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Advertisers are making tentative forays into the Web. But, as Tom Standage explains, the new medium demands a new approach

T his is the year the Internet may finally become a useful business tool. It depends, though, on whether companies are able to tame the great unbroken beast and ride it all the way to the bank.

One of the great hopes is that the World Wide Web will become a serious advertising medium. In theory, it is a terrific idea: the Web can carry high-quality ads into the homes of 40 million people. But few companies so far have made full use of the new technology. Most advertising is simply "repurposed" - in other words, shovelled - across from print and TV advertising. In particular, magazines that sell "paper" space are now running the same ads in their on-line editions.

The standard Web advert is a banner, a small graphic intended to catch the reader's eye. Clicking on the graphic takes the reader to the advertiser's home page. Successful magazines such as Playboy and Wired have their own on-line equivalents, and charge up to $30,000 per month for banner ads on their pages.

FutureNet, the Web site run by the magazine publisher Future publishing, is the UK's foremost example of Web advertising. It is also representative of the school of thought that, for now at least, the best way to sell space on the Web is to play on its similarity to space on the printed page.

Its advertising manager, Simon Richardson, freely refers to the site as a "successful title" with a "front page" and "readers", and an impressive roster of advertisers, including Guinness and Vauxhall, each of which pays up to pounds 6,500 a month for its advertising banners. He says that it is important to talk to potential advertisers in terms they understand: space on the page, readership, and an agreed monthly rate. "It's because there's a huge learning curve," he says. "Big companies' marketing departments are used to buying and using print media."

But the Web is capable of doing a lot more than simply luring people to sites with banner icons. Some advertisers are asking for something a little more clever, and some sites are giving it to them. One of the big "search engines" on the World Wide Web is Lycos. If you do a Lycos search for "Ram upgrade", an advert for Ram upgrades will pop up. The number of people who see the ad may be small, but at least they will all be genuinely interested.

The notion of charging on the basis of the number of click-throughs (looks at the actual advertisement) rather than eyeballs, (visits to the page carrying the banner) is rapidly gaining ground. Some believe the days of banner advertising are numbered. "We don't see it as holding any value over time," says Sheri Herman of Fattal & Collins, the agency behind the Webby award-winning site, The Spot. "It's a great beginning, but after people have seen that banner a couple of times, they will probably click on it less."

Advertisers also want to know more than plain numbers - they want to know what sort of people are looking at their ads. Many sites that carry advertising require readers to fill in a registration form, which then enables the site managers to figure out who is clicking on which ads.

The problem is that the registration deters people, so although more information is gathered about those people reading an ad, the actual numbers are reduced. FutureNet has so far avoided introducing registration for precisely this reason. "The only reason we would introduce a registration system would be as a result of pressure from our advertisers," Richardson says.

The Riddler, a puzzle site run by Interactive Imaginations, gets round the registration problem in a novel way - by assuming that the best way to get people to read Web-based adverts is to bribe them. The site offers a series of brain-teasers, trivia questions, graphical puzzles and plain old-fashioned riddles with cash prizes to the tune of $25,000 per month for the first people to solve them. As players work their way through the pages, they are exposed to advertisements and demands to fill in demographic details.

"Essentially, we are Robin Hoods: we take money from the wealthy sponsors and drop it into the hands of the playing community, who pay nothing to play," says the Riddler's Joshua Shaub. So far the company has generated $150,000 in advertising revenue, and its servers clock 400,000 hits per day from 50,000 subscribers

The players are under no illusions about how the system works, while advertisers have the attraction of knowing exactly which people, demographically, and how many, see their advertising. Players get cash prizes of up to $1,700, and Interactive Imaginations laughs all the way to the bank.

A more subtle way to lead people through advertising might be to use narrative - just as a TV commercial does. This is where Ms Herman believes Fattal & Collins' experience with The Spot, which is effectively a Web- based soap opera, will stand them in good stead. "At the end of the day The Spot will be like a TV show," she says. "One of the things we are working on is the creation of the equivalent of a 30-second TV commercial that will link to The Spot."

But will people really be prepared to work their way through this so- called "episodic" advertising?

"The average person who comes to The Spot visits four to six times a week, and stays 15 to 30 minutes at a time," says Ms Herman. "That's right up there with heavy soap-opera viewing - they are committing the same amount of time they are to a TV show. They're just having a different experience. It's a different model."

Expect to see the first examples of this new model some time this year.

In the meantime, the rapid pace of change merely emphasises that those involved in Web advertising today are still pioneers in a rapidly changing field. The approaches tried so far owe more to above-the-line, mass media advertising - magazines and TV - than they do to direct marketing techniques. But that may change as those familiar with marketing start to catch up with those who are merely familiar with the technology.

The Spot: www.thespot.com

The Riddler: www.riddler.com

Futurenet: www.futurenet.co.uk

HotWired: www.hotwired.com