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Marketing Entwined With Journalism on Forbes.com

By NAT IVES

Published: August 3, 2004

FORBES.COM has begun placing links to ads in its news stories, calling the practice an experiment but raising new questions about the separation of journalism from the advertising that supports it.

"We want to be trailblazers, whether from an advertising standpoint or an editorial standpoint," said Jim Spanfeller, president and chief executive at Forbes.com, part of Forbes Inc. The company will keep a close eye on its readers' reaction throughout the summer. "We would walk away," Mr. Spanfeller said, if readers indicated confusion or disapproval of ads within the editorial content.

The new approach of Forbes.com was reported yesterday in DMNews, an online publication about direct marketing.

Forbes.com is one of about 200 online publishers to adopt the system, called IntelliTxt by the company that developed it, Vibrant Media in San Francisco. Other participants include the British edition of the Motley Fool, the financial news Web site; the Experts Exchange, a site for information technology professionals; and the network of gaming sites operated by IGN Entertainment.
Advertisers pay Vibrant to be associated with certain words, which are then underlined twice when they appear on participating Web sites.

When a visitor rolls a mouse over the underlined words, a small box labeled "sponsored link" appears with ad copy and a link to more information.

Many forms of online advertising are enjoying renewed interest from advertisers, particularly ads linked to Web users' searches on sites like Google and Yahoo. A forecast last week by Jupiter Research predicted that online advertising would bring in $8.4 billion this year, up 27 percent from last year.

But as online advertising evolves, many of the new techniques raise questions. Yahoo, for instance, sells "paid inclusion," which ensures that marketers appear in the index of sites from which Yahoo draws its search results. The company said paid inclusion did not increase the frequency or prominence of any search results, but executives at search consulting firms have said it seemed to help.

Although Forbes.com is not the first to adopt IntelliTxt, it is perhaps the most prominent and the most identified with news coverage.
In June, the Forbes site ranked sixth among online financial news and information destinations, with 4.8 million visitors viewing material on the site, according to Nielsen's NetRatings service. By comparison, the top-ranked site, Yahoo Finance, drew 9.8 million viewers.
By another important yardstick, the amount of advertising a site delivers to its visitors, Forbes.com delivered 107.7 million impressions in June, Nielsen reported. An impression is a single appearance of an ad on a user's computer screen. Yahoo Finance delivered 2.1 billion impressions.

Executives at some other online news sites were critical of the decision by Forbes.com.

"From a subscriber's perspective, I think people would be very confused by the advertising that popped up over words in the stories," said Randy Kilgore, vice president for advertising at the Wall Street Journal Online.

Publishers also have to keep their big advertisers happy, Mr. Kilgore said. A marketer like I.B.M. would not be pleased to pay for a large, colorful display ad on the Journal Online, only to find that an adjacent article includes links to a competitor, he said. But the Journal Online, which receives income from paying subscribers, also has a different business model than Forbes.com, which is free to use and therefore more reliant on advertising revenue, he added.

Larry Kramer, chairman and chief executive at CBS Marketwatch, said he worried that the system could erode of the barrier between advertising and news content.

"Are we going to start writing stories that use words that we think will bring us more revenue?" he asked. "While I don't think anybody is doing anything untoward now, I do think there is potential for that."

Journalists at Forbes.com brought up similar questions, Mr. Spanfeller said. "It wasn't a heated debate, but it was people doing the right thing and raising the worst possible case," he said. "We talked it through."

The system, moreover, works in such a way that publishers are unlikely to adapt coverage to maximize the keyword advertising in their articles, Mr. Spanfeller said. "I can guarantee that no one in the company has any clue about who's bought keywords."

Doug Stevenson, chief executive of Vibrant Media, pointed out that publishers control which sections of their sites will include IntelliTxt links. Business news sites are potentially favorable, he said, but placing ads in the text of political and international coverage could lead to uncomfortable juxtapositions. "We ask the publishers to focus on review sections primarily, including hardware and software reviews," he said.