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Let the Simpsons be Your Free ISP
Anthony Fuentes writes "Looks like Homer and company are getting into the free ISP business, click here for details. Offer applies to win32 users only." Probably because Homer uses Windows - and Internet Explorer, of course, because that's the only browser you can use with this service.
Click-through value will suck mightily, as customers will be forced by the "health bar" to click through an ad or other button every once in a while, and will immediately return to their previous surfing. This will cost the advertisers money, as wasted bandwidth, not produce additional sales.
I think this is only a good idea if you have one of those novelty, drinking birds that Homer used when he worked from home to keep clicking it for you.
Sure,click-through is low, but what's the click-thru rate on TV advertising? Basically zero. Few TV ads elicit an immediate response, but they manage to put the name of the product in your head.
The real question is "how much do people notice those ads?" and studies on that are still inconclusive. For some unknown reason, early INet pundits thought that Web ads would be like infomercials, where you immediately call the 800 number (or click through) and order the product.
But they aren't like that, and nobody should ever have thought they would be. Banner ads are more like billboards; they put the idea and name of the product in the back of your head.
This idea of click-through has kept web ads restricted to web companies for the most part. But that's changing. We're already seeing significant web advertising budgets coming from the motion picture industry; there's a good chance other industries will follow.
BTW, simpsons free ISP does more than just try to get banner ad money. It also advertises the Simpsons quite effectively.
PS. Kinda hard to believe nobody patented the idea of ad-supported ISPs,isn't it?
The advertiser-supported ISPs are going to have a hell of a time staying in business. A quick look at the business model:
Income: Web Advertising rates. Common rates for a banner add are in the 1 to 10 cents per "eyeball", or pair thereof, depending mostly on how well-targeted the ad is. Absent very sophisticated (and rare on an ISP level) profiling, the ISP cannot really identify what the user is interested in, in order to carefully target ads. Moreover, the free-ISP user demographic is likely to be mostly internet newbies, which is the kiss of death for an e-commerce site. So it's very unlikely that a free ISP will be getting more than 1 cent per ad. Click-throughs can be worth as much as 25 cents in some cases, though it's likely to be much less, especially since a forced click-through doesn't signify real interest and is therefore less valuable to the advertiser than a voluntary click-through. Porn sites, which often use pop-up windows to essentially force a click-through, rarely get more than 3 or 4 cents per click-through. And porn is very profitable. Posit a maximum of 5 cents per click-through of revenue.
Expense: Based on Earthlink's SEC filings, and the data of other companies (including my own employer), it is generally accepted that about $13 per user per month is the minimum cost for an unlimited time or > 15 hrs per month dialup account. That covers only direct costs, not advertising. Moreover, that level of efficiency requires on the order of 1 million users. Cost per user looks more like $20 per month for most smaller companies. Further, it tends to cost about $15 - $20 in initial costs (including advertising) to get a user. 18 months is a fairly average length of time for a user to stick with an ISP, so the ISP *must* recover its initial investment within that time to make a profit. Given the annoyingness of ads, it's unlikely that a free ISP will have a better retention rate. Let's suppose J. Random Free ISP is doing about $15 per month, at best. Further, they need to recoup $18 (to be simple) in 18 months. So they need $18 per user per month to break even. Add another 10% to make it sufficiently profitable to bother, and you need $20.
That's 2,000 ads or 400 click-throughs (or some combination thereof) per user per month. At best. Our average unlimited-time user logs about 15 hours a month. At that rate, the free ISP needs to serve each user 125 adds an hour (or 24 click-throughs) to break even. That's a pretty weak proposition. I wouldn't put any money on it.