• by Larry Dobrow , December 29, 2003

Paid search dominated the online marketing headlines in 2003, with bushels of tech suppliers and would-be ad mavens throwing themselves into the fray. But the way Xtenit Chief Executive Officer Brian McFadden sees it, 2004's hot trend for publishers and techies could well be selling specifically targeted ads in requested content, such as e-newsletters.

McFadden is far from a disinterested party, as his company offers a host of ad integration and subscriber relationship management tools for Web publishers. That said, he makes a persuasive case as to why publishers should be paying more attention to selling ads within content emails.

"People who are subscribing want to receive that content-they want to have a relationship with its publisher and they want to be informed," McFadden explains. "Interspersing targeted advertising within those conversations is one of the revenue streams that's still out there for the taking. That alone should have a lot of publishers interested."

When asked why publishers haven't wholeheartedly embraced the concept of embedding ads in e-newsletters, alerts, and other communications, McFadden says that awareness is a major factor ("most of what you read is about paid search"). Similarly, those who are aware of the technology tend to associate it with direct marketing communications that offer little in the way of asked-for content. A more important factor, however, is that much of the technology currently offered for distributing content via email doesn't accommodate targeted ads. "In terms of distributing email to a large audience, most of the other providers don't differentiate between the applications they're offering a Jet Blue or an L.L. Bean and the ones they're offering," McFadden says.

McFadden takes pains to distinguish targeted ads on the Web from those embedded within email. Although web sites allow marketers to match specific ads to specific visitors, he notes that such efforts provide little in the way of predictability: "Web visits are generally random, and [visitors] cannot be completely identified unless they log in." Content pushes via email, on the other hand, are sent to a predefined, receptive audience, allowing publishers to more accurately predict overall reach and thus do more selling in advance. And of course, publishers usually have more information about those users, who were all required to have provided at the very least a confirmed email address.

McFadden dismisses suggestions that subscribers to email newsletters might bristle at the thought of an ad or three being embedded alongside the content. "Magazines and newspapers have always had ads," he explains. "It's something that subscribers have come to expect." Furthermore, he argues that publishers might be able to include fewer ads if the targeted model takes off: "Rather than pandering to a set of advertisers who want their ad sent to every subscriber, [publishers] can narrow it down-maybe two ad spots instead of three, but better targeted."

Bullish as he is about his company's technology, McFadden concedes that email legislation clouds the marketing picture for 2004 and beyond. His prediction: customer acquisition efforts via direct email marketing will be more difficult and costly to do. "Legitimate marketers are going to be so concerned about even the remote appearance of a violation of the new rules," he says. Naturally, McFadden predicts that this will play right into Xtenit's hands. "Companies will see that there's less risk in placing ads in email publications, and particularly targeted placement."