• by February 18, 2004

The New York Times Co.'s digital unit said that ad revenues for January spiked 42.3 percent compared to January 2003. New York Times Digital reported the increase yesterday, attributing it to growth in display advertising and in all classified ad segments at NYTimes.com and Boston.com. The increase comes on the heels of the digital unit's $25 million profit in the fourth quarter of 2003.

While the ad revenue picture for January was a mixed bag for the other Times units and Merrill Lynch reduced its estimates for the company, the digital unit is percolating. Digital projects double-digit growth for 2004. Rich media and streaming advertising are likely to help fuel growth at NYTimes.com. This month, clients including FedEx, Marriott, and MGM Grand have run video ads on the site. Hollywood studios are big fans of video ads, often running inventory on Thursdays and Fridays to drive movie openings at the box office.

Interstitials, which New York Times Digital introduced in December 2002 with Sony Pictures' promotion of "Adaptation," are fairly common on NYTimes.com now. Although the site does not run full-page takeovers on its home page, it does run full-page takeovers that appear immediately after leaving the home page (and other pages), before the next page loads and is viewed. American Airlines ran the first takeover ad on the site in February 2003. The Times caps these ads at 15 seconds, and doesn't allow uninitiated sound. NYTimes.com is also known for its Surround Session advertising, in which readers receive ads from a single advertiser for their entire viewing session. NYTimes.com launched a half-page ad format in April 2003.

"Full-page takeovers are increasingly popular, but are not necessarily a runaway success," said Martin Nisenholtz, CEO-New York Times Digital. Readers are, of course, vocal about any perceived intrusions. "A handful of readers will continue to complain about anything intrusive, including takeovers, but the vast majority understand that advertising is a necessary part of the mix for a free Web site. And depending upon the creative, we often hear that our readers actually like these ads," Nisenholtz said.

Improvements in rich media have enabled publishers like NYTimes.com to accept more sophisticated ad formats. Unicast, Eyeblaster, PointRoll, and other providers are the ingredient technologies fueling online advertising.