainpaste “learns” about them, as well, by deleting or modifying interest areas or even turning brainpaste off.
“Obviously our hope is that users keep us active at all times,” says brainpaste president Anthony Citrano, “but there may be times they do not want their private assistant to be paying attention.”
The advantage to advertisers is that because brainpaste is on the client side and not on the Web server, it continues to build the profile wherever the user goes on the Web.
One company already has learned some lessons since its founding last August. Winfire, which launched an eponymous application it touted as a “browser assistant” on Aug. 31, recently has replaced its president and repositioned itself.
Chad Steelberg, co-founder of the Irvine, Calif.-based Winfire and now CEO, says Web browsing is just one tiny aspect of a grand plan. “People getting data are not going to be limited to a Web-based portal,” he explains. Steelberg sees the Winfire technology being used as the engine for any e-business that wants to build a desktop relationship with users.
Winfire will soon launch a Web site where users can visit to choose content for their individual desktop apps from a menu of content providers. Web publishers also will be able to offer downloads of branded versions of Winfire on their own sites.

WILL ADS FOLLOW?
So far, none of these companies has reported getting the big ad ball rolling–which leads some to wonder, of course, if these e-gadgets will prove successful.
Offering ads on the desktop may be very effective–in the short term, says Darian X. Heymann, co-founder of Beyond Interactive, an Internet advertising agency and media company in Minneapolis. “Over time, ad clutter has increased exponentially,” he says. These applications “are absolutely more clutter, but they’re new clutter.” The Net’s short history, he points out, has shown that novelty works–at least for a while. “They’ll probably have their day,” he says, “and once people get used to them and start getting annoyed, they’ll be less effective.”
The level of targeting obviously could make or break these apps. Jupiter’s Slack says the “five basic questions” may be enough for mass advertisers used to buying radio and television on the same demos, but the question in her mind is, how valuable will these users turn out to be?
“With any type of free software, or free offering in general,” Slack says, “the type of user who’s drawn to it becomes the critical selling point. These are value-conscious users, and your luxury high-end goods advertiser will probably not be interested.”
That doesn’t mean the audience doesn’t have value, Slack adds. “This tends to be a youth-heavy and college student-heavy demo that plenty of advertisers are very much going after.”
Company execs remain upbeat. Costello, for one, argues that the quality of users for EntryPoint tends to be high because of its key component, the e-wallet. “These are people,” he explains, “with a high affinity for shopping and closing transactions.” n