SmartAge's Kinko's-like business model also appeals to analysts, some of whom have hailed the company as an incipient giant of the Internet. "I'm pretty impressed," says Jack Staff, chief economist at Zona Research, in Redwood City, Calif. "Small businesses need to be able to market on the Web without a lot of overhead."
Certainly, SmartAge gives every appearance of a company that expects to succeed. Far from the madding crowd of Silicon Valley, its two-story brick headquarters nestles in a suburban San Francisco neighborhood where housing prices start at $700,000. With its wood paneling, dusty-rose carpets, and brass fittings, the office looks more like a law or psychiatry practice than a high-tech start-up. That sense of maturity is reflected in SmartAge's 37 employees, most of whom are several years older than those stereotypical Stanford grads who hunker over business plans and dream about retiring at 40.
But even amidst this placid elegance, the tempest of Internet business can be heard rattling the windows. One challenge to SmartAge is simply the rapid march of technology, which by 2002 will make it possible for Web-site owners to do things like use code embedded directly into banners to track viewing patterns and responses, according to Boston-based Forrester Research. Such advances would make some of SmartAge's existing services obsolete, but Lohse pledges to stay two steps ahead of technological change, offering whatever services small companies need to exploit the Net's developing state of the art.
A bigger problem for SmartAge than the march of technology, however, is the so-far tepid pace of banner-ad acceptance among consumers. Despite efforts to jazz them up with animation and other special effects, banner ads frequently fade into the digital woodwork. A study commissioned by Advertising Age magazine revealed that 49% of Web users simply ignore banners, compared with 39% last year. "Most people don't look at them," concedes Staff. "And the revenue [through increased sales] that actually comes through them isn't phenomenal."
That revenue is also tough to measure. Large companies running sites on in-house servers can spend as much as $50,000 a year monitoring impressions and "click-throughs" (when a site visitor clicks on an ad) using services such as NetGravity. Even then they can't track purchases back to specific banners. Of course, the same thing can be said of traditional media, such as print advertising. But the technological glory that is the Web was supposed to excel at detailed response measurement. "Ad measurement on the Internet is a mess," Forrester reported last year. "Hyped expectations, a lack of agreement on standards, technology obstacles, and a fragmented ad-delivery process has hampered the ability of media buyers and sellers to track ads."
Given those problems, the fact that SmartClicks is free makes placing ads if not a positive boon at least a low-risk proposition. But then there's the flip side: people who do believe in the effectiveness of banners may disdain ad exchanges on a you-get-what-you-pay-for principle. "I don't think banner exchanges are very good," says Jonathan Mizel, publisher of the on-line marketing newsletter Cyberwave.com. Although Mizel is a SmartAge customer and has used its SmartClicks exchange, he prefers to pay for ad placements because sites that sell space also guarantee viewers. "Banner exchanges are a great place to test your banner, but when you roll out a campaign, you're better off purchasing ads directly," he says.
Although Cerf is a believer in free exchange, he recognizes that Mizel's sentiments may be widespread. He argues that SmartAge can help banner ads "develop into a profitable medium" but says it "still remains to be seen whether the business model matches the behavior of users and companies seeking a Web presence." With that in mind, SmartAge is hedging its bets by selling banner packages that promise to deliver a minimum number of eyeballs to advertisers.
For those who prefer the free road, success in a banner exchange boils down to three rules: make sure your ad is engaging, swap with sites that complement your business, and don't expect the moon.
That approach has worked for Deborah Edlhuber, owner of Prairie Frontier, in Waukesha, Wis., which sells wildflower and prairie-grass seed. Edlhuber erected a Web site a year and a half ago, chiefly as a marketing vehicle. Last May she contracted with SmartAge competitor LinkExchange to place her self-created ad on several dozen gardening and photographic sites. Today www.prairiefrontier.com attracts up to 1,700 hits a day, many from visitors clicking over from Edlhuber's LinkExchange partners. "They definitely bring people to my site, and I can track the click-throughs," she says. "But it's still hard to say how much business I get from them."
Christine McCarthy, founder and president of San Francisco start-up Cordpack Inc., has a similarly practical attitude. Her company, which manufactures carrying cases for laptop cords, put up a Web site in June. With only a small budget for the site, McCarthy relies on SmartClicks to advertise. "We get a steady flow of traffic--a few hundred hits a day," she says. "It keeps up the momentum while I'm caught up in other areas of the business. At least I know I've got something out there. And anything we get from them is gravy."
Bronwyn Fryer writes about business and technology. She is based in Santa Cruz, Calif.
