Excite@Home Gets Rolling On Broadband-Enhanced Ads

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The newly formed Excite@Home is wasting no time exploiting
the growing reach of high-speed connectivity via DSL links, as well as cable links,
especially in efforts to promote the benefits of broadband-enhanced advertising.

While the branded @Home Network service continues to carry
content and advertising on its site targeted exclusively to customers of its cable
affiliates, the Excite side of the combined companies has launched a "broadband"
portal, ExciteXtreme.com.

That portal will guide high-speed users from the
digital-subscriber-line-access side, as well as the cable side, to broadband content and
rich-media advertising.

"You'll see some things on the ExciteXtreme portal
that you see on @Home, as well as things on @Home that are exclusive to @Home
subscribers," said Hilmi Ozguc, vice president of Excite@Home's "Enliven"
business unit and a cofounder of Enliven's predecessor firm, Narrative Communications
Corp., which was acquired by @Home last year.

"All of those details are still being worked out, but
clearly, we are going to have a very broad-based broadband-content offering," Ozguc
added.

No matter what content distinctions are worked out between
the two portals, the combination gives the company a head start in leveraging a mass of
users from all high-speed-access platforms for the sale of broadband-enhanced advertising,
Ozguc said.

"The problem with selling this type of advertising was
that there were only a few thousand subscribers, but now, the numbers are going to go
through the roof," he added.

Nor are the companies depending solely on the emergence of
a massive base of broadband users to begin leveraging the rich-media approach to
advertising that Enliven has pioneered in the narrowband space.

Here again, the Excite connection is a major boon to @Home
by giving it real estate to sell in the dial-up domain as Enliven goes about the business
it has built as a provider of a full range of tools and support services to the
advertising community.

"There's a real crisis brewing in online advertising,
even though it's growing at an enormous pace," Ozguc said. "The latest surveys
of ad performance are finding that the click-through response rate on banner ads has
dropped to under 1 percent, after peaking at between 2 percent and 3 percent."

Where banners were initially a novelty that drew curious
users to click for more information, their ubiquitous presence has now made them part of
the background that people tend to ignore, Ozguc noted.

Thus, even as advertising revenues are expected to double
in 1999 from last year's level of a little more than $1 billion, advertisers are looking
for better ways to make an impact without waiting for a broadband-enabled marketplace to
develop, he added.

"High-speed access allows you to do a whole lot of
things, like running video- and audio-enabled ads in big windows that are closer to the
look of advertising on TV, only with an interactive component," Ozguc said.

"But that's only one leg of our efforts," he
added. "What we've been doing over the past two years or so is developing ways to
bring the narrowband world closer to this type of capability."

Enliven's technology allows advertisers to go beyond the
traditional banner-style Internet ad and to create pop-up ads with video and audio
segments that play on the Web page the user is accessing, without requiring the user to
jump to the advertiser's Web site or to download a special streaming-media plug-in.

"The No. 1 problem we had to solve was how to provide
a richer-media experience without requiring people to stop and download software,"
Ogzuc noted. The solution was to develop a very thin software player using Java that
downloads with the Web page carrying the ad.

"The Enliven player only uses a 15-kilobyte piece of
Java code, and it can run on any operating system," Ogzuc said.

This innovation also required that the firm develop a
streaming technique that wouldn't download more information than the thin player could
handle at one time. This required a very different type of streaming technique from that
used, for example, by the popular RealNetworks Inc. system, in which the player residing
on the user's machine has about 2 megabytes of code.

The cross-pollination under way in the Excite@Home domain
also extends into the e-commerce and advertising support that IBM Corp. is offering to the
Web community through its Internet-media division, noted Bill Pence, director of
development for the IBM unit.

Along with using Enliven as one of the tools the division
applies in helping companies to develop media-rich advertising and Web sites, IBM is
employing MatchLogic Inc.'s market-tracking tools, supplied through Excite, to help its
customers maximize returns on advertising investment, Pence added.

"MatchLogic supplies the online profiling of users --
their choices in the use of ads and in purchases through e-commerce," Pence said.
"We can target ads to users based on the interests they show when they visit sites
that are tracked with this technology."

Both Pence and Ogzuc stressed the fact that with improving
technology, the wide-scale availability of 56-kilobit-per-second dial-up access and
ever-improving computer power at the premises, the move to media-rich advertising and
e-commerce is now well under way, even before broadband access is available on a
mass-market basis.

"A year ago, companies were experimenting with the
tools we've developed to enable a richer-media advertising experience over narrowband
connections. And today, they're putting those tools to use on a very wide scale,"
Ogzuc said, noting that 120 of the Fortune 500 companies are now using Enliven technology
in advertising on their Web sites.

A recent Grey Interactive/ASI Interactive Research study
sponsored by Intel Corp., Softbank Interactive Marketing and the Advertising Research
Foundation found that the type of "pop-up" ad supported by Enliven was the most
effective ad model tested.

The recall rate for such ads was 76 percent, compared with
51 percent for banners, and the larger ad model also generated a 44 percent higher
click-through rate than banner ads, researchers reported.

Of the 2,400 consumer and business users queried, 56
percent of consumers said they liked the advertising. Business users were far more
negative, with only 26 percent registering positive responses to such advertising, the
study found, although the click-through rate was strong even on the business side.

But such advertising has its limits, with small video
windows producing less-than-fluid-motion pictures and audio well below the
near-compact-disc quality that comes with broadband access.

This is why broadband is beginning to be a hot topic in the
content and e-commerce communities on the Internet, Macromedia Inc. spokeswoman Andrea
Coffey said.

"Researchers are finding that advertising offered at
quality levels made possible by access speeds four times or better above dial-up generate
18 times the recall levels of GIF [graphic interface format] banners," Coffey noted.

Macromedia has drawn closer to the Excite@Home sphere in a
multipronged deal that will produce tie-ins between the creative tools and Web sites of
the two entities.

For example, Coffey said, Macromedia's "Director"
-- a leading creative tool used in the development of multimedia and Web content -- will
be tightly coupled to the Enliven tools, making it easier for content developers to add
advertising hooks that will support enhanced-advertising capabilities.

"We're also working out a traffic-sharing agreement
that will link shockwave.com with the @Home and Excite portals," she noted.

Shockwave.com -- started more than one year ago as a
"skunk works" portal for users of Macromedia's tool kit who were pushing the
envelope in developing enhanced media -- has now become a full-fledged commercial
operation, representing still another place where high-speed-access customers can go to
find content that has been optimized for broadband.

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