Pay or Free: What’s the Best ISP Model

Within the ISP model, there are two schools of thought for which is better –pay or free.

The first school would argue that the pay ISP is better for advertisers because users pay for the service and thus may have more discretionary income and be more apt to make purchases online, providing advertisers with a better ROI. The latter school would say that the free ISP platform is better due to a greater reach to the average consumer. Plus, free ISP users know they are going to be targeted with ads in a toolbar or pop-up window and are therefore more receptive to receiving this information.

Either way, it is clear that ISPs are hungry to increase ad revenues and build their user base. For some, advertising revenue is the key to survival. The means to that end are through offering advertisers a more effective vehicle to target ads, whether it is better profiling or more accurate information on users’ surfing habits. And with the slow adoption of expensive broadband Internet connections among average consumers, dial-up ISPs will remain the primary source for targeting online ad campaigns.

There are several challenges that advertisers may face in going the ISP route. For ISPs, free or pay, it is nearly impossible to guarantee exposure for advertisers, making the ad buy more ambiguous and hard to measure. Further, free ISPs’ subscribers are not always active users and often provide inaccurate information when registering. And because advertisers rely heavily on the personal data collected by ISPs on their users, it is difficult to ensure that users’ privacy is protected. All these issues plague online marketers in justifying their ISP ad buys.

But ISPs are a key tool for online marketers to more effectively target results-driven campaigns than, say, a simple banner ad. With the advent of new ad serving and targeting technologies, advertisers are better armed to leverage the power of the ISP model and make it work for their campaigns.

Making the ISP Model Work:

Having examined the pros and cons of the ISP ad model, we must discuss how online advertisers can make the model work for them. To ensure that the ad buy is intelligent, advertisers should work to form strong partnerships with the ISP and create a foundation that can grow into a long-standing relationship. ISPs need advertisers almost as much, if not more, than the ad people need the ISPs. Thus, innovative and effective advertising reflects on the ISP in the eyes of users because they never interface with the advertiser. And most ISP users, free or pay, will not stand for invasive marketing or careless use of their personal data. So advertisers and ISPs have to form strategic partnerships to ensure that the end user is happy and safe, thus increasing the chances of him responding to the ads.

In addition to strong partnerships, online marketers must realize that most ISP users want to be exposed to certain messages and content. But these need to be tailored to their needs, interests or preferences. Users don’t want to receive an offer for $50 off a new set of golf clubs if they don’t play golf.

If advertisers tailor their messages and the method with which they deliver them, they will enhance the user’s Internet experience and the user may become more apt to respond to the ad. Most Internet users are finicky and don’t want blatant ads thrown in their faces. Therefore, advertisers need to be smart in how they develop their specific campaigns for ISP users and creatively package the ad content to subtly attract user’s attention.

What the Future Holds:

The advent of broadband Internet access will change how ads are being delivered on the Web and how advertising can be more innovative. With rich media, streaming audio and streaming video, ads will become more exciting and visual for Web surfers. In the past year, dial-up ISPs have moved toward providing advertisers with the platform to deliver this interactive content and have made the value proposition greater for advertising on ISPs.

However, broadband deployment has been slow to take off. Dial-up ISPs will continue to thrive amidst the broadband connected landscape, as a good portion of middle America will be lured by the free ISP offerings or deem cable modem or DSL connections too expensive or inaccessible in their respective locales. And as ISPs continue to thrive, so will the fact that advertisers will need to view ISPs as effective vehicles to deliver their ad messages and to target those messages in an effective manner.

The ISP ad model has its share of challenges and pitfalls, but it’s not going to vanish anytime soon, as long as online marketers continue to innovate how they deliver their messages. Not to mention, the basic fundamentals of advertising — delivering the right message, to the right audience, through the right medium, at the right time — will remain static.

• Meir Yedidia is co-founder and CEO of Adwise, Israel. Adwise develops solutions for managing and delivering targeted advertising and rich-media content. Reach him at [email protected]

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